External actuarial and auditor markets becoming increasingly monopolistic

Insurers in Canada and the U.S. are increasingly turning to external actuarial firms, A.M. Best’s annual review of the auditor and actuarial markets found.
The study encompasses 2007 statutory filings submitted to A.M. Best for nearly 4,000 Canadian and U.S. insurance companies.
A.M. Best found that 319 independent accounting firms provided annual audits for approximately 98% of those insurers.
The actuarial market was composed of 180 external firms providing 2,023 opinions and 1,476 companies declaring use of internal actuaries.
Use of external actuaries versus internal or affiliated actuarial opinions grew over the past four years, to 57.8% in 2007 from 53.6% of the total companies in 2004.
The audit market share of the Big Four (PricewaterhouseCoopers, Ernst & Young, Deloitte and KPMG) remained flat in 2007, at 96% of net premiums written, A.M. Best found.
The actuarial market share of the Top Six (PricewaterhouseCoopers, KPMG, Milliman, Deloitte, Ernst & Young and Towers Perrin) showed a slight increase to 81% of NPW from 79% in 2006.
These findings indicate that the auditor market is considered monopolistic, and the actuarial market is slightly more competitive, but still highly concentrated across the Top Six, A.M. Best reports.