Broker Direct is warning brokers they should prepare for a renewed attack on their distribution channel from motor manufacturers offering affinity deals.

Many underwriters retreated from the affinity market earlier this year after losing out badly on free insurance deals.

Neil Harris, insurance director of Broker Direct, said: "Many flat rated schemes were doomed to failure because they were not selective enough in their risk carrying. It resulted in good risks subsidising those with a poor claims record."

But, he suggests, several motor giants now appear ready to re-enter the business using sophisticated internet technology to ensure their schemes return a profit. Their approach he stresses, is to foster long-term loyalty by offering a cradle to grave service in everything from replacement parts to insurance.

Premium collection is also being built into car finance packages making it an attractive purchase option.

And unless brokers respond to this challenge, Harris predicts car makers could capture up to 20% of the motor insurance market through their control over the sale of new cars.

He stressed the launch of internet brokers such as Screentrade has made it easier to provide quotes on an individual basis in car showrooms.

Brokers are investing in new technology to achieve a competitive edge in the motor insurance market.

But, Harris urged, brokers must target their market actively and economically by offering choice and transparency.

IIB is set to launch its own broker-owned web site, Insureright, producing on-line quotations in March 2000.