NU swims against tide with SME direct withdrawal

Norwich Union's decision to pull out of the direct commercial market will certainly trigger debate (see page 1).

At a time when others appear to be spending significant funds in boosting their share of this market, the UK's largest general insurer has decided it will not be further pursuing this avenue for growth.

So while Axa continues to make waves in this sector and Royal Bank of Scotland Insurance invests millions in advertising Direct Line for Business on our television screens, NU has staked its growth - in what is essentially a micro-commercial sector - on brokers.

While on the surface this may look a backwards step, NU's stance is not as strange as it may seem.

Chief executive officer Igal Mayer has been at the firm just over a year now and in that time has certainly wasted no time in making his mark and impressing himself on the insurer; with comments about commission, the bright future of independent brokers and insurer-owned intermediaries.

By distancing NU from rival insurers with growing direct commercial arms it will be able to make sure it does not suffer the embarrassment of having its brokers' clients contacted by its non-intermediated sister firms - as has happened with Allianz and Cornhill Direct Commercial and Axa and Axa Business Solutions (Axa triggers broker storm after 'direct is best' letter, Post, 2 August 2007, p3).

Battle for brokers

It also could give it mileage in the battle for brokers' attention and could be seen as a good selling point when up against insurers such as RSA (with More Than Business), Allianz (with Premierline) and the aforementioned Axa, which is also seeking commercial broker business as well as sales direct.

And finally it must be noted that by web-searching phrases such as 'SME direct' and 'commercial direct', the results show a vast array of companies - some of which are indeed brokers - so the insurer may not lose as much ground on some rivals as it may at first appear.

This will be even more pertinent if it backs the right brokers with the best online presence, as top searches such as Commercial Direct and SME Insurance are indeed intermediaries. And another Commercial Vehicle Direct is owned by the Brightside Group in which NU has an investment.

Agree/disagree: e-mail jonathan.swift@incisivemedia.com.