Consolidators tipped to dominate broker space

UK consolidators' ambitious growth plans will see them controlling 14% of the market by premium in 2...

UK consolidators' ambitious growth plans will see them controlling 14% of the market by premium in 2010, according to new research.

Datamonitor's report into the market, which was due for publication yesterday, estimated that if consolidators hit their growth targets they will control £7.6bn in gross written premium, representing 13.7% of the total in three years' time.

At present, these firms control £3.4bn in GWP, according to Consolidation in the UK Commercial Broker Market, which represents just under 8% of the UK insurance market.

"This shows it is important that insurers partner with these companies if they want to take advantage of this future growth," said Datamonitor's analyst and report author Andrew Birkett.

Datamonitor estimated that following the recent acquisition of Paymentshield, Towergate now controls in the region of £1.7bn in GWP, giving it a 4% share of the total UK insurance market in 2006. The report pointed out its target for the company is to increase this to £3bn by the end of 2007, which would raise its share of the market to a "not insignificant" 7%.

"The majority of the consolidators have made it clear that their intention is to grow the business over the next two to three years with the aim of either an initial public offering or a sale over the course of the next few years. Axa's recent acquisition of Layton Blackham may spur further purchases by insurers that do not want to get left behind in the SME sector," Datamonitor concluded.

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