Ellen Bennett, editor-in-chief, Insurance Times
Aon’s bid to boost its revenue has been greeted with predictable resistance from insurers. But the broker is just doing what comes naturally. As a business, it exists to make money, and as the broker’s role evolves, it has to develop new revenue streams. Contingent commissions may be back on the cards, but in the post-Spitzer interim, brokers had to get smart. As a profession, they have long been undervalued. A formal process of packaging up and selling on their contextual market knowledge in the form of GRIP technology goes some way to mitigating this, as do additional service charges.
Brokers are evolving from transactional advisers to long-term consultants. Their remuneration models will have to change to reflect this. Aon’s answer may not be the final solution – but at least it’s trying. Insurers are right to worry that, if Aon’s strategy is a winner, its rivals will not be far behind. But chances are, they are just going to have to get used to it.
Get stuck in
Our look back to the deals that shaped the UK insurance sector (see page 14) offers a timely warning to those chief executives drawing up next year’s shopping lists. M&A often stumbles over legacy systems and personal rivalries. Be warned – but don’t be put off. Because while such mega-mergers as Royal Insurance and Sun Alliance; Commercial Union and General Accident; and CGU and Norwich Union had their faults, history is likely to be kind. The resulting insurers, RSA and Aviva, are robust, consistently serving brokers and policyholders. And if Andy Haste has his way, there’ll be one more deal to list next year.