January 2006

Consolidation among UK insurance brokers looks set to continue in 2006, but prices could rise sharply as the number of firms seeking to acquire outstrips the number of brokers up for sale by a factor of 10 to one.

According to a new survey conducted on behalf of leading broker-only insurer NIG, 30% of brokers said that they intended to acquire another broker in 2006, however only 3% said that they hoped to be bought.

Large regional brokers had the greatest appetite for acquisition with 52% wanting to buy another intermediary. Least interested were national brokers with just 22% registering a wish to acquire.

Geographically, London and the South of England lead the pack with one in three intending to acquire, but the percentage falls to a low of only one in five in Scotland.

NIG commissioned Broking Now! to survey 251 brokers across the UK during November 2005.

Commenting on the findings, NIG's Director of Distribution, David Parker, said: "With the introduction of statutory regulation in 2005, it was inevitable that there would be some fall out from the market. But it is interesting to see that this trend is set to continue.

"2006 will be an intriguing year for consolidation. With demand far outstripping supply, basic market forces would suggest that the price of those businesses up for sale could rise dramatically and we may see some bidding wars breaking out.

"The survey also seems to indicate that while the major national brokers are slowing in their appetite for growth by acquisition, the super regionals still have plenty of ambition and are looking for expansion."