June 25, 2013 by Canadian Underwriter
The global market for commercial non-life insurance brokers is set for strong growth up to 2016, led by rapid growth in emerging markets, according to research firm Finaccord.
Commercial non-life insurance markets for brokers outside of Europe and North America will account for 23.6% of the global market by 2016, the London-based firm says, based on its ongoing research.
The firm estimates global revenues for commercial non-life insurance brokering at $46.2 billion in 2012, up from $41.9 billion in 2008.
Emerging markets experienced high growth rates during that time, with a compound annual growth rate in India of 36.3%, followed by Argentina (28%) and China (22.4%), Finaccord’s research suggests.
Canada and the United States accounted for 50.8% of the global market in 2012, the firm says.
“This was a consequence of the enormous value of premiums in the underlying market for commercial non-life insurance in North America and the fact that brokers (including independent agents) dominate distribution in both Canada and the U.S.,” Finaccord says.
Brokers’ share in the distribution of commercial non-life insurance in Canada is estimated to be the highest in the world at 96.3%, while brokers in the U.S. are also dominant with a share of 73%, Finaccord notes.
Between now and 2016, Finaccord says it expects the market to increase to $55.42 billion. The firm estimates that during that period, North America’s share will decline to 50.1%, and Europe’s will drop from 29% to 26.6%.
“Brokers in North America will benefit from healthy growth rates in the underlying market for commercial insurance,” Bernd Bergmann, a consultant at Finaccord commented in a statement.
“Meanwhile, while brokers in Europe are generally gaining at the expense of other distribution channels, growth in their revenues is limited by the mediocre dynamics in commercial insurance premiums which are likely to experience a slow recovery from the difficult market environment that characterised the years from 2008 to 2012,” Bergmann added.
Countries elsewhere are expected to increase their share of revenues from 20.2% to 23.4%, with India’s market roughly doubling, according to Finaccord.
“Outside Europe and North America, the significance of brokers as intermediaries of commercial non-life insurance can vary dramatically as they play only a very small role in some countries, such as Japan where multi-tied agents are far more important, whereas brokers dominate the distribution of commercial lines in Argentina, Australia, Brazil and South Africa among other countries,” Bergmann said. “Crucially, they also account for a rapidly rising proportion of the market in China and India,” he added.
In 30 countries analyzed by Finaccord, Aon and Marsh are the largest players, accounting for about 13% and 11% of the market respectively. Willis accounts for about 3%, according to Finaccord’s analysis.
Bergmann said Aon and Marsh will likely grow faster than the overall market in most countries, but will need to achieve growth organically in areas where viable acquisition targets may be limited.