Networks creep back onto the radar

Some illuminating insight into the future of the broker market can be gleaned from comparing and contrasting the recent Professional Broking Sentiment Survey with the findings of the Mazars Insurance Broker Survey 2005.

The most obvious concern of brokers, evident in both polls, is the cost impact of regulation. This may come as no surprise, as the likes of Andrew Paddick, et al. have been vocal in their concern about cost since well before 'GI day'.

However, one interesting suggestion that emerged from Mazars' survey, carried out in conjunction with the British Insurance Brokers' Association, may resurface as a result. It found that, after the staunchly independent rejection of networks by the majority of brokers, many are now reconsidering the network option, as the cost reality of being directly authorised becomes increasingly apparent.

After the bullish fanfare of many network start-ups in 2003, which sought and failed to scaremonger brokers into joining to avoid what was peddled as inevitable extinction, there is now evidence to suggest that, while their approach was a little off, they may have had a point.

Of those brokers surveyed by Mazars, more than one-third (36%) said they were considering joining a network or alliance, compared with 27% in 2004, marking a resurgence of interest.

Undoubtedly, the alarmist approach of some start-ups and their rapid demise has been off-putting to many brokers, but there are examples where such arrangements are mutually beneficial for all concerned. Certainly, the cost-saving benefits associated with membership of a network look attractive in light of brokers' concerns about the cost of regulation.

And, of the successful networks, these were probably greatly assisted initially by a less confrontational approach to attracting members.

As one reputable compliance manager said, the start of regulation is the "end of the beginning" - not the apocalyptic end touted by some to serve their own ends. Perhaps the false start by some ventures muddied an issue that may now come of age.