Big, niche or dead. That's the choice for brokers these days because of the way insurers are driving the industry. All their actions indicate they favour the American model, dealing with just three or four brokers, rather than the UK model of perhaps 15 insurers, with six or seven most regularly favoured.

A good example of this streamlining is currently underway at Axa, which is redefining the way it deals with its preferred brokers. The UK's number three general insurer, which has a total agency base of 14,000, wants to concentrate on its top 200 brokers. This group delivers 40% of its business - its top 500 deliver 80% - and Axa wants to make them feel more special than any other insurer is capable of doing.

Interestingly, better terms are not necessarily on offer to its Premier brokers. Instead, more help driving the business forward is Axa's USP.

The insurer is making great play of this bespoke approach to a broker's business, contrasting it with the so-called "sheep dip" approach of some insurers' Club philosophies.

But one of the clever things from Axa's point of view is that as there is no uniform approach, it does not have to offer the same discounts to its Premier brokers. Each broker must hammer out its own terms and conditions with Axa, and is on its own in doing so.

What's happening here, and at other insurers too, is a new toughness with brokers. These are our terms. We can help you. But it must be done this way. And we get more of your business.

Across the board, insurers are cracking the whip with their brokers. Commissions are being reduced by 30% at a stroke, on a take-it-or-leave-it basis, and with 24-hour notice periods. Unless you're in a commanding position as a broker, there's nothing you can do about this.

Brokers may not like it, but the more realistic realise insurers have no choice but to re-engineer their businesses. Transaction charges are way too high and must be tackled radically. When 40% of every premium paid to insurers goes to paying 20% commission to brokers and 20% on admin costs, insurers cannot compete on a global basis. The same transaction in America costs the best insurers just 15%.

That is why branch networks have been under attack as never before. Overheads can only come down if local branches are slashed and insurers develop "virtual" networks based on advanced telephony and national call centres.

Can it work? It has to. But it will not work instantly, and it may be tough on brokers in the transition phase. The upside for brokers is that this makes them look far harder at the way they do business. A new hard-headedness is developing. And a realisation that unless they're big or niche, they are indeed dead.