Brokers can produce a cheaper rate than direct writers on 85% of building risks, research by Intermediary Systems Ltd (ISL) has revealed.

The risk analysis software company invented a standard risk - a three-bedroom, detached house built in 1965, owned by a 35-year-old accountant.

ISL assigned the risk 500 random postcodes across the UK and ran the risk through its What If? broker software, before running the same 500 risks through its What If? Direct internet analysis software.

The sum insured was varied to reflect the differing rebuilding cost in each postcode.

ISL commercial director Mark Harrison said the broker market was cheaper in 85% of cases in ISL's sample.

"There was generally always one broker product that was cheaper than the direct writer rates," he said.

However, Harrison said the spread of broker market rates was wider than the direct market.

"Looking at products from similarly-sized companies and similar products in terms of coverage, the average range in the premiums quoted was 324%," he said.

"In the direct market, the average difference between the lowest and the most expensive quote was 57%."

The biggest range in quotes in the broker market was for the postcode W7 2, for which Norwich Union's Home Club product quoted £607 and Methodist Excel quoted £63.

The average premium for the risk was £268.

Harrison said the differentiation could be due to disagreement on the level of risk within a postcode between different companies, brand perception or niche targeting of certain postcodes by some companies.

"For example, some companies might specifically target certain groups of people, like those who own new houses, so for those postcodes, they will be cheaper than the others," he said.

"On brand perception, if you buy a big insurer's product, the perception is that they'll pay out better or give better service, so they can get away with charging more.

"Smaller companies need to keep their prices low to attract business."