The insurance brokerage market - United Kingdom

Insurance brokers are part of the largest category of intermediaries, figures that facilitate the reconciliation of supply and demand within a given organizational context (e.g. real estate, insurance). Unlike insurance agents, who are employed by an insurance company, brokers work on behalf of the client and have no working relationship with the insurance company. Brokers analyze the risk profile of their client and evaluate among the market proposals the most advantageous insurance coverage for them, in terms of cost-benefit. The role of the broker is therefore not only to sell a particular policy, but also to provide advice on a variety of solutions. Insurance brokers can work independently or for a brokerage firm and can represent two types of clients: private or corporate. The rise of the Internet and innovation in the sector has contributed to the development of the industry in various ways. This is a problem for insurance brokers as it means increased competition, due to visibility becoming more difficult and the online offer more abundant. In the UK, the market has been traditionally controlled by a small number of big firms. However, times are changing and SME's are starting to get a larger slice of the pie. In fact, market shares of big insurance brokers have been falling due to the rise of SME's in this sector. While technology provides one of the biggest threats to this industry, it can also provide opportunities if firms are able to embrace it and take it on to become more efficient and competitve.