Brokers still in the driving seat

Despite competition from the banks, direct arms of insurers and the consolidation of SME books, independent insurance brokers have the upper hand when it comes to the distribution battle. Furthermore, they have the knowledge, presence, skills and client relationships to dominate the SME sector for years to come. For this to happen, brokers are going to need to adapt to the seismic shifts that are likely to occur in the market over the next five years.

The good news is that many of these movements are predictable and there are more opportunities than ever to work with willing partners that want to tap into the SME sector. The bad news is twofold, with more businesses wanting to access the profitability of SME insurance and to challenge ultimately the business model of the traditional independent broker. Banks are poring over their databases; insurers are buying brokers; brokers are buying software houses. Insurers can hedge their bets and develop relationships with a series of partners, as well as attempt to go the direct route that, incidentally, is still failing to achieve anywhere near critical mass.

Whether it is through the use of networks, schemes, technology, niches or innovative marketing, independent brokers are still very much admired and can become even more sought after in the future. This month's Broking Success, Shona Robertson, is correct when she says independent brokers will always be needed because they can adapt quickly to changing market conditions.

However, as Simon Burtwell of Ernst & Young says in these pages "... there remains work to do for the value inherent in the broker model to come fully to the fore." In the current climate, this is needed more than ever.