The rise and rise of the super-provincials

Growth of 16.2% in 2002 and annual premiums edging £20bn make commercial insurance larger than personal motor, household and personal accident combined. It also remains a secure bastion of independent advice, with brokers controlling over 90% of the business.

Of those brokers, no two are the same, varying in size, strategy and aspiration. The sector is seeing intense merger and acquisition activity.

In a competitive, growing and regulated market, size matters.

A powerful new category of broker has emerged. It comprises 15 or 20 firms that originated as reasonably sized regional brokers and now, through acquisition and organic growth, have achieved 'super-provincial' status.

This is introducing a fascinating dynamic. Broking is not - as might have been expected - dominated by a few giants. Instead, a developing middle tier - brokers with income over £50m - is taking business from above as well as from below. They are combining a hefty marketing punch with local presence, personality and the availability of capital. This is producing particular success in the small to medium-sized enterprise market, where service and continuity remain crucial. They already have more than 5% of the market and this is growing.

The super-provincials enjoy substantial leverage. Will underwriters find themselves offering greater rewards and establishing expensive dedicated service propositions? Or will they revel in the fact that nationals are no longer dominant?

They will certainly highlight the attitudes of different insurers to the broking sector. They will look positively on insurers that support broker-oriented technology. They will favour insurers that put experienced, expert, decision-making staff on the front line. They will align with insurers that understand a broker's needs in terms of quality and service.

The regional brokers will always be a threat - looking to attract clients who hanker for a highly personal relationship.

Online trading is also a competitor - cyberspace is the one place where size does not matter.

And there is direct writing - if someone gets it right, tomorrow could look quite different.

As they grow, the super-provincials will need the occasional glance over their shoulders. After all, the bigger you are, the further you have to fall.