But the company, which has reported record interim pre-tax profit of £109.2m, will retain brokers for its wealthiest customers.

See analysis: Moving online

Hiscox will stop using brokers to distribute mid net worth policies from next year. It said the natural home of such policies was online.

However the insurer, which announced healthy profits this week, said it would keep using brokers to distribute high net worth policies.

Austyn Tusler, head of the art and private client division at Hiscox UK, said: “We have reacted to a changing market dynamic where people are using online purchase rather than a broker or a telephone for mid net worth polices.

“While we expect this trend to continue for mid net worth policies, we are committed to the broker channel with regard to high net worth individuals.”

Hiscox’s sole mid net worth broker policy, known as 506, will be placed into run-off from the start of 2009. Mid net worth policies are sold to individuals with home contents worth up to £75,000.

Tusler added: “The broker response has been varied depending on the focus of the broker. For the majority it has not been painful. With the main focus of their business on high net worth policies, these changes have not been significant.”

Earlier this week, the insurer reported record pre-tax profit of £109.2m for the first half of 2008, up 3.4% from £105.6m year on year.

Gross written premiums fell to £639.4m for the six months to 30 June 2008, down from £733m in the first half of 2007.

Net earned premium reached £486.8m in the first half, up from £471.9m in the same period last year, and combined ratio fell to 79.7% from 84.8%.

Interim pre-tax profit at the Hiscox UK and Hiscox Europe businesses more than doubled to £16.3m, from £6.6m, with gross written premiums up 14.6%.

Hiscox Global Markets recorded a pre-tax profit of £80.4m, down from £87.5m last year, but the company praised “highly disciplined underwriting in the face of a softening rate environment”.

Pre-tax profit at Hiscox International hit £20.3m, up 67.7% from £12.1m. The insurer said Bob Forness was set to join the Bermudian business and set up a specialist team to complement the property catastrophe business.

Robert Hiscox, chairman of Hiscox, said of the results: “Our well-diversified specialist businesses round the world have the ability and the opportunities to make profits whatever the state of the market.”