As sharks circle, who gets swallowed in insurance consolidation?

Mergers and acquisitions have always shaped the UK insurance market. From the days of Norwich Union, General Accident and Commercial Union combining to form Aviva, to Allianz’s purchase of LV and, most recently, Aviva’s £3.6bn swoop for Direct Line Group being finalised in July 2025, consolidation has been a defining feature of the industry.

But, while last year was described as “transformational” for UK deals, 2025 has been the opposite so far.

According to MarshBerry’s June 2025 research, only five new UK insurance distribution transactions were announced that month.

This made the first half of 2025 the slowest for sector M&A since 2019, with deal volumes down 35% on the same point in 2024.

This slowdown led some to postulate that the industry has been digesting its latest feast of deals. Others, however, believe the trend reflects a structural shift – a move from opportunistic buying towards selective, value-driven acquisitions.

Feast and famine

Speaking to Insurance Times about consolidation trends, Simon Collings, chief broking officer at Gallagher, said: ”There’s always been consolidation in the market.

“If you go back all the way to the 80s and 90s, Aviva was born out of the old Commercial Union, Norwich Union and General Accident. We’ve had Royal and Sun Alliance come together to form RSA. We’ve had Chubb and Ace. We’ve had Allianz buy LV. So the background to this is that there’s always been consolidation.”

Consolidation has often moved in waves. Periods of frenzied M&A tended to be followed by quieter years as firms integrated, divested or repositioned.

Marcella Hill, partner at Clyde and Co, framed the latest dip as part of this pattern.

She said: “We view the current wave of consolidation in the UK general insurance market as a sign of healthy rationalisation and part of a broader international trend.

“Ultimately, a balanced and well-regulated consolidation trend will strengthen the sector and enhance its resilience.”

Most contributors, however, agreed that consolidation created clear winners and losers.

Collings explained: “The bigger insurers are getting bigger. Giants like Sompo are snapping up Aspen, Aviva has snapped up DLG. The bigger insurers will continue to get bigger.

“At the same time, we are seeing more and more specialist insurers launching – especially in the MGA world. That balance is really healthy for clients, because you’ve got the scale options of the big players and the specialist options of the smaller ones.”

Despite the positives, Collings warned: “If you’re an insurer without scale and not a specialist, that middle ground is a difficult place to inhabit. I suspect some of those insurers will get squeezed in a soft market.”

Rob Schumacher, co-founder of insurtech MGA Feather, agreed.

He said: “It’s the people stuck in the middle that will lose. They’re too big to be small, but too small to be big and I think they’re the ones that are going to suffer.”

Indigestion fatigue

While scale can deliver efficiency for both brokers and insurers themselves, not everyone was convinced it benefited customers.

James Daley, managing director at Fairer Finance, said: “Although it might be a reasonable deal that Aviva has got for shareholders, mergers are incredibly disruptive in the short run.

”You can see that there’s a lot of instability now and it takes quite a lot of disruption and upheaval to achieve the savings that they need to when you do these massive mergers. All of that ends up distracting from culture and good customer outcomes.

“I struggle to think of examples at a big level where you can say ’that was categorically positive for consumers’.”

For Daley, smaller acquisitions with clear technological or product synergies are more compelling from the customer perspective.

He noted: “It makes perfect sense when you’ve got a niche underwriter that’s developed some great technology that can help revolutionise quote journeys and then an insurer can buy that company and leverage those skills and expertise.

”But when you buy a massive insurer and try and integrate it with your own, you’ve got to fire hundreds of people, you create massive instability across both companies and it’s quite a risky time from a customer perspective.”

One reason M&A slowed in 2025 was that many buyers were still digesting prior deals. In June 2025, MarshBerry noted that no single acquirer had, so far, announced more than three deals – a far cry from 2024, when JMG Group alone announced 16. 

“Several buyers are still dealing with indigestion,” the report explained.

“The ability to create value from multiple arbitrage – buy low, sell high – has reduced. There is an increased recognition that a measured and discerning approach to deals, with a focus on fit and integration, is the most reliable way to create lasting value.”

Nick Wright, chief development officer at Pen Underwriting, echoed that selective tone.

He said: “Consolidation in the MGA space is inevitable. We will only go and target MGAs that are attractive – because they make money, they deliver a return and they’re in a complementary niche.”

Optimists and pessimists

For some, M&A insurance trends were simply following other sectors.

Wright explained: “Insurance is no different to other industries. Look at your high street shops, look at how you do banking, look at how IFAs have changed. There’s going to be less law firms, less accountants, less shops – because people want to go to a super-provider. Amazon sells 350 million products, but only 12 of them are their own.”

Others, however, pointed to the resilience of mutuals and niche MGAs.

Nick Turner, NFU Mutual’s chief executive, stressed the value of specialist models.

He said: “Consolidation is certainly happening, and I’d expect that to continue, but I think there will always be a place – and there must be a place – for insurers with real specialism and knowledge of their customers.”

Echoing these comments on the importance of specialism, Schumacher predicted that MGAs would continue to proliferate.

He added: “Because the market is so big, there’s going to be loads of these MGAs that will carve out niches and that will be successful in niches.”

So, is consolidation hollowing out the market, or creating a healthier balance?

For Collings, the mix of global giants and niche specialists was positive.

He concluded: “I like the balance of big insurers improving their service and products at the same time as new specialists coming in to offer something different and keep the big guys honest. That is a really healthy place for our market to be.”

Daley was less sanguine, however.

He said: “LV was a mutual – very customer focused – and now it’s owned by a hard-nosed private shareholder company that’s trying to pretend it’s still mutual. LV has been sliding down our tables over the last few years, probably because of its owners.”

The market is replete with big sharks circling minnows that could be swallowed up. But the open question remains – what happens if all the minnows disappear?

Where is the trend of larger players consolidating heading and where will the market stand by 2035? The consensus seemed to predict a few dominant carriers with global scale, surrounded by a vibrant perimeter of MGAs and specialists, with mid-sized players largely gone.

Hill summed up the opportunity, noting: “For insurers, brokers and MGAs, consolidation presents both opportunities and challenges.”

The challenge for boards and regulators is to ensure the market remains competitive, innovative and customer focused – rather than becoming the bloodbath the shark and minnow metaphor brings to mind.