The increasing concentration of market share among the sector’s biggest players presents the rest of the industry with a question

By Jon Guy 

As the day the World Bank warned global growth was projected to decelerate from 3.1% in 2022 to 2.1% in 2023 yesterday (6 June 2023), there was better news for insurance brokers.

Jon Guy

Jon Guy 

According to the latest rankings and analyses by research company Insuramore, the value of the worldwide market for insurance broking in terms of fees and commissions earned was around $151.4bn (£122.1bn) in 2022, up from around $137bn (£110.5bn) in 2021, equivalent to a growth rate of almost 10.5% without adjusting for inflation, but closer to 2% as an inflation-adjusted measure.

Last year, revenues were estimated to be $68.8bn (£55.5bn) due to commercial P&C, or non-life, retail broking, $14.6bn (£11.8bn) to private P&C retail broking, $50bn (£40.3bn) to employee benefits plus life and health insurance retail broking, $6.4bn (£5.2bn) to reinsurance broking and $11.6bn (££9.35bn) to wholesale broking.

While the increase signals that business confidence is growing as the global economy looks to be recovering, the figures also highlight the growing dominance of the major global players and the move towards either size or specialism.

Each of the various segments in the ranking registered a double-digit growth rate across 2022, apart from employee benefits plus life and health insurance retail broking – indeed, without adjusting for inflation, the top 20 broking groups together achieved an even higher aggregate growth rate of 11.7%, although this was driven in part by M&A activity.

Big players

In terms of the value of its total broking revenues worldwide, Marsh McLennan ranked first among broking groups in 2022 and was followed in descending order by Aon, WTW, Gallagher and Acrisure.

The scale of the control of global premiums by the larger groups are stark.

Overall, the top 20 groups are believed to have controlled 51.5% of total global broking fees and commissions last year. The top 300 groups were accountable for 83.2%. The two figures are an increase on the 2021 figures of 50.7% and 79.4%.

The increase may be down to M&A and consolidation, but it highlights the struggle that smaller brokers face in competing for market share.

Interestingly, looking to the future, the question is whether a continuing stream of M&A activity causes the worldwide market to consolidate further in 2023, or whether the dynamic growth of some smaller and medium-sized competitors causes the share of the top 20 groups to hold at just over a half of global broking revenues.

It is likely that the coming year will be a pivotal one for many brokers, who will face the question of whether to resist an acquisitive approach or take the view that big is better.

  • Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.24 = £1, which was correct as of 1 June 2023.