Tom Broughton, editor

Step by step, the market is beginning to rule as rates turn, commissions fall and battles for business share are overtaken by cost-cutting and stability measures. The most visible sign of this shift is in the managing general agency (MGA) space. Our tongue-in-cheek cover this week asks if MGAs have a future. The reality is that the model is changing as insurers look to stop the gravy train, pull back on excessive deals and prevent every broking giant in town from bundling into this lucrative area as a diversification tactic (see pages 16-17). While having an MGA operation has become de rigueur for major broking houses, questions remain as to their value – especially since insurers began to enact at local level the tough rhetoric outlined in the boardrooms. Within this landscape, there are several good MGAs that write business in the right way and continue to have the support of carriers.

But it is the major brokers that will be forced to decide if the MGA route is a good bet as returns diminish. Is it worth the time and energy required to conform to the tougher regulatory regime that’s on the way? After all, just how do you set up that invisible wall to separate client choice from the returns of your insurer partners?

A broker of the old school

It is easy to focus on seismic structural changes in a market driven by a coterie of investors and power players. But our interview with Peter Smits, an independent regional broker based in Hertfordshire (see pages 20-21), brings home the reality of life for small businesses attempting to manage the hopes of employees and local clients.

Larger competitors have made numerous approaches for the company over the past two years – and Smits has turned them down every time. For this businessman, it is the running, growing and nurturing of a family firm that provides the biggest reward. What’s more, he believes that offering the right advice to loyal clients has to be the right path for the profession he loves. Brokers like his Ashbourne Insurance will no doubt continue to be targeted by aggressive suitors but, for the good of the market, let’s hope he doesn’t receive an offer he cannot refuse …