Bob Hand, managing director, Affinity Solutions

The effect of affinity marketing in the SME market is small, and the penetration is minor.

But what do we mean by affinity marketing? In this case the SME is the customer, they are the constituency that we're talking about, and the affinity group, for me, is any organisation for whom insurance is a non-core activity.

It can, indeed, be a bank as a potential new distributor in this marketplace, it can be a trade association, a professional association, or a retailer, or a utility company.

We know the SME mindset. It's perhaps one or two individuals that will have responsibility for insurance placement in their business.

SMEs are self-reliant. They are cynical. They wear many hats often in their businesses.

They have a direct no-nonsense approach, price is a key factor in their choice of insurance providers. They enjoy their independence, but they do value relationships and experience.

A recent Datamonitor survey found that around 40% of SME respondents would purchase commercial insurance from a bank, rather than a broker.

At first sight it seems banks have a huge role to play. Not necessarily. It still means that price, service delivery and a better package will be key to their ongoing success.

Banks consider themselves in exactly the same way as an insurance provider would. Build credibility, the same track record and show the same experience that an insurance broker would.

Price will probably still remain the most important factor, but reputation can be a key influence on the final decision to purchase.

What we do is invest certain brand values in these organisations, so someone like Tesco now has five million accounts. We don't love them, but we trust them. Why? Because we don't think they're going to go bust. Will we see Tesco as the largest SME provider in the marketplace in five years' time? I think not.

In the personal lines affinity world some of the largest affinity group providers are brokers.

There is no substitute for proper segmentation and analysis.