I refer to your article on the report by CapGemini (News, 25 January), in which a comment was made by AXA chief executive Peter Hubbard stating that one of the reasons AXA purchased Stuart Alexander and Layton Blackham was partly aimed at understanding customer relationships.

How do these people get such prestigious jobs in the first place and continue to hold on to them? What a waste of money to obtain information that was readily available free by asking their agency base.

The vast majority of the broking community are fair and professional. Furthermore, the small-to-medium sized brokers build ongoing relationships with their clients.

By the very nature of their business model, they have the time and inclination to interact with their clients very closely and, in many, cases promote long standing friendships.

As a result, those clients will want to deal with that particular broker year after year. However, we still have to provide them with insurance at reasonable premiums and one tends to find that they are not that price sensitive because they are receiving a high standard of personal service.

Unfortunately, with all the major insurers clamouring to set up direct arms to their businesses and spending vast fortunes on advertising (more than they would ever have paid in commissions to their supporting brokers) this has resulted in dual pricing and as a consequence a bad reputation for the industry.

More often than not, the higher premiums received via their brokers helped to subsidise these forays into direct insurance.

In addition, very few insurers understand the concept that it is more cost effective to hold on to a piece of business than to obtain new business.

In our own case, we have a retention ratio of 97%. Regrettably, they do not stay with the same insurer year after year, as insurer support and service levels are always on a rollercoaster depending on their attitude at that particular moment in the insurance cycle.

In order for us to maintain our relationship and service levels with clients, we may have to move them around from time to time.

So my free advice to Peter Hubbard and all the other insurer chief executives is to promote the growth of small-to-medium sized brokers, give them the support and respect they deserve.

Be consistent with this attitude and most of all dispense with their direct operations. Then they will see their retention rates grow.

Don't get me wrong, I have no objection to competition, but the only benefit that direct insurers have provided is that it has jolted the insurers into becoming more efficient and embrace technology.

The detrimental effect of direct insurance has been that it has commoditised and devalued insurance to the consumer and initiated these low retention rates, for the insurer at least.

Warren Buffett, the second richest man in the world, was recently quoted in the press as saying that the insurance industry in the UK has made a great error in commoditising insurance and, unless this is reversed, the future implications could be grave.

By the very nature of this man's success, should we not be heeding his advice?

Name and address withheld