More broker consolidation is “a given”
The insurance industry should expect more consolidation and greater competition in the years to come with the most successful firms becoming those that can innovate quickly and launch new products into new markets. But the industry must also resist yet more regulation.
Those were the main conclusions of a survey conducted by the Novae Group looking at the future of the insurance industry. It interviewed many leading figures from the London insurance market to reach these conclusions.
Some of the more controversial predictions made by participants included that the three large brokers that dominate the market will consolidate down to two while there will also be consolidation among the smaller brokers driven by the cost of capital and cost of regulation. “Insurance companies don’t welcome this loss of competition. But it is a given,” a contributor to the report said.
It also concluded that the key to future success for many companies will lie in their ability to succeed in emerging markets and diversify into new lines of business and products. “If you are struggling to write one line of business only, you will either get taken over, or no-one will want to do business with you,” one participant said.
But it is critical that the industry resists regulation, the report said, especially after the industry has weathered such a long financial crisis so well. “Increased regulation is the biggest factor – it is more and more intrusive and completely bloody relentless. It particularly impacts on new companies,” one participant said.
“In an industry built on having eyes on future risk, how often do we look into our own future? The truth is that the insurance industry, as a major contributor to the economy, is central to the financial services sector, not only in the UK, but worldwide. Hopefully this survey reinforces that reality,” said Matthew Fosh, CEO of Novae Group.
