Biba on the opportunities and threats

Will the consolidation in the broker market continue into 2008?

Definitely, yes – and it could go beyond that. The impending rise in capital gains tax in April could have an impact in closing some acquisition deals earlier.

Have regional brokers made enough of an effort to get to grips with technology?

Many of the brokers that I am now talking to have engaged with the idea of using technology. I don’t think there are many failing to maximise their use of technology. That will continue and the value of technology is clear to brokers.

Are brokers’ businesses threatened by the continuing soft market?

The whole industry is threatened by the soft market. A soft market which affects commission-based businesses, is very difficult. We are seeing more and more brokers moving only to fees and even supplementing commission by charging a fee, because that is what they have to do.

Is the current regulatory framework set to change significantly?

We are in significant times in a sense that we are moving to a different regulatory environment. We want to be free from rules and I think the market has to take back the rules. It is significant in a sense that we don’t want to be rule based.

Is it possible, or sensible, for a new broker to launch in the current climate?

Absolutely. With all the consolidation going on there is a very good reason to start up more broker businesses. Brokers should not fear starting up in the current climate. There are many different options for businesses.

How much of a threat are aggregators to the broker?

They are both a threat and an opportunity to the brokers. I don’t like aggregator sites. I believe they do mislead the customer by putting the emphasis on cost without comparing the cover. I don’t think that is treating customers fairly. The opportunity is there for brokers to participate in this and use aggregator sites correctly. We are doing some work on this.

How much of a threat are direct insurers to the broker?

Direct insurers are going to revolutionise the market. They have already revolutionised the way that the general public buy insurance.

They will always be there so there will be competition. I think brokers have got to think about the value within this. There is always going to be a market for the broker.

What is the future of distribution in the SME market?

SME business is in my opinion, the province of advice based distribution ie, the broker. The value of advice should not be underestimated.

It is of concern to see a continuing acceptance by the insurance industry, the regulator and many more distributors towards total commoditisation of this commercial risk space as an appropriate response to cutting costs without due regard to the principle of treating customers fairly.

Brokers are in an excellent position to combine technology and advice to provide cost effective and profitable business solutions, which will meet the needs of the customers rather than customers trying to fit into a pre-set internet offering, many of which are inadequate.

The good news is that I am beginning to see superior internet offerings combined with advice. I am sure this is the way forward.

What issues is Biba currently campaigning on, and why?

We have been working for months on the proposed introduction of compulsory commission disclosure, and complying with members and the government on this.

The ICOB [insurance conduct of business] review [by the FSA] was one of the strongest reviews we’ve ever put in.

The EU competition review and issues around that we are working on with our European colleagues. We have a pro-broker campaign to raise the profile of the benefits of insurance intermediaries.

We also have the development of Find a Broker consumer and business service on the Biba website.

Other things include uninsured driving, electronic certification for motor, travel insurance, climate change, flooding, a new membership campaign.

Then of course, we are promoting, defending and representing our members and their interests.