The Knowledge: Broking in the UK - Timeline

Trends in broking move in waves. From the crest of the consolidation surge in 2006, broker mergers and acquisitions fell into a trough in 2008-09 before picking up again last year.

Deal-making has taken a different turn, with fewer, bigger deals now more characteristic of the marketplace than the smaller bolt-ons that dominated a few years ago.

Arthur J Gallagher’s takeover of Heath Lambert kick-started this new wave of mega-consolidations. The nationals could strike some big deals next year.

Broker networks have also risen and fallen in terms of how they are regarded in the industry, both by brokers and insurers. The conclusion many have reached is that networks need to show they add value for insurers.

Some insurers have even rejected the networks mode, regarding it as a more costly and less efficient way of doing business with intermediaries.
In 2008, Aviva showed its preference for working directly with brokers, and in 2009 AXA’s network review was part of a wider trend contributing to a decline in the number of brokers joining networks.

The year ahead could see brokers facing more of a threat from aggregators as the trend for online purchase of micro-SME policies continues to take hold. Broker houses that are able to embrace the new technology could gain a competitive advantage.

Meanwhile, a focus on consumer relations is also becoming increasingly important as brokers aim to communicate to customers the value they add.

Aggregator sites

Threat or opportunity? The jury’s still out on what aggregators mean for brokers. But even as some intermediaries find innovative ways to use new technology, the fear is that the decimation of business experienced in personal lines will be repeated in the commoditised micro-SME sector.

What’s next: Those companies prepared to invest in developing technology for an increasingly tech-savvy consumer base will reap the benefits. Mobile purchasing options, such as those mooted by iGO4, could proliferate, as could ‘real-time pricing’ comparison sites as the technology becomes available.