U.K. Brokers See Price Stability

British brokers believe that pricing conditions in the U.K. will remain relatively stable, new Lloyd's-sponsored research suggests.

"As a result, British brokers should benefit from the need to spend less time explaining and communicating market instability to clients, and more time on adding value to their role," the report said.

Direct writers, the Internet and the rise of "super-brokers" have created new challenges as well as opportunities for brokers, the report noted.

The study found that the new distribution trends, including the consolidation of firms to create so-called "super-brokers," are among the main issues facing brokers.

Moreover, more than 80 percent of brokers believe that maintaining profit throughout the insurance cycle is still the greatest challenge.

Among the other findings:

o Brokers are spending more of their time dealing with increased regulation and becoming more Internet-savvy. Almost 90 percent of those questioned said they were actively addressing increased regulation, and three-fourths said they were dealing with challenges posed by the Internet.

o More than 75 percent said the creation of "super-brokers" is most likely to change the U.S. broker market in the next 18 months.

o Brokers feel they have adequately addressed the key issues of client money, contract certainty and conflict management, although they believe more work needs to be done.

Julian James, director of worldwide markets for Lloyd's, said the study confirms that maintaining profitatibility remains a key challenge.

Eric Galbraith, executive director of the British Insurance Brokers Association, said the survey reinforces the notion that innovation is a must in changing times.

Consolidation has created the new "super-brokers," whose high degree of power over insurers is seen by many brokers as a threat to control capacity and distort the marketplace, the report noted.

But the study also asserted that the brokers as a whole are not addressing the issue. "Maybe U.K. brokers aren't sure what they can do in response, or maybe they feel they cannot stop the trend," the report said.