Editor's Comment - It's time for brokers to speak up

The insurer buying broker bandwagon shows no sign of abating, with Ecclesiastical and Royal & SunAlliance - soon to be RSA - getting in on the act in February. The buying frenzy raises questions over how insurers will market themselves to the rival brokers of those they have bought. Simon Cooter, distribution director at Brit Insurance, summed up this difficulty: "We are not interested in buying brokers. I would struggle with telling brokers that we wanted to do business with them if we owned their biggest competitor down the road."

So far, there appears to have been little serious opposition to insurers buying brokers, from both trade associations and the Financial Services Authority alike. Undoubtedly, insurers' appetite for acquiring brokers is about winning more (effectively commission-free) business, and although this is important, arguably the challenges of running a broker could prove a distraction from the raison d'etre of being an insurer. Surely providing a 'world class service' is something that all UK insurers should be breaking their backs to achieve, rather than meddling with an already successful distribution model?

The UK is meant to have the best and biggest insurance industry in the world, and yet there are still too many basic errors from insurers that are hindering brokers spending time winning more business. Brokers are often bemused by some of the excuses and remedies that insurers offer after receiving consistently poor service - delegated authority should not be attractive because insurers are handling claims poorly in the first place.

Imagine if those insurers that have bought brokers had invested the money internally on training staff? Although there is little brokers can do about insurers buying brokers (except by not selling to them, of course), brokers do have a choice where they place their business, and should speak up if their service is being compromised by a broker buying strategy.