Survey reveals that brokers haven't been won over by regulation
The majority of brokers believe that FSA regulation has not been good for the industry, a survey has revealed.
According to the 2005 Mazars' Insurance Broker Survey, the percentage of brokers who thought the impact of the FSA on the industry was positive fell from 46% in 2004 to 37% in 2005.
In addition, those who thought the impact would be positive on their clients fell from 31% to 25%.
"Regulation is the key issue for the industry in the next three years," said Mazars head of broker group Mark Grice. "The FSA hasn't won them over."
The survey revealed that 85% of respondents said the amount of work needed to satisfy the FSA's requirements was too much, up from 67% of respondents in the previous year. And 42% of brokers surveyed said they believed the cost of regulation would have a 5%-10% impact on profits.
Biba chief executive Eric Galbraith said the organisation would be looking at the ongoing benefit derived from some of the FSA regulations. "Is all the documentation going out to customers having a cost benefit?" he asked.
"Some documentation being sent out, I feel, is unnecessary, and we have to prove that is the case to the FSA ."
On broker consolidation, 87% of brokers said they expected consolidation to continue, with only 1% believing the number of brokers in the market will increase.
The survey also found that two thirds of brokers believed profitability would determine deal prices, as opposed to one third, who thought it would be brokerage.
"This implies that these potential sellers believe they will be able to keep profits up in order to maximise their exit value," said Mazars.