Old chestnut is still a hot topic

The recent Professional Broking Roadshows provided evidence that an age-old debate is being played out - right down to the wire. It is a fact that some brokers that deal in standard personal lines are surviving very well. But, it is one almost exclusively at odds with the commoditisation of these products, which is key to insurers' survival.

At the roadshows in Glasgow and Bolton, Norwich Union found itself in the firing line for such diversification, with brokers gasping at the notion they should abandon standard personal lines. Feedback gathered after the events drew comments berating the personal lines 'dinosaurs' and that the chairman should shut them up. A harsh comment, but one representing a harsh reality.

That said, while carriers say they must cater for people's buying habits, they also incentivise them to use certain channels. As Stephen Wall, managing director of Bollington, said: "We do not know why a risk is quoted by an insurer as £300 through one channel, but £1200 through a broker - and we are not going to be told."

Insurers making the transition to multichannel distribution was never going to happen without opposition. However, the cultural shift around commoditisation is a nettle to be grasped for the survival of both insurers and brokers.

But, while economics dictates that commoditisation and multi-channel distribution are necessary to avoid the whole industry being inherited by banks and supermarkets, there is a risk that something vital will be lost.

At the risk of being dismissed as archaic, the assumption that motor is a simple class of business is actually questionable considering the amount of fraud it attracts. Also, how confident could you be in the general car-driving public's understanding of exclusions on their policy, i.e., named drivers' entitlement to drive other cars?

As Eric Galbraith said in his opening speech: "The world is changing while we have our noses to the grindstone." But the demonstration, promotion and pursuit of the value that brokers add is key not only to their survival but could also be the defining factor in preventing the industry becoming a supermarket itself.