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Summary of our market study
The insurance broker market has been experiencing notable trends starting from 2020, including a diversification in the service offerings and a shifting landscape due to the impacts of technological innovation and the COVID-19 pandemic. With the British Insurance industry expected to pay over £6.2 billion in insurance claims related to the pandemic, brokers adapted by offering new products and extending services to accommodate the emergent needs of customers, such as covering quarantine-related expenses. Moreover, the sector has seen a growing role for insurance broking software with key players like Open GI, SSP, Acturis, and Applied Systems leading the way. Market structures are also changing; smaller firms continue to capture greater market share, challenging the dominance of traditionally large firms. Regulations have been evolving, particularly as the UK adapts to post-Brexit changes with the FCA overseeing the industry's conduct. While the British market has been well-established, with a direct contribution of 12 billion GBP to the British GDP in 2020, global insurance premiums were led by the United States with life and non-life insurance payments combined at around US $1460 billion in 2018. Key global players include Allianz with a 2020 turnover of 140 billion euros, and Axa with 96.7 billion euros, along with leading brokers like Marsh & McLennan Companies and Aon plc with turnovers of 17.2 billion dollars (2020) and 10 billion dollars (2017), respectively..### Evolving Trends in the Insurance Brokerage Market The insurance brokerage market is experiencing a dynamic shift with the interplay of several factors influencing its overall landscape. The increasing reliance on technology and the rise of small and medium-sized enterprises (SMEs) seem to be driving the market trends in a transformative manner. Insurance brokers have traditionally acted as intermediaries between clients and insurance companies, offering personalized advice on risk management and identifying the most advantageous coverage options. However, with the rapid growth of the internet and heightened innovation, the industry is poised to face escalated competition. Online platforms provide clients with abundant options for insurance coverage, challenging brokers to enhance their online visibility and offers. Despite the challenges, insurance brokers have seen opportunities, especially in the British market where the dominance of large firms is beginning to erode. SMEs, which have been continuously growing in number—approximately between 200,000 and 210,000 in recent years—are capturing a larger share of the market. This growth is not only reshaping the market structure but also driving demand as these businesses are often seeking insurance against daily operational risks. Moreover, customer expectations and interactions with insurance brokers are seeing a shift with emphasis on deriving the best value products and reliable support from brokers, although interactions may remain infrequent, with more than 50% of clients communicating with their brokers just once a year. The influence of technological advancements cannot be overstated. Investment into insurance technology has surged, with deals escalating from roughly 28 in 2011 to at least 150 by the third quarter of 2017. Financial backing has also witnessed a substantial increase, jumping from about 140 million USD to at least 1.6 billion USD over the same period. Four significant software providers—Open GI, SSP, Acturis, and Applied Systems—are taking the lead in the British market, offering a range of innovative solutions to brokerage firms. The enforcement of Covid-19 pandemic-related measures provided a stark example of the market's responsiveness. The industry has witnessed new offerings emerge to address the needs brought by the pandemic, such as policy extensions, additional clauses, and comprehensive products catering to companies and families affected by the crisis. Regulatory oversight remains a significant driver of market operations. In the UK, the Financial Conduct Authority (FCA) plays a pivotal role in maintaining order within the brokerage industry. Post-Brexit, new rules are expected to be introduced, reflecting the UK's autonomous stance from the European Union's regulatory framework. In summary, the insurance brokerage market is undergoing a period of change.### Prominent Players in the Insurance Brokerage Market Landscape The insurance brokerage market is an intricate web of firms that cater to a broad spectrum of risk management needs. These key players not only provide necessary coverage options but also bring innovation, stability, and expertise to the industry. Below we explore some of the most influential entities shaping the insurance brokerage landscape. **Allianz** stands as a behemoth in general insurance, with a robust portfolio that demonstrates its capacity to cater to a wide range of insurance needs across various sectors. **Axa** is another giant within the general insurance segment, providing an array of insurance products and services that address the complexities of both individual and corporate risk management. Turning our lens towards the insurance brokers who play the role of matchmakers between clients seeking protection and insurance companies offering policies: **Marsh & McLennan Companies** has solidified its position as a leader in the field, investing in client relationships and adapting to the evolving risks in the global market. **Aon plc** operates as a powerhouse within the sector, known for its innovative approach and global reach, offering tailored solutions to meet diverse client demands. **Jardine Lloyd Thompson Group** (JLT), another major player in the brokerage market, stands out for its expertise in specific industries, bringing in-depth knowledge and specialized services to its clientele. All these firms navigate within a market that is in constant flux, and they are supplemented by the essential supports of insurance broking software providers: **Open GI** leads in this tech subsector, delivering software that enables brokers to be more efficient and responsive in their operations, thereby enhancing the overall client service experience. These companies, noteworthy for their scale, scope, and specialization, continue to drive innovation and maintain the delicate balance of the insurance brokerage market, ensuring that clients have access to the best products and services to manage and mitigate their risks effectively.
