Survey finds that banks are failing to break into commercial business
Brokers handled 90% of commercial insurance business written in the UK during 2004, a new report from Datamonitor has revealed.
Brokers' share of the commercial market has remained fairly static, according to the report, UK Commercial Insurance Distribution 2004.
But it found that the direct insurer channel was the second most popular route for insurance.
In the small and medium enterprise (SME) market, the report revealed that broker dominance was gradually being eroded with SMEs being increasingly courted by banks and direct providers.
The survey found that while a large number of SMEs would consider purchasing insurance from a direct insurer, less than half would turn to their bank for their insurance needs (see graph).
Datamonitor analyst David Stephenson said that while the banks were making efforts to push their insurance products, they still hadn't got it right.
"The banks are still focusing on their core banking operations with insurance still very much seen as the poor relation," he said.
Despite the hype surrounding direct insurers, Stephenson said their penetration of the SME market would be confined to smaller SMEs who had simpler insurance requirements.
"The larger SMEs realise that they do need advice and skill in arranging their insurance and they realise that that comes from brokers."
The report found that the market shares of different types of brokers and intermediaries had fluctuated over the past year, with super-provincials the biggest winners.
"The super-provincial brokers are making inroads into the commercial market and they are putting pressure on both the national and smaller brokers," said Stephenson.
The survey revealed that the brokers see their biggest threat as the larger brokers.