Insurers are doing it for themselves

The idea of insurers offering advice direct to the public is not new, however, it may soon be a reality in the UK. As Peter Hubbard made plain in this month's interview: "If brokers can think about underwriting, insurers can think about advice." That puts a totally different perspective on insurers buying commercial brokers, either wholly or in part.

Within days of Hubbard's comments, the news broke that both Norwich Union and Allianz Cornhill had each bought a 5% stake in the Jelf group. That NU and AC have done it precisely to head off Axa is probably the most strategically sensible explanation. The well-known fact that Axa has been deluged with interest from brokers - probably under the impression that top dollars are on offer, has further made other insurers nervous.

The reason all of this offers a further insight into insurers buying brokers is because, as they are fond of saying, they want to get closer to the customer. So, why would they not buy themselves into a position where they can peer into the inner workings of those that have owned the customer since the year dot? In Axa's case, if it wanted to use that knowledge to provide advice itself, it certainly has some knowledgeable mentors in-house.

Axa also has some pretty ambitious targets to meet and the resulting need, as Hubbard also said, to be "bolder and more innovative", indicates further that direct advice could be on the cards. Axa does seem to have had its fingers burnt when acquiring commercial brokers in Canada so, if it is not going to extract value in the way its critics have suggested from broker acquisitions, learning from Layton Blackham and Stuart Alexander about advice in order to provide that direct could be one of the main benefits for the wider group.

Axa could emerge as a frontrunner with DIY advice but if it or any insurer owns or part-owns a broker they are at liberty to use that knowledge and experience to seriously enhance and expand their existing direct offerings. Brokers have been encroaching on insurers' traditional stronghold of underwriting for some time without any reaction and, as traditional routes to market become fragmented, insurers providing advice could not only be the response but the next big shift.