The insurance industry is beginning to express real doubts that the Financial Services Reform Act (FSRA) will bring sufficient advantages to consumers. Some industry leaders believe it won’t make the business more transparent. More expensive and unwieldy for all concerned, yes. But better? Many doubt it.

While it’s a bit late to quibble now – about four years too late – a panel session at last week’s National Insurance Brokers Association Convention revealed just how much industry professionals are beginning to search for the benefits that were supposed to come with the new regulations.

Aon CEO Peter Harmer was adamant that the FSRA will not change the fundamentals of how his company does business. Ultimately, 19 out of 20 brokers will probably find that FSRA will not change the fundamentals of how they do business, he said.

QBE Mercantile Mutual Executive General Manager Terry Ibbotson said smaller intermediaries will struggle with the cost of compliance. Referring to his own company, he said the cost of implementation is “just massive” and the cost of ongoing compliance will not be far behind. “To say anything other than that the cost will be passed on would be false,” he said.

“The infrastructure you have to put in place for an organisation the size of ours is a challenge, but it is not an impossibility,” he said. “My fear really is more for the smaller business and the smaller intermediary who is required to implement a whole serious of processes. They will find it a significant burden, and they will find it more difficult to pass on the cost.”

Of particular concern are the people who distribute products, Mr Ibbotson said. “They may not be able to cope with it – that is the real challenge.”

Willis MD Gary Seymour believes the consumer will pay more, but he strongly encouraged the industry to rise above the detail and deal more in the spirit of the legislation, which includes the drive for better practices, education and professionalism. “If we can get ourselves back above it, I think there are tremendous benefits associated with the change,” he said.