Intensifying globalization of insurance market will increase consolidation rate

Nearly half of the global insurers surveyed by KPMG predict the rate of consolidation to accelerate in the international insurance market.
In “Globalizing the Risk Business: Surviving and competing in the global insurance industry,” 49% of the 148 insurers surveyed believed that the rate of consolidation will increase, and only 9% reported the opposite.
In a parallel trend, firms have already opted out of marginal markets or sold peripheral businesses to concentrate on their core subsidiaries, KPMG reports.
Around 75% of survey respondents said their company had either left a national market during the past three years by selling its operations, or had done so by closing down an office.
Forty-five per cent of firms surveyed said they plan to take part in a merger or acquisition in the next three years.
KPMG points to two high-profile deals that occurred last year Old Mutual’s successful tender for control of Skandia, and Swiss Re’s acquisition of General Electric Insurance Solutions (deals worth a combined value of more than US$11 billion) as confirmation that the consolidation process has some way to go.
“Indeed, the nature of Aviva’s interest in the Prudential is proof of that,” the report says.
“Insurance markets in both the U.S. and continental Europe remain more fragmented than other industries, a sign that we can expect more deals in the coming months and years.”