Insurers are predicting the number of intermediaries will continue to decline as smaller brokers struggle to accommodate the demands of regulation and technology.

Royal & SunAlliance and AXA reported up to 20% reductions in their agency base over the past 15 months as a result of consolidation, mostly at the smaller end of the market.

Colin Calder, AXA head of broker development, said: "Brokers have decided to get out. They are driven by regulation and the demands of customers and IT. They are going to the likes of Towergate, Oval and network groups."

Both insurers predicted that the trend would continue for at least the next 24 months. Calder speculated that the final number of broker could be as little as 2,000.

Calder said: "If there are larger more 'corporate' brokers, they could potentially have more bargaining power, but it could also lead to the two sides working in closer partnership."

Steve White, Biba head of compliance and training, said there had been a compression of agencies in the market but doubted the reduction was anywhere near the vicinity of 20%.

He said insurers' figures could be attributed to FSA regulation and the removal of database duplications.