Stuart Reid says the strength of a large insurer will enable the broker to meet new market challenges
As I write this, news will be reaching the market that both Chris Blackham and I have sold our businesses to AXA UK.
I am aware that there will be scepticism in some quarters about this move - and others like it. But there are good reasons for the transaction and the many others that have gone before. So what are the reasons behind our decision to join forces with AXA?
A number of the large insurers have come to realise the need for diversification away from being simply a product provider to a model that includes distribution.
This is not necessarily a new phenomenon and mistakes have been made doing similar things before. Insurers may have a lot to learn about broking but let's be frank, we are both supplying the same goods just in a different manner.
The rise of the internet, direct sales and the underwriting that many brokers now undertake are just three simple examples of how boundaries between product provider and distributor are becoming blurred.
I have written before about the polarisation of insurance broking along the lines of the IFA in the life and pensions sector. For example, we will be left with the very small and the very big, and I still think that this development would be disappointing.
However, the reality is that most medium sized brokers are no longer independent in the true sense, having looked to either the venture capital market or floated to raise capital.
Size is important to enable businesses like ours to take head on the challenges that are coming in distribution, employment and in legislation and regulation generally.
It is therefore natural that as long as independence can be maintained, that is, we decide which product and provider is appropriate for our clients, and we remain responsible for customer service, then the strength of a large insurer puts us in a very powerful position to succeed and grow our business.
I for one believe this is so, and look forward to an exciting future. IT