No reason to sell out

Before the Financial Services Authority took over from the General Insurance Standards Council, folk were rushing to exit the market, only to find that the regulator extended the application process and succeeded in making a total hash of things.

Once again there are some looking for the exit, this time under the auspices of a tax change, and once again it would be folly to sell.

Many are still unable to see that the 'take out' formula is not designed to benefit the seller - something no one appears to be prepared to discuss. It seems bizarre how so many business owners are prepared to take a discounted price for a company worth substantially more by any standards.

No other business in any other industry would be sold on the basis of the take out formula used for buying insurance brokers.

The problem is not a surplus of brokers, far from it, the problem is clearly with the insurers and their inability, save for a few forward thinking companies, to come into the 21st century.

The industry has decimated its reputation with rhetoric and false promises to the paying public and succumbed to the lowest levels of advertising to secure business from the 'unsuspecting' personal and commercial lines sectors.

The FSA's complete inability to understand insurance and focus on supporting large firms to the clear detriment of the smaller ones continues unabated. Many small brokers have become so upset that they think clearing their desk is the only option; if it means selling their respective businesses for a sixpence then so be it. This decision seems neither rational nor professional.

However, if more brokers accepted the benefits of sub-broking, particularly with their own kind, they would be a force to contend with. It would allow them to keep their own business and, most importantly, their independence, while at the same time reducing their overheads through sharing facilities and outsourcing more effectively.

These are not major basis changes to adopt but will be way more beneficial that selling out at the bottom.

It is a tough, emotionally draining, if not traumatic, process to reach the point where putting the 'for sale' sign up appears to be the only option.

As a company, we think the tax changes proposed by the Chancellor of the Exchequer are a total reversal of the government's purported understanding of the entrepreneurial spirit to which it was so enthusiastic in its earlier days, and should not be used to generate a panic sale.

It is darkest before the dawn, and there is huge potential for every small broker - if they are prepared to look outside the box.

Robert D Marshall, Director, Advanced Insurance Centres Limited, Ilford, Essex