Tom Broughton, editor.

Broking giants are under the spotlight like never before and that’s before the recession has even begun.

It wasn’t too long ago that the ambition of this small band of brothers was limitless. Consolidators were bragging about buying each other, diversification was the order of the day and many pledged to achieve competitive edge by becoming, in that cliched phrase, “more than just a broker”.

All your average market watcher could do was sit back and wait for the next big merger and hope it would help to explain the record profit margins. But there has been a switch in sentiment, costs are now being ferociously scrutinised and a quick glance at the third-quarter results of Aon (page 3) and Willis reveals that revenues are now static.

Leading brokers have a lot to contend with. First up has been trying to explain the inexplicable to clients. The national brokers must attempt to manage expectations in the financial crisis and better understand the behaviour of rating agencies and insurers. Then there has been the volatility of the banks. You only have to look at Towergate to see how delicate a refinancing negotiation can be when your business model depends on it (page 1).

All the major broking players have spent time adjusting their strategies for when the market hardens but, with the onset of recession, a new realism is sweeping the sector. If acquisition funding hasn’t evaporated already, market confidence has. The play right now is about stability and survival – getting closer to the bill payers, understanding the client base and delivering good old-fashioned risk management and advice.

However, such is the dynamism of the players in this game, there are bound to be some audacious manoeuvres. For every Aon trying to consolidate its position at the top with a Benfield-style swoop, there will be a top 10 broker eyeing the next rung up the ladder.

The pecking order will remain as changeable as the standings in the final lap of a Lewis Hamilton race. So ask yourself not when the next big surprise may come, but who will spring it. Aon has made its play and Willis has bought HRH. What will Marsh do? Don’t rule out a few players slipping off the track either. In the mean time, it’s time to batten down the hatches and get back to basics.