AXA's acquisition of Smart & Cook could provoke a backlash from brokers and push other insurers to protect their market shares.
The acquisition of the Harrogate-based broking giant is expected to be announced shortly. It is thought to have attracted a price tag of over £150m.
A source close to AXA said: "We expect the deal to be officially announced in the next week. Key staff have been told."
The move is AXA's third commercial broker buy this year and follows the acquisition of Stuart Alexander and Layton Blacham in January.
It will create a broking operation controlling nearly £500m in gross written premium.
But the acquisition has prompted concern about the French insurer's strategy and the ramifications for the independent broker sector.
Brokers and insurers warned that the move could anger other independent brokers, who fear they will be discriminated against by AXA.
"We are not sure what AXA's end game is," one broker said. "Eventually AXA will want to start making use of its acquisitions.
"It will begin demanding volumes of business from its [acquired] brokers and some brokers will not be happy about that."
Another leading broker added: "What this means is that other consolidators will begin selling up. I am not sure how brokers will remain independent if this trend continues."
"Other insurers will be eager not to loose their portion of the broker market," one source said. "They will want to buy big brokers to shore up their position in the market."
Chris Hanks, general manager of Allianz Cornhill Commercial said he would keep a close eye on whether AXA uses the acquisition to build market share. "If AXA begins to divert business to it, it is a clear sign that it is diluting the independent broker franchise and other brokers and insurers may decide to take action."
Hanks said Allianz Cornhill had seen no evidence of AXA diluting the independence of Stuart Alexander and Leyton Blackham, but added: "We don't know the basis on which they bought Smart & Cook."
He insisted that Allianz Cornhill would not begin acquiring brokers in response. "It does not alter our belief that it is not in our interest to acquire commercial brokers."
John Kitson, director of intermediary business at Norwich Union said: "We will be looking for reassurances from Smart & Cook that they will remain independent. The challenge will be convincing the market of this."
Smart & Cook is jointly owned by private equity house 3i and the family of the late founder, Geoff Cook. The broker's fee and commission income in 2005 was £31.4m. It controls gross written premiums of £200m.
As Insurance Times went to press Smart & Cook was unavailable for comment. Axa and 3i refused to comment.