Three years of caution is enough. The private sector must now seize the opportunities that this tentative recovery offers

The start of every year brings with it plenty of opinions about what will happen over the next 12 months. The past few years have been very tough ones in the UK general insurance market – too many brokers and too much insurer capacity chasing shrinking parcels of gross written premium have made it so.

Nowadays, chatter in the market regularly includes phrases such as “running to stand still” and “doing more work for less reward”.

The focus seems to be primarily on client retention ­– the theory is that you need to keep your clients in order now to have the chance to grow with them when the economic tide eventually turns.

Unfortunately, in these early months of 2011, it is difficult to find much to be positive about. UK consumers are likely to feel poorer as a result of increasing inflation and taxation. Another major factor is confidence­ – we all need business owners, entrepreneurs and homeowners to cease sheltering from the storm, which has now hopefully passed.

But the directors that run private enterprises are re-energized. They may have had some fallow years, and they will effectively be working for HM Revenue & Customs until mid-May at the earliest, but life is there to be lived and there are bills to be paid. If this is the recovery they have waited 36 months for, it would be a folly not to fully engage. This is not the time to be joining a phone-in to complain about the VAT rise; it is time to be working hard enough so that the VAT rise does not matter.

For brokers this will, I think, mean a tough start to 2011. The situation might improve later in the year, however, if the UK economy starts to regain some confidence and the banks’ stance on lending is relaxed.

The government has a key role to play in all this. A few policy changes can help to increase the feel-good factor, and create some momentum. This could mean broker acquisition opportunities return.

There are already more buyers, and this will stimulate interest. Furthermore, the capital gains tax regime is still very advantageous for sellers, and after a couple of very quiet years, when conditions for sales have not been ideal, there will be some broker owners who feel that the time for a deal is right.

Broking does have Darwinian characteristics. The strong will flourish, while the weak will continue to find it tough. There will still be bad economic news to come for the UK in 2011, and much of this will be disheartening ­– public sector job losses is just one example.

The government has said more than once that tough decisions will have to be taken, and there’s no doubt this is true.

However, at the same time there will be increasing signs of economic recovery, partly observable in the private sector, where approximately 300,000 jobs are expected to be created this year.

The recovery will move at different speeds in different sectors, but at its heart is a UK private sector that is intent on making up for lost time.

We are only here once, and we have all had enough of recession doom and gloom. IT

Stephen Lark is managing director of Lark Insurance