Brokers can compete with online sellers in personal lines and should see these products as an opportunity to build their relationship with business customers, according to a leading broker.

Donnelly Insurance Brokers MD Mike Donnelly told the National Insurance Brokers Association convention in Melbourne last week that direct sellers are moving into the SME sector, and consumers who have bought home and contents cover online may feel comfortable switching their business there too.

Mr Donnelly has published brochures that compare features of personal lines policies recommended by his company against online products. He sends these out with renewals so clients can recognise differences in policies.

“From a risk management point of view it makes sense to add personal lines to your commercial business,” he said. “It pays the bills when there is a hard market for commercial business.”

But Mr Donnelly says brokers cannot afford to have the same structure for personal lines as for commercial accounts, and he has set up a separate profit centre.

The business operates like a call centre: when clients have claims they speak to staff, who tell them what information they need to provide, then pass them on to the insurer.

Several conference speakers commented on the quality of online products, with one claiming policies with “shoddy, watered-down wordings” are tarnishing the industry.

MGA Insurance Brokers authorised representative Andrew Faber says brokers should reclaim business from online sellers. They could earn $2 billion in premium if they took 10% of the market back.

Population growth means the premium pool has almost doubled since 2008, he says.