Brokers warned '2009 is seismic year'

The impact of the worsening credit crisis and the growing demands of clients for transparency and greater value in tougher economic times will create real challenges in 2009, according to Alphatec, a provider of specialist technology solutions for brokers.

David Grier, managing director of Alphatec, said: “There’s no question that 2009 will be a seismic year for brokers. Tougher economic conditions will see clients seeking ever greater transparency in commercial relationships and reductions in insurance spend.”

One significant development from the credit crunch is a fundamental change of attitude among clients on the value of the service brokers provide. This will have an impact on brokers in 2009.

Grier said: “The phrase ‘fee justification’ is one we’ve heard repeatedly from the brokers we talk to. Clients are demanding far greater levels of transparency and scrutinising breakdowns of fees and commissions more closely. They want hard proof that they are achieving a good return on their investment.”

The company believes greater understanding of costs will reap very specific business benefits for brokers. Brokers can educate clients on the value of the service they receive and the full benefit of having a professional broker rather than a simple price comparison service.

Openness about the level and value of the service plays an important role in retaining existing clients and even increasing fees for clients where the evidence supports it. Brokers will also be armed with information to enable them to shed unprofitable clients and be more competitive in acquiring new business.

Despite the challenges, the company believes 2009 offers huge potential for brokers.

Grier said: “In the last six months alone, we have seen more brokers demanding more from their management information systems which shows that they are catching up years on the other professions such as accountants and lawyers. Next year will see these brokers, equipped with a real understanding of their costs, flourish.

“2009 will doubtless bring challenges to all of us but I believe it has the potential to be a highly prosperous year for those brokers who are prepared for the market conditions - and to offer an expensive lesson in life for those still operating in the dark.”