Small brokers' bottom lines may suffer, says Andy Cook

September is always a month of action. We all come back from holiday having resolved to do something. Maybe it's a new job, maybe it's to tackle that loss-making account or maybe to buy that annoying rival down the road.

It seems that the same is true of our insurance companies. After dabbling in the fashionable high net worth market with its Tapestry product, Norwich Union has decided to call it a day. Belmont Insurance decided to create a super-broker force in Kent by buying rival Bishops, and insurers are looking - again - at variable commission (see analysis page 10).

What's all the fuss about? After all, variable commissions have been around for a long while now. Well, it seems that the fuss is all about the market in which they will be used.

Variable commission, which means the broker sets his or her own commission rate for any piece of business, is commonly used for larger risks. And in soft markets especially, the national brokers' defence and attack teams lurch into action offering low rates in order to keep their order books full.

Now it is the turn for small brokers to 'enjoy' variable commission. Zurich set the ball rolling in the SME market, but Norwich Union raised this topic last year and all of the other players will no doubt have their own plans.

The spin doctors have it that variable commission is great - it offers the chance for brokers to charge a commission rate that reflects the amount of work that they put into each risk.

That's a great sentiment but as a cynical journalist (which must be on a par with the cynicism of most brokers), I fear that variable commission will end up allowing brokers to beat each other up as they pitch for rival brokers' risks.