Giant multi-national broker Marsh has declared war on provincial brokers with a promise to capture swathes of their small business customers.

Marsh has taken on more than 200 extra staff already and has launched three new products based on more than two years of market research. The broker has promised to be “aggressive” and wants to take 5% of the market for those businesses below £1m and double its business in the £1m-plus market to 10%.

“Our competition here is the good provincial broking firms. They have the relationships but they haven't got the money to invest in servicing the sector. We will be formidable competition,” said Joe Clowes, executive director for the new Advantage range.

Marsh's battle plan involves three products and service arrangements with internet servicing, meaning virtually no paperwork.

Under Advantage Direct the company will use a call centre in South-ampton to sell bolt-together business insurance packages.

It says the 20 to 30 year-old business people are so computer literate they don't want to meet face-to-face. Marsh reckons the self-employed artisans with three or four people in the firm are too busy and want to buy their insurance early mornings or after work. And it says many shops, hotels and restaurants, will also buy direct.

But the Advantage range will get more sophisticated for bigger firms. “A three-person electricians' firm has the same needs as the next three-person electricians' firm, but a 2,000-employee engineering firm is very different from the next 2,000-employee engineering firm,” Clowes said.

Marsh has hired an extra 40 field staff, based in either existing Marsh offices or serving more local communities by working from home.

For the largest firms, it is promising to offer the risk management services it currently reserves for giant multi-nationals but at fixed prices.

Property and casualty insurance is underwritten by CGNU, Axa, Allianz Cornhill and the Charington Lloyd's syndicate. There are also specialist engineering insurers and fleet underwriters.

Regional brokers denied Marsh would be a threat. Paul Dickson, of Dickson Insurance Brokers, said: “I just don't think they'll have the right number of high calibre staff to provide the right service to the client.”

Grant Ellis of the 85-member firm Broker Network said: “The big accountancy firms do not provide services to this sector because they are too expensive and their account execs change too frequently. Relationships are key and Marsh cannot afford to provide the services businesses expect from their adviser.”

The news came a week after Marsh boss Dan Jones told the CII conference that brokers should work together to fight the internet challenge.