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Summary and extracts
1 Market summary
1.1 Presentation and market definition
Insurance brokers are part of the largest category of intermediaries, figures that facilitate the reconciliation of supply and demand within a given organizational context (e.g. real estate, insurance). Unlike insurance agents, who are employed by an insurance company, brokers work on behalf of the client and have no working relationship with the insurance company. Brokers analyze the risk profile of their client and evaluate among the market proposals the most advantageous insurance coverage for them, in terms of cost-benefit.
The role of the broker is therefore not only to sell a particular policy, but also to provide advice on a variety of solutions. Insurance brokers can work independently or for a brokerage firm and can represent two types of clients: private or corporate.
The rise of the Internet and innovation in the sector has contributed to the development of the industry in various ways. This is a problem for insurance brokers as it means increased competition, due to visibility becoming more difficult and the online offer more abundant.
In the UK, the market has been traditionally controlled by a small number of big firms. However, times are changing and SME's are starting to get a larger slice of the pie. In fact, market shares of big insurance brokers have been falling due to the rise of SME's in this sector. While technology provides one of the biggest threats to this industry, it can also provide opportunities if firms are able to embrace it and take it on to become more efficient and competitve.
1.2 A fast-growing global market
The global insurance market was valued at *** billion USD in ****, with an expected CAGR of *.*% until ****, to reach nearly *** billion USD [***].
Size of the global Insurance Brokerage market World, ****-*****, in billion USD Source: ****
The geographical region that is expected to experience the strongest growth in this period is Asia-Pacific, with a CAGR of *.*% [***]. Insurance is an activity present in all countries of the world, which in **** generated contributions of more than * trillion dollars for life and non-life insurance. The United States has the highest premiums in both life and non-life insurance, with a payout of nearly US $**** billion.
Total global premiums World, ****, in US$ billion Source: ****
Premium of life and non-life insurance World, **** - ****, billion US$ Source: ****
The increase is more pronounced for non-life insurance contributions, which will grow at an average annual rate of *.*% between **** and ****, while the average annual growth rate for life insurance is only *.*%.
In Europe, life insurance generates more than US $*** billion in contributions, while non-life insurance generates only US $***.* billion. Contributions are highest in the United Kingdom, Germany and France.
Country where the life and non-life insurance premiums are not the most important Europe, ****, billion US$ Source: ****
The distribution of contributions varies greatly among ...
1.3 The well-established British market
Indirectly, it is estimated that the insurance brokerage industry contributed **.* billion GBP to the British economy in ****. Directly, however, the industry provided ** billion GBP to the British GDP in the same year [***].
The insurance brokerage market in the UK has reached its maturity and has not been growing at strong pace. In fact, an Insurance Broking Whitepaper report suggests that between **** and **** the market grew at an estimated rate of *.*% per year. Another source, IBIS World, states that the market grew at *.*% per year between **** and ****. The market size has fluctuted between approximately £** billion and £** billion for the last ** years.
The market is expected to reach £**.* billion by ****, which would indicate a growth of over **% from current levels [***].
