Broker Forum: Consolidator bosses say brokers are not the enemy

Consolidator chiefs Phillip Hodson and Chris Giles said insurers have treated brokers like the enemy in their battle to reduce commissions.

Hodson, speaking at Insurance Times’ Broker Forum in Manchester, said that insurers’ loss of business in their attempts to squeeze consolidators “has been huge”.

Hodson did not name any specific companies, but admitted two firms had tried to reduce his company’s commission levels.

He said: “If you have a £40m – £50m account, that is something that insurers should consider reasonable compared with their own account make up and therefore they would want to preserve that and not attempt to attack you as though you are the enemy, as opposed to the market where you operate.”

Giles managing director Chris Giles said: “There are large regional brokers around who have got a little bit more muscle, and therefore the attempt to reduce commissions and networks has been dragged into the public domain.”

Giles said the third-quarter results of the insurers would be “fascinating”.

As reported in Insurance Times, Aviva took at tough stance on commissions of consolidators in attempt to cut its distribution costs.

However, the insurer has now gone back to the negotiating table after it is believed to have lost up to a third of its gross written premium (GWP). It is thought Aviva has not offered to raise commissions, but offered to underwrite new areas of the consolidators’ books. Aviva will report its half-year results on 6 August. In 2008, its general insurance GWP was £11.14bn up from £10.57bn the previous year.

Aviva’s book of business with Giles is thought to smaller than the other consolidators.

But Giles told the forum he would not slow down in its drive to outgrow rival consolidators.

He said: “We are in the business to be bigger and uglier than the guys next door. That is the name of the game.”