Insurance brokers continue to frustrate insurers’ predictions of a falling market share for them, says National Insurance Brokers Association CEO Noel Pettersen.

Speaking at the Stateplan conference in Strath Creek, Victoria, last week, he said the 2006 JP Morgan Deloitte General Insurance Industry Survey has confirmed brokers’ dominance of commercial lines, with their share growing 12% over five years.

In personal lines, the amount of business sourced by brokers and third-party distributors rose almost 4% – while direct distribution fell 6%.

Mr Pettersen says Australia represents less than 5% of the global insurance market, which has changed dramatically in the past 20 years.

“New risks and issues have emerged – asbestos, 9/11, tsunami exposures – and 50% of the world’s population live in coastal areas,” he said. “Climate change, possible pandemics, globalisation, social change and increased regulatory scrutiny are part of the modern world.”

Two decades ago there were about 1500 registered insurance brokers in Australia. Now they number about half that.

“These days broker size has polarised, with relatively few large firms – mainly multinationals – and many small to medium-sized firms that have merged or been taken over,” he said. “It’s mainly smaller players that are commercially vulnerable to change, and the market will see more of this over time.”

But this smaller number of brokers continues to play an important role, transacting about $9 billion in premiums. Their importance is highlighted in commercial lines, in which they distribute nearly 90% of policies.

“Savvy business owners know there is a vital difference when using a broker to fill the knowledge gap, and it’s the broker’s role in the settlement of claims that is often unheralded,” Mr Pettersen said.