Newly released data from Finaccord, a London-based market research consultancy specializing in financial services, reveals that the market for commercial non-life insurance broking reached a value of €9.89 billion [$12.165 billion] in commissions and fees in 2011.
The report said that, “while there are significant variations in market trends across the region, the overall market in the 20 countries covered by Finaccord has grown slightly in nominal terms since 2007 when it was estimated at €9.73 billion [$11.97 billion].”
Bernd Bergmann, a consultant at Finaccord, noted: “Commercial non-life broking has proceeded at completely different speeds within Europe over the last four years. While in countries like Spain and Ireland the economic crisis has led to a sharp contraction in insurance broking revenues from business customers, brokers have made progress in markets like Finland, Russia and Turkey where they traditionally play a minor role.”
The research also concluded that “commercial non-life insurance brokers in Poland experienced the highest growth in revenues at a compound annual rate of 16.9 percent in nominal terms, which equates to 12.8 percent in real terms, when adjusted for inflation. It was followed by Finland where the compound annual growth rate in revenues registered 10.3 percent in real terms, and by Turkey with a growth rate of 9.2 percent on the same measure.”
Bergmann added: “In Poland, brokers benefited primarily from strong growth in the underlying commercial non-life insurance market while they also managed to increase their market share at the expense of other distribution channels. In Finland, on the other hand, brokers traditionally only play a small role in the distribution of non-life insurance for business customers. Their improvement is encouraging but it comes from a small base. A similar logic applies to the high growth rates of Russia and Turkey.”
The research also found that “while the largest European markets, namely France, Germany, Italy and the UK, brokers have performed well in comparison to other distribution channels, their growth in revenues has been hampered by the weakness in the underlying commercial non-life insurance market.
“In the UK, the largest commercial non-life broker market in Europe, revenues fell significantly between 2007 and 2011 (at a real compound annual growth rate of 3.9 percent), which was entirely attributable to the weakness in commercial lines insurance as a whole, since the market share of brokers actually increased.”
Bergmann explained that most of the mature markets “have suffered from a soft underwriting cycle. Brokers in these countries can expect that once the cycle improves, they are well placed to take advantage of any upswing.
“While the fastest growth over the next four years is forecast for brokers in the less mature markets of Russia and Romania, brokers in several of the advanced markets, including Germany and the UK, now face better growth prospects than in the recent past.
“However, uncertainties are now emerging over the regulatory environment. In the Netherlands, for example, new disclosure rules as well as a ban on broker commissions will come into force in 2013. If more regulators in Europe follow this example, brokers may experience changes in the overall market structure.”
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