Lloyd's broker acquisition - a warning to proceed with caution

In your article about the Community Broking Group (PB, June 2004, p19), I read that one of its stated aims is to acquire a Lloyd's broker.

Having been there (twice) I would caution it and other regional firms with similar ambitions that this is when its troubles will really begin.

Apart from the fact that ownership of a Lloyd's broker will make the group less attractive and more difficult to sell, there are other disadvantages, which include the following:

- Lloyd's brokers often have tails that may be tucked between their legs at the time of purchase.

- The professional indemnity costs of their whole group will go through the roof.

- Small Lloyd's brokers have very little market influence, except perhaps in a niche. Specialist and large risks may still have to be placed by larger specialist brokers.

- In the City it is much easier for teams to walk out of the door with their business.

- The City ethos is very different to that of the regions.

My advice is to use the services of experienced wholesale and specialist brokers. They are cheap at the price. I just about managed to escape with my shirt.

Geoffrey Bishop, Chairman, Bishops.