Andrew Holt says the market is still cautious of broker acquisitions by insurers, but it does show the strength of brokers in the distribution chain

Another week and another broker acquisition by an insurer. This time it is Groupama expanding its broker book with the buy-up of the Bollington Group, showing how the business of broking and insurance is becoming more and more blurred.

Groupama’s purchase is a nifty move. Headquartered in Bollington, near Manchester, the broker controls in excess of £75m in premiums and is one of the country’s biggest motor trade brokers within the SME market. The motor angle is significant. It comes on the back of other shrewd Groupama business, with the purchase last year of motorbike broker Carole Nash, one of the UK’s top 30 brokers with over 240,000 policyholders and a business in excess of £60m in premiums.

The market though, is still is wary of such acquisitions, because it does not know where they will end up in the long-term. The frequently repeated allegation is that brokers will truly lose their independence and worse, end up placing business with their insurance parent company. Which of course, is to the detriment of the customer. But we are still some way off this scenario.

The focus on broker acquisitions reaffirms Peter Cullum’s mantra that there are three things that have taken over the market: distribution, distribution and distribution. Being in control of the distribution chain has driven consolidation through the market. The situation can, however, be seen as a great boost for brokers. It shows that within the distribution chain brokers have real clout. So in this way the business of insurers acquiring brokers is good for business. Long may it continue.