Tom Broughton comments on the commissions struggle.

Chris Giles has got the backing, the business acumen and determination to build a powerful broking empire. And his private equity investment is a contributory factor to understanding why he is so ruthless and aggressive in his plays. Norwich Union boss Igal Mayer, meanwhile, has finally decided to turn his words into action and push back on the consolidators, and in particular Giles, who has been demanding commissions of up to 40%. Mayer has given plenty of warning to prepare brokers for this approach. The market has shown no sign of hardening in the immediate future, the economy has been wobbling and more than one insurer has given public warnings about its decreasing reserving levels. So why is Chris Giles pitching commission increases of up to 40% to major insurers, and in this climate? Is it because he can? Is it because he wants to emulate the Towergate model? Or is it because he thinks that insurers like NU have more than enough reserving provisions to see them through the rough times?

Whatever the truth, should you look at the current landscape it seems that Giles’ opening negotiating gambit will be met with a certain level of cynicism by all. Norwich Union, which is understood to be pushed to accept a 12 point increase, is no doubt talking with a number of broker partners right now. Perhaps in the future it could even take a stake in one of Giles’ rival consolidators. No doubt a compromise will be reached eventually, but this negotiation is not just about the ambition and power of Giles, it’s about trying to resurrect some sanity to remuneration in the market.

• The government’s reforms of personal injury have been generally met with disappointment from across the sector. As previously documented in Insurance Times the powerful union lobby has appeared to get its way. Lord Hunt points out quite rightly on page three that a need for further reform is a necessity and that a change of administration may just pave the way. But in the meantime, it’s the claimants and insurers who are getting a raw deal.

• How will the motor market recover from its current doldrums? This week, our motor supplement looks ahead to ask how new technologies and changing environmental demands could shape the market in the coming decades.