Size of the British Insurance Brokerage market UK, ****-****, in billion GBP Source: ****
1.4 The impacts of the Covid-19 pandemic
As a result of the Covid-** pandemic, the British Insurance industry is expected to have to pay more than £*.* billion in insurance claims [***].
While most insurance policies do not cover for pandemics, they cover other aspects that were impacted by the pandemic:
Medical expenses as part of a travel insurance Employers' liability to losses caused by the Covid-** pandemic
2 Demand analysis
2.1 Understanding the demand drivers
The European insurance market is extremely diverse. Over the last decades, the population of European insurance intermediaries has fluctuated to meet the demand of the specific national populations, making it difficult to identify a general trend.
2.2 A growing number of SME's to stimulate the market
A very important aspect of the insurance brokerage market is the number of companies operating in a country and whether or not this number is growing. This is because businesses (***) are exposed to a wide range of risks on a daily basis that they need to be insured for.
While the number of medium-sized business (***) has been on the rise and is expected to keep on growing in the coming years. By the end of ****, there were *** thousand small businesses operating in the UK [***].
Number of SME's operating UK, ****-****, in thousands of businesses Source: ****
This growing number of small businesses provides an opportunity for insurance brokers as they are able to expand and develop their clientele. Morever, insurance brokers are also able to diversify their offers and implement a flexible business model that would allow them to gain a competitive advantage.
2.3 The interaction between clients and insurance brokers
A study conducted by PKF Littlejohn helps to understand the expectations that clients have from their insurance brokers, as well as the interactions between both of them.
The study shows that the main thing clients get from their insurance brokers is the feeling that they are getting the best value product in the market (***), is the feeling of comfort that clients have knowing that they can rely on their brokers when they have issues.
What clients get from their insurance brokers UK, ****, in a score of * to ** (***) Source: ****
Moreover, also interesting to note is how, as whole, there is very little interaction between clients and brokers. In fact, in more than **% of cases, clients only speak to their brokers once a year. On the other hand, only **% talk to their brokers every month.
Frequency which clients and brokers speak to each other UK, ****, in % Source: ****
2.4 A sector that is expected to be disrupted
Although the insurance brokerage market is one that does not tend change too much over time, recent innovations and investments into technology are slowly changing the sector.
Since ****, the number of deals and the amount of money invested into insurance technology has been growing. In fact, while in **** there were ** deals and just *** million USD invested into this sector around the world, in ****, the number of deals grew to at least *** and the amount invested rose to at least *.* billion USD (***) [***].
Insurance technology investment and deals UK, ****-****, in units and billion USD Source: ****
With technology becoming ever so important in the sector, this is resulting in the players having to adapt and innovate in order to continue to remain relevant.
Although the graph above showcases the deals and investments related to the global market, it serves as an important foundation to understand the development of the British market. This is because the British market is one of the leading markets around the world in this sector, therefore it can be expected that the evolution of the British market (***) somewhat mirrors that of the global market.
However, it is also important to note that there is a particular country that is ...
3 Market structure
3.1 Insurance brokerage players
As of ****, it is estimated that there are *,*** companies operating in the insurance brokerage market in the UK. These companies are responsible for **,*** jobs [***].
There are * key players that dominate the market:
Aon Marsh & Mclennan Companies JLT Group Willis Arthur J Gallagher International
With the exception of JLT Group, which has operations just in the UK, the other four companies mentioned above have operations in various countries around the world, as well as activities beyond just insurance brokerage, making it difficult to determine their market shares.
However, we can estimate the market share of JLT. With a turnover of £*.** billion in ****, JLT holds approximately **% of the market [***]. It is expected that the other firms mentioned above have similar market shares (***).
Other important players in this industry include:
American International Group Inc (***) Zurich Insurance Group Ltd Allianz Group Liberty Mutual Insurance AXA Aviva Plc Chubb Ltd
3.2 A market that is becoming less concentrated
The insurance brokerage market in the UK has traditionally been controlled primarily by a small number of big and powerful firms. However, times are changing. Smaller businesses (***) have been gaining market share at the expense of bigger players.
In fact, while in **** the market share of big insurance brokers was of **%, in ****, this percentage went down to **%. It can only be expected that in the present day this percentage is even smaller [***].
