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Although many newsagents have evolved from their traditional roles in the high street, the National Federation of Newsagents, the largest newsagent association in the UK, has around 18,000 members (in order to qualify, each store which is a member has an account with a newspaper wholesaler such as Dawsons News, and Smith's News). Altogether, there are around 33,000 independent newsagents and convenience stores supplying news in the UK, although the definition of a newsagent is becoming harder as they diversify into other product lines.

A spokesman at NFRN said: "Today it is hard to establish what a newsagent is. The traditional newsagent sells confectionary, news and tobacco. They are under pressure because newspaper readership is declining and there are tight margins; many are finding it difficult to modernise. However, 66% of newspapers are sold through independent newsagents and around 13,500 of our members deliver newspapers, which is an important service." There are a further 20,000 'multiples' selling news, such as large chains, petrol stations and supermarkets.

The National Federation has its own insurance division, which was set-up in 1999 and is called NFRN Mutual. A spokesman said it insures around 5000 of its members, and chairman of NFRN Mutual Peter Wagg said its main competition was from brokers. One newsagent, interviewed for this article, has already been called five times this year from brokers regarding his renewal, including the NFRN.

At the Institute of Grocery Distribution, newsagents are classified under 'traditional retail and developing stores', which also includes grocers, off-licenses and forecourts. There are 44 584 of these stores, according to the IGD. The temptation has been to expand into convenience stores, as 49p in every £1 of retail spending is on food and groceries. Meanwhile, large chains such as WH Smith, which describes itself as a 'store' are likely to use a large broker or have a bespoke programme with an insurer.

Although sales of newspapers are being challenged, there are still millions of copies bought everyday, while business and consumer magazines have been resurgent in recent years. In addition, cards, cigarettes and sweets are an important revenue stream. It is hard to see the demise of newsagents, although understandably some firms will want to increase income by moving into other lines.

David Nichols, head of package business at Zurich, estimates the newsagent market is worth £90m of gross written premium. Zurich deal with thousands of brokers dealing with its Shop product, and sales are moving onto the Swiss insurer's extranet and imarket.

There are thousands of brokers operating in the newsagent market, although some stay clear and have never considered the opportunities. Insurers competing in this softening market include Zurich, NIG, Axa, MMA, QBE and Allianz Cornhill. Newsagents are covered under shops and retail covers and, as these become more standardised, placing business via extranets and imarket has become more common. Many of the packages are auto-rated. If phone calls are required, then underwriters can often offer quotes within 20 to 30 minutes. As the AA's website states, its Shop product covers retail outlets from "newsagents to hair salons."

Neal Lowe, of Needham Insurance Brokers in Coventry, and a member of the Cobra Network, says: "The distributors are strict with the volume of papers newsagents need to sell. Not everybody can become a newsagent overnight." Lowe has also seen changing demographics in the newsagents as they move towards the convenience store model. He says: "Some have knocked down a wall and turned themselves into mini supermarkets." As risks expand, then the broker can use its relationship to provide increased protection.

Changing legislation

Cigarettes are one of the prime targets of thieves within newsagents. As prices rise, cigarettes are becoming more valuable and make up a large slice of newsagents' revenues. Brokers recommend having a roller shutter over the cigarette counter, a key risk management device lauded by brokers and insurers.

The laws are also changing with government legislation banning those under 18 from buying or smoking tobacco. This law comes into force in October, and will follow the smoking ban in pubs and restaurants set to be introduced on 1 July. Newsagents will come under pressure from 16 and 17-year-olds, who were previously sold to legally, and will no longer be able to able to feed their habit.

Nichols says: "The risks are seasonal. Newsagents need to look after shop surroundings, customer welfare and stock risks. There is also the money run to the bank. Newsagents are potentially sitting targets with the cash they have on the premises."

John Griggs, commercial director of Howard Insurance, based in Northfields, Tyne and Wear, and a member of the Broker Network, says: "Recently there has not been much theft but plenty of claims involving broken glass. There are also claims involved in falls and trips. The shop floor should be clear and dry. Owners need to be wary of steps on their front doors and preferably have a mat at the entrance."

Many newsagents will also contain post offices, and although the post office will have its own policy, it is still important to recognise the potential risks in having more money on the premises.

Despite paper boys and girls declining in popularity across the nation, it is still a popular service where newsagents can provide real value. The boys and girls are covered under standard liability covers. The full details of paper girls or boys who are under the age of fourteen are required to be supplied to the insurer.

National lottery outlets are also a concern, and according to Tony Gibbs, sales and commercial director at Reading-based Macbeth and Company, a retail package will cover approximately between £3000 and £4000 of cash on the premises.

Lowe believes the biggest threat is from goods in transit claims. Many of the owners will use 'cash and carry' shops for stock. Almost inevitably vans are then broken into and stock disappears. The stock would be protected under the shop's liability policy.

Some brokers are wary to enter the market, as they see newsagents as magnets for troublemakers. One broker says: "We wouldn't touch them ordinarily."

Despite the more packaged nature of the risks, knowing your customer is important, and then differentiating yourselves from the direct route by providing outstanding client service, especially around claims.

Griggs says: "If we offer a personal service and help them out with claims, then the younger generation will return to brokers as they come across problems with direct players. Who do you call to make a claim when you buy insurance through the internet?" He adds: "We have a very good retention rate of 90%."

Gibbs says sometimes the customer will ask the broker if what they have been quoted correctly for their buildings insurance from their landlord.

Nichols says: "In order to insure in this market, you have to do your customer research and know what the broker is looking for. Customer insight is key."

As everybody knows, market conditions are difficult, and newsagents are a good example of just how soft the market has become.

Lowe says: "Premiums are the lowest they have ever been. The market is very soft and no insurers are willing to lose any business. However, retention rates are good and if you do enough of this business, then it is profitable."

Griggs is more sanguine. He comments: "This is a very competitive business, and there is little money to be made." He adds: "Many newsagents are buying insurance online and there is an affinity scheme via the National Federation of Newsagents." In addition, he notes competition from players such as Premierline, a small to medium-sized enterprise specialist bought out by Allianz Cornhill last year. However, he adds many newsagents are entrepreneurial and successful and that he is "yet to see a poor one". Griggs says: "Some might buy a shop elsewhere and there is the potential to insure this too."

Fight for business

One broker cited a recent renewal of a local newsagent where the renewal was £400 cheaper. Insurers and brokers alike are fighting over this business. However, the owner of the local newsagent, who had been called by five brokers this year, said that despite having made no claims, his premium had increased or stayed the same over the last couple of years - perhaps sanity is prevalent in some sectors of this market.

As in every market, research is vital before entering it. However, with the support of underwriters keen to increase their market share, then brokers could use their personal service to capitalise in a market that has the potential for profit. It is hard to see the demise of newsagents, although understandably newsagents will want to increase income by moving into other lines. This should be seen by brokers as an opportunity.

NUMBER OF RETAIL OUTLETS

Newsagents

Independent newsagents in the UK: 35,000 (including convenience stores that sell news)

Source: National Federation of Newsagents

Traditional retail and developing convenience

Small stores, typically under 280m2 in size with a confectionary, tobacco and newspaper sales base.

Chains, with more than 10 company-owned stores: 1919;

Independents: 3020

Source: Institute of Grocery Distributions.