Foreword

Surveying the opinions of brokers is a difficult task. Every broker prides itself on its individuality. Each firm is run differently, has a unique client bank and maintains relationships with different insurers. Some are PLCs, others are local run by a sole trader. Ask a question a hundred times and you will get a hundred different answers.

That said, there are common themes. Every broker is subject to regulation, every broker is endeavouring to provide a professional, value-for-money service, and every broker is trying to maintain relationships with the company market.

The subject of insurer service generates considerable heat. The survey suggests brokers are disappointed with standards. They do not like call centres, offshoring and the lack of technical skills.

However, while service is not perfect, it is not as bad as some think. Research by the Association of British Insurers reveals decent levels of customer satisfaction, and some insurers have made service a priority. What is beyond doubt is that customers loathe offshoring. Firms committed to staying onshore can now exploit this as a marketing advantage.

Regarding regulation, brokers remain anxious about cost and increased workload. The purpose of regulation is to protect the customer, but brokers say customers do not understand it, do not see the need and hate the attendant bureaucracy and cost.

We will, however, see a regulatory dividend thanks to the massive investment in time and effort. The regime will drive up standards and that will benefit the consumer. And we are starting from a higher standard than perhaps the Financial Services Authority believes, as we already treat customers fairly. Customer satisfaction levels for claims handling are high and improving, and the level of complaints is minuscule relative to the 77 million policies issued every year.

Consolidation is another huge topic, and regulation is often cited as the reason for the contraction of the broker sector. However, consolidation is as much about demographics and a desire among insurers to control distribution. We will see further broker acquisitions by insurers as they strive to exert control over income and earnings. Distribution cannot be talked about without talking about the internet. Large numbers of quotes are delivered online, and brokers need to participate, whether they focus on personal lines or the small to medium-sized enterprise market.

Brokers are enthusiastic about technology, even if there is uncertainty regarding imarket. However, the existence of imarket indicates unprecedented industry cooperation. The initiative handles 25,000 transactions per month, and over 2200 brokers are signed up, along with 80% of the underwriting market. The key to further success is simple: more insurer products and greater integration with software houses are needed.

What of the market itself? There have been instances of insane rate cutting, such as a 10% drop in a single month on motor business. Some insurers are buying market share and the market remains saturated.

It needs to be remembered that insurance is a simple business. If claims, expenses and commissions exceed income, you make a loss. Claims are the biggest constituent of the equation, so this is where the market needs to focus. As we say at Groupama, sanity wins over vanity every time.