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Cheap deals forcing brokers out of personal lines

Cheap car insurance as well as cost and commoditisation drivers in other personal lines business is helping create strong competition in the sector, with brokers continuing to lose market share.

The private car account has shown no real growth since 2002, standing at £10 billion, while the household insurance market has enjoyed large increases with a rise of more than 50 per cent to over £7 billion, according to an article in Insurance Age.
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Cornell Consulting's Tony Cornell said the broker share of the motor market dropped since 2000 from 45 per cent to 35 per cent and for household from 45 per cent to 30 per cent. He said the broker market is now valued at about £6.5 billion.

"This drop in broker share has been a deliberate strategy as commercial brokers left the market as it became more commoditised and price became increasingly important," he said.

Studies showed the pet and travel insurance had grown, however, becoming a £500 million market.

The article highlighted that the market was challenging, but still offered big opportunities for brokers. It said pricing was competitive and comparison sites were growing quickly.

"For brokers to succeed, it's vital to understand the changing landscape of the market and how to balance customer growth with revenue," it added.

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