The future for broking lies in the commercial lines market, with personal lines moving to the direct channel, said Broker Network chief executive Grant Ellis.
Speaking at the CII conference in Birmingham, Ellis said the idea of “stack it high and sell it cheap” personal lines insurance did not have a future in the broking community.
“The future of the broking community is going to be dominated by commercial lines and high service personal lines.
“Insurers will waste a lot of money trying to pursue the direct channel. There aren't many SMEs that can be commoditised to fit a direct and simple commercial lines product.
“The direct commercial market is relatively small. There will be some new entrants into the commercial market but it will be those who are very good at selling direct already who will be the ones to do well,” said Ellis.
Speaking at the same conference session, Giles Insurance Brokers chief executive Chris Giles said direct commercial lines insurers would not be the biggest threat to brokers over the next five years.
“The biggest challenge to brokers in the next five years will be from other brokers.
“Consolidation is inevitable post regulation. Large regional brokers will emerge and enter the stock market, while principle and family-owned brokers will disappear.”
Giles said direct insurers would not be much of a threat to commercial lines brokers.
“Brokers deliver profit to insurers so why would they want to challenge them?
“The composite insurers will find it very difficult to come into the commercial lines market.
“If insurers try to write commercial lines business direct, they will contaminate their own distribution channel.”
