There are divergent views on how the insurance industry will look in the future, but most agree that it will be vastly different from how it is today Below, Broker Network chief executive Grant Ellis takes a humorous look at the UK insurance industry, circa 2010.
It's 2010 - the second decade of the new millennium. The noughties are about to end as we look forward to the next decade - the teenies. But what about that first decade? What's changed in those first ten years? Would someone leaving the 1990's recognise the insurance industry ten years on? Let's take a look, shall we?
I guess the first thing anyone would notice is that we have had statutory regulation for the past six years. Now, to be fair, we knew it was coming, but like every other new regulation before it, what we thought we were getting, changed almost as soon as it was introduced.
Now every broker who gives advice to a client has to be individually registered, and has to prove their competency by passing a range of exams.
The burden proved too much for many brokers, especially after the FSA withdrew its "grandfathering" of older brokers in 2008. Many took the opportunity to exit at that point, although in truth this was already on the back of large numbers exiting from 2005 onwards.
Much of that activity has been fuelled by the consolidators, who upon finding themselves increasingly competing with one another to buy the better brokers, have forced up prices. Fortunately such competition has largely disappeared as most of the main players have since merged with one another.
Giles Insurance and Oval merged in 2007, and Layton Blackham and Stuart Alexander joined up with them in 2008. Stuart Reid, managing director of Stuart Alexander, who famously didn't work Fridays at the start of the decade, finished it working every Friday - just not Monday to Thursday.
He's just recently decided to take early retirement as the combined business is set to become a division of Centrica later this year. NFU's broker division Country Mutual Insurance Brokers went on an acquisition spree in 2005, buying as many Farmweb brokers as they could lay their hands on. Farmweb turned to NIG and it's parent Churchill for help, and they responded by helping launch a campaign among farmers to demutualise NFU. This succeeded in 2007. Churchill then waited 12 months before swallowing up the new plc.
And what of the other insurers? AXA merged with Royal & SunAlliance in 2006 to form AXA Royal Sun. However, they quickly dropped the 'Royal Sun' bit as the name was, quite understandably, being shortened somewhat inappropriately.
Farewell little guys
Norwich Union has also been active in the acquisition stakes. After Folgate listed in 2007, it decided to take back underwriting control of the Folgate book by taking over the whole operation. Having stripped out what they needed, they sold the broking business to Smart & Cook only last year, which itself was acquired by American giant GE Capital in 2008, and is now headed by executive vice president Europe Paul Meehan. Meehan is also now mayor of Leeds, having entered politics in 2007.
Personal lines is now even more firmly in the hands of the direct insurers and a few large broker chains. For commercial insurance, however, the broker still dominates distribution - and the decade has seen a rash of new underwriters enter the UK commercial insurance market, most with little, if any, actual infrastructure in the UK, distributing their products via a handful of the larger brokers.
With lower expenses they have given the established players a bit of a headache.
Most have responded by shipping more and more jobs abroad to the Far East, although South Africa, with its English-speaking population, is taking over from the more traditional overseas operations in places such as India.
IT has played a big role too, as most of us would expect. One player, Acturis, dominated the scene in the noughties and is now the number one supplier to the industry. Polaris's imarket is in its fifth release, and chief executive Martin McLachlan said recently that he hoped to have published a set of data standards for commercial insurance "within two years".
And what of Broker Network, I hear you cry? Well, as the chief executive of a recently listed plc business, I think it would be inappropriate of me to comment in case it comes back to bite me later on. You'll just have to wait and see, won't you?