Independent broker blog: More of the same in 2010?

The start of a new year usually brings with it fresh optimism and hope that this will be a better year than the one previously endured and I wonder if the same will be said and felt for the prospects of the motor insurance market in 2010?

I think everyone is hoping for an improvement in rates, not just over last year but something to avert the slide of the previous five years or more. Insurers still chase the holy grail that is a 10% increase, traditional brokers cry-out for a level playing field and the aggregators are having to look at ever newer, simpler ways to keep the volumes flooding in, and we are no different.

Whilst we consider ourselves pretty good at renewal retention a hardening of rates would be a very welcome sight. The foundations upon which Ashbourne Insurance was built, like most other high street brokers over twenty years old, is general motor business and whilst we have had to diversify over the years it still represents a none too insignificant proportion of our business.

There were signs toward the end of 2009 that the rate was beginning to increase, however I suspect that for most this was too little, too late. The news headlines promised no better for 2010 with a number of insurers announcing withdrawal from motor in addition to those that had already put their book into “run-off”, all in all a pretty grim outlook and thoughts of here we go again!

To me a reduction in capacity is somewhat of a double-edged sword. On the one hand this may help to accelerate the rate increases craved by so many; on the other the lack of available markets seriously undermines the brokers’ position.

The news then of the Zenith acquisition by Markerstudy and their capture of the experienced QBE team was a welcome read between Christmas and New Year and one that will be loudly applauded from the broker sector. In amongst all the doom and gloom it’s nice to hear of at least one insurer who is trying to buck the trend and I wish them well.

For us and motor, 2010 provides us with the same challenge we have faced over the past few years, however I do believe that this year the independent regional broker should have more cause for optimism than most. Our shops are busier that at anytime I can remember in the past three years as are our telephones, more and more customers are looking for the “touch & feel” of a traditional broker, all this as a direct result of the financial crisis and a lack of confidence in those faceless corporations.

The aggregator model will continue to dominate the standard motor insurance market, however as they all fight amongst themselves for volume, their consumer dictates that the process is made ever simpler and therefore less attractive to those insurers who use this method of distribution. Is it just coincidence that the two largest UK brands, Directline and the company formally known as Norwich Union continue to advertise their absence from the comparison websites?

I also believe that the aggregator market will become further fragmented in 2010 with more and more sites, serving only to confuse and further dampen consumer confidence.

We will continue to target those clients whom see the added value and benefit we bring and use the weapon of relationship & rapport in our fight against the aggregator. We shall be selective in our choice of insurer and hope to support those looking to support us and finally we shall continue to be pro-active and innovative.

Peter Smits is managing director of The Ashbourne Insurance Group.