'The big boys will walk away if they feel there isn’t enough bread on the table'

How long will it be before the relationship between insurers and some networks breaks down completely? The problem is that, with no sign of a hardening market, escalating commercial claims costs and investment returns still on the floor, insurers don’t feel they get value for money from networks any longer.

Brokers will argue that insurers caused the rise of networks last decade by stripping away their infrastructure to save costs and leaving independent brokers neglected; brokers could only survive by clubbing together.

Now the pendulum has swung too far the other way, with some, but not all, networks expecting insurer support for their model. But as Aviva demonstrated with Broker Network, the big boys will walk away if they feel there isn’t enough bread on the table. Aviva and NIG have their own networks now and their reliance on networks is diminishing.

All of this represents a great opportunity for networks that can prove their worth by building a more sustainable relationship with insurers. Network remuneration may have to be reduced to reflect the difficult commercial environment, but insurers in return will be expected to raise their game further on product offering, service and financial support in other ways.

With Macquarie ending its loans for brokers, for example, insurers will probably be loosening their purse strings for network members. The ground is shifting under the feet of networks but the fleet-footed have an opportunity to prosper.

Software house under attack

Cyber attacks are a growing risk to businesses and this week the insurance industry found out it isn’t immune. An attack on software firm SSP’s integration with Google’s comparison site led the former to close its aggregator service to brokers for a day.

The insurance industry is a digital-oriented business with data stored on computers and servers, and commerce transacted online. If ever an industry needed cyber liability cover, it is this one.