Giles Insurance chief executive Chris Giles has warned that managing general agents (MGA) face a difficult future as their markets disappear, with the growth of the consolidators.
His comments came as he admitted that Giles Insurance would be ending its trading relationship with underwriting agencies Primary General and Fusion.
The business placed with the two companies is worth nearly £4m in premium, and will be underwritten through Giles’ own schemes and facilities.
Giles said the business would be moved because Primary and Fusion, owned by Towergate, were essentially rivals to Giles Insurance.
“It’s nothing we can’t do ourselves,” he said. “We will be running off the Primary account. The Fusion business will also be moved.”
Giles Insurance’s account with Primary is worth £2.4m, while the Fusion account is understood to be worth less than £2m.
Giles predicted that wholesale brokers, Lloyd’s brokers and managing general agents would find business hard in the future.
“The consolidators have their own MGAs and Lloyd’s brokers. They don’t need third party MGAs or Lloyd’s brokers.
Primary General and Fusion are not the first underwriting agencies to be axed by Giles.
Oxygen Insurance Managers will be removed from the panel of Ink Underwriting, which Giles recently bought (News, 21 September).
A spokesman for Primary General and Rural said the group’s strategy had always focused on smaller brokers, which were not considered strategic partners by insurers.
The company did have relationships with larger brokers but accepted that their strategies might diverge, the spokesman said. “We have never been reliant on the revenue generated from these accounts and, in the medium and long term, we have never included it in our thoughts or planning.”
The spokesman added: “We currently have a core of around 350 brokers of whom 100 have a significant or medium-term strategic agreement with us.”
Giles makes Scottish buy
Giles Insurance Brokers has strengthened its Scottish operation with the acquisition of Crosbie & Jack.
The Falkirk-based broker is one of the largest independent brokers in Scotland, controlling Â£20m in gross written premiums.
The acquisition takes Giles Insurance to Â£180m in annual premium.
Giles Insurance chief executive Chris Giles said last week that, by the end of October, the company was looking to make four acquisitions totalling Â£50m in GWP.
Michael Quinn, group managing director of Giles, said: â€œThis acquisition complements and strengthens our strategic base in Scotland, placing us at the very forefront of the industry north of the border.â€
Crosbie & Jack employs more than 60 staff across its four offices in Falkirk, Stirling, Aberdeen and Glasgow. It specialises in the building trade, fleet, contractors, manufacturing, risk management and the licensed and leisure industries.