'Belt-tightening is the order of the day'

Brace yourselves: life is about to get very difficult for the UK general insurance market. That was the uncompromising message from the chief executives gathered at our Global Leaders Forum last week. Yes, there will be a double-dip recession, they said - and, no, general insurance will not escape. Business as usual is no longer an option - the end of the economic turmoil is nowhere in sight.

So belt-tightening is the order of the day, as brokers including Bluefin know only too well. Chief executive Stuart Reid, interviewed this week, acknowledges that there will be “a lot of pain and heartache in the months ahead”. That means job losses - and Bluefin won’t be alone. Expect cutbacks at all the big brokers at the end of this year and early next, and don’t be surprised if the insurers get in on the action too. It will be all the more painful considering how tough recent years have been. Businesses have been struggling against since 2008, and there just isn’t that much fat to trim. Those with debt or plans to float over the next two years will be under particular pressure to cut costs.

But nil desperandum. As Marsh’s Martin South pointed out, there are still opportunities. Organic growth remains a pipedream for now, but acquisition is a realistic aim - for Marsh, for Bluefin, and for several other brokers. Let’s just hope they can all find someone to buy! Insurers could benefit from strategic acquisition, too, and the activity in Lloyd’s and the Bermuda market is likely to hit the UK regions soon. As Achilles’ investment in Brit shows, private equity firms are eying the carrier market, and further deals are set to follow.

As businesses prepare to weather this storm, individuals are doing likewise. Across all markets, the next generation of business leaders is cutting its teeth in a recession that is proving deeper and longer than anyone imagined. It may be hard to see it now, but in the longer term, that will be no bad thing.