The future's bright, the future's...networks

When Grant Ellis and Andy Homer both agreed that there would only be room for two or three networks in the future, it gave the impression that they had some kind of inside knowledge, or that they can actually predict the future.

Brokers who are members of a network will insist that networks have a strong future, and if brokers want to increase their revenue a network will be the only option for them.

That also seems to be the view of others in the market, and the networks themselves, who would not be surprised to see new networks form in the future and competing for the same business.

Steve Burrows, chief executive of the Cobra Netwowrk, thinks that competition between networks is healthy and is not worried about more networks entering the market. He predicted: “I think the number of brokers will reduce and I think there is certainly an aim from insurance companies to either push them into networks or allow them to be consolidated or leave the big players to build from that. It would not surprise me if you ended up with 500 agencies in three years' time."

Whether a network can survive in the future has been questioned, but Burrows says there will be plenty of opportunities for them to grow. He added "Brokers will either sell or join a network. The day of small broker surviving in the High Street is getting more and more difficult and the average age of brokers is still 55-plus so this is a fantastic time for them to sell whilst prices are relatively good."

Brokers who have no involvement with networks will tell you that they are not worried about the future because they are only concerned about maintaing their independence.

For consolidators, they predict the market will change dramatically in the coming years. Paul Ragan, chief executive of Protectagroup, thinks there will be a group of “dominant forces”. He said: “By 2012 we will be looking at a very different market. You are already starting to see insurers taking a great deal of interest in brokers.”