Evolution of market share by size of insurance broker UK, ****-****, in % Source: ****
The reason for this 'fragmentation' of the market has to do with the fact that SME's are able to provide a more personalised service that bigger insurance brokers are not able to offer. This is why bigger firms are starting to develop their offer to be able to compete with SME's in this front.
3.3 The growing role of insurance broking software
With the growing importance of technology in the insurance brokerage industry, we must certainly understand what are the main players that are innovating in this industry and providing insurance broking software to their clinets.
There are four main firms which can be considered the leaders in this segment in the British market. These are Open GI, SSP, Acturis and Applied Systems. The table below gives an overview of these players [***].
There are also other players that participate within this broker technology segment. These other players are mainly traditional insurance brokerage firms that have innovated and developed their own technology. This tends to be done by companies that have a more consolidated position in the market.
4 Analysis of the offer
4.1 The different types of insurance available
In the insurance sector, the main distinction is between life insurance and non-life insurance. As far as non-life insurance is concerned, the offer is very diversified, as shown in the table below summarising the different offers:
In particular, we can observe the following trends in the offer:
Enrichment, especially in the mobility sector, of traditional products with digital devices and safety services, also in response to legislative provisions Increase in the number of customizable products, through warranty extensions, additional services, and coverage to be shared with family or friends in the transport sector In the travel sector, there has been an increase in the offer of instant insurance coverage, which can be purchased online. The development of modular and flexible insurance coverages in the field of risks related to property, natural disasters, and digital activities The enrichment of insurance cyber coverage, aimed at families, professionals and businesses, against the risks of cyber attacks, fraud, theft of data and information The widening of the offer of health policies extended to third parties, regardless of the family structure and cohabitation The emergence of products aimed at protecting the insurance needs of voluntary, cultural, and recreational activities The emergence of products for the agricultural ...
4.2 The offers of insurance brokers
Insurance brokers thrive on uncertainty. The more risks an industry provides to a business, the more desired the services of an insurance broker becomes to the business in question. This is why the services of insurance brokers appeal greatly to bigger businesses - businesses that have more complex operations.
In general, smaller businesses will be looking for more commoditised insurance products, whereas bigger firms may be looking for more complex ones, as they are exposed to a greater degree of risks
Source: ****
Looking into the future, there insurance brokers may need to adapt their activities and offers in order to ensure that they can be successful in the coming years. The table below considers some of these changes [***]:
4.3 New offers to face the Covid-19 pandemic
The insurance industry has implemented new measures to provide support for the COVID-** pandemic. These include: the suspension, extension and deferment of premiums for life insurance policies, non-auto damages and auto coverage, the blocking of all actions to recover unpaid premiums and deductibles, the extension of existing guarantees with specific clauses, the inclusion of daily payments or lump-sum compensation in policies and the offer of additional services and new products.
The companies have also addressed the health emergency by adapting their offer and introducing new products for companies and families to cope with the consequences of the pandemic.
Some companies have extended free of charge to their customers, on a temporary basis, guarantees and services already present in their policies, both individual and collective. Others have extended to their clients, holders of health insurance policies that provide a hospitalization allowance, the recognition of the daily allowance even in case of quarantine at home, if positive to the COVID-** buffer. With the aim of guaranteeing the population group currently most affected by the virus, a company has extended the insurable age for health coverage from ** to ** years.
In the travel sector, some companies have extended the guarantees for the reimbursement of costs ...
5 Rules and regulations
5.1 Regulations
The activity of insurance brokers in the UK is governed by the Financial Conduct Authority (***).
Due to the UK leaving the European Union, EU regulations no longer apply to British companies operating in this sector. This is why new rules will be soon coming into place to regulate this industry.
The British Insurance Brokers' Association (***) gives more in-depth information about the regulations of this industry
6 Positioning of the actors
6.1 Segmentation
- Allianz
- Axa groupe
- Aon plc
- Marsh & Mclennan Companies
- Jardine Lloyd Thompson Group
- Open GI
- Lyanne
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