The push for profits, post-regulation

The introduction of regulation went smoothly, according to the Financial Services Authority. It has authorised more than 13,291 new firms and granted 4839 variations of permission, which combined had about 22,000 appointed representatives. While satisfied that the majority of primary insurance brokers have come under its remit, there is concern about the thousands of secondary intermediaries that have not.

The interim authorisation granted to 941 firms yet to receive a decision on their completed application will only capture a small proportion of those secondary intermediaries.

The remaining secondary firms that rely on insurance sales for a large chunk of their profits face significant disruption to their business, especially as the FSA has made it a priority to crack down on firms that continue with unauthorised and illegal selling and arranging of insurance.

This presents a significant opportunity for brokers to pick up business by becoming principals to the secondary market.

Becoming a principal could provide a welcome source of additional income, particularly as it is argued that the true cost of regulation is yet to be felt. In its business plan for 2005, the FSA has announced it will take forward a detailed study of the costs of regulation, focusing on small firms.

However, this will bring little comfort to brokers as profits continue to fall, with fees and commissions reaching their lowest levels for six years, according to the latest survey from the Confederation of British Industry and PricewaterhouseCoopers.

It is time to get back to the business of making profit. The theme of this year's British Insurance Brokers' Association conference being Back to Business. This year's Professional Broking Roadshows will also focus on maximising profitability and we are currently working to secure a range of expert speakers on this all-important subject.