John Jackson's point regarding "The growing tendency towards a chain of brokers being involved between client and insurer.." is well made as usual. The consolidation of UK insurers, allied to restrictions in capacity and innumerable agency and product rationalisation programmes from the composites has meant that the choice of markets available to brokers large and small is increasingly limited.

Some may believe there is nothing wrong in brokers using brokers to place risks that do not readily fit the "norm" of their own agency base, but in my experience, it's the underwriters as well as clients that suffer from this method of trading.

The "chain gang" of which he speaks that results in extra mouths to feed, inevitably means the client paying more than necessary, as fees inflate the core insurance cost.

Underwriters are often starved (unwittingly or not) of accurate risk information and end up dealing with a broker that lacks any personal knowledge of an insured client. This generally results in a significantly poorer loss ratio. The further one gets from the original broker, the more risk information and account performance generally declines.

While there are some well established and professional wholesale brokers and some that just help their friends out on a facultative basis, this multiple sub-broking trend is not good for our industry.

Perhaps brokers should look to new markets, rather than deal with the dinosaurs or place business with their competitors.

Jonathan Davey
Managing director
Primary Broker Services

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