Too little, too late?

At this year's annual British Insurance Brokers' Association Conference, it was demonstrated that knowledge in the secondary market is very low.

The Financial Services Authority's key task during the coming months will be to raise awareness among secondary intermediaries. But, with less than a month until the cut-off date for a guaranteed turnaround of applications by 14 January 2005 - is the message too little too late?

The secondary market is said to be worth £3bn. If insurers have little appetite for appointed representatives, there is a stark choice - be regulated or form part of a network, which is why SA launched its secondary network earlier this year.

Direct regulation would surely only appeal to those large businesses with a high income from insurance. One might argue, if directly regulated by the FSA, why any business such as this would continue to deal with a broker at all. Most insurers would have no qualms giving a direct agency to those directly regulated. This could lead to a significant reduction in certain brokers' incomes.

And do medium-sized firms want to be directly authorised, have direct agencies with insurers, to become an insurance broker? Many would like help, assistance and expertise with this.

Post-regulation, many argue that the secondary market will stop dealing with insurance. This surely underestimates how important this income has become. Will managing agents who depend on this income exit this market completely? Will they wish to become directly authorised by the FSA? This is not just a problem for managing agents. Many types of businesses are concerned about the future.

This is a huge opportunity for the primary market, one that currently is being missed. Support is needed from insurers and more can be done, as the FSA has promised, to raise awareness. The rules will not change - this is an issue that needs addressing.

Much debate and discussion has ensued about the amount of broker networks launched last year and either their success or lack of it. Has this left the primary market shy of attempting to fulfil the markets needs? It would appear so.