The latest spate of changes announced by insurers naturally will affect brokers. Tony Cornell outlines the implications

There have been a number of recent changes announced by insurers.

AXA has announced a restructuring of its UK general insurance arm and Groupama has withdrawn from the larger commercial insurance market. The good news is that AXA has committed substantial capital to its UK business and intends to remain a major force. And Groupama is staying independent and remains a market for brokers. The bad news is brokers will suffer a further period of poor service while the reorganisations take effect and a market for larger commercial business has been lost.

Changes are inevitable in a vibrant market and one would worry about its future if businesses remained constant. We have a dominant market leader in Norwich Union (NU) which has a low cost base and critical mass in its chosen markets. This puts pressure on the rest to compete. Improving service is critical to NU's strategy as the leaked internal survey from NU published in Insurance Times last week has shown; and other insurer priorities must be to match its expenses ratio. First class service costs money and the client and broker market have never demonstrated that they are prepared to pay a substantial premium price for it. There are other forces for change

  • Brokers are consolidating, joining networks or exiting markets. This mean many insurer branches are not required

  • Clients are using the internet for business and are getting accustomed to call centres. These low cost solutions mean centralisation

  • Technology is changing work processes, cutting out unskilled work and reducing the knowledge required to do skilled ones

  • Centres of business are moving as clients consolidate, old industries die and new ones emerge

  • Labour is mobile and the cost of employment or access to pools of staff becomes more important

  • Online placing of business could revolutionise the industry and once again reshape it

  • Local service is no longer vital with modern communications.

    So it is not surprising that changes seem to occur regularly and, apart from the staff affected, the brunt of the impact of these falls on the broker market.

    Brokers manage the interface between insurer and client. They deal with the fall-out for poor service and they have to absorb the extra costs that inefficiencies in the supply chain bring.

    Change has to be constant and is vital for businesses to survive. The latest ones will hopefully bring their rewards before another major event in the industry forces a further change of strategy.

    Tony Cornell is an independent consultant at Cornell Consulting. He can be contacted at

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