Europe's 11 largest insurance companies are currently wasting at least £3bn a year by failing to take advantage of the economies of scale possible in the European single market, according to financial management consultants AT Kearney.

But report authors Leonard Koningswijk and Christophe Angoulvant believe the big 11 are set to rectify the problem by creating pan-European operations within the next three to six years.

They predict up to 43,000 insurance jobs will be cut during this integration, even though European insurers have normally shied away from large staff cuts “due to the fear of social unrest and strikes”.

A number of these job losses are expected to fall on British groups CGNU and Royal & Sunalliance, but the report declines to say how many.

The report is based on a survey of nine of Europe's 11 major insurance companies and focuses on seven key business areas including product marketing and selling, claims processing, information technology, human resources, asset management and support services.

It finds that multi-national insurance groups operate generally on a country-by-country basis, leaving decisions on branding and claims handling to their national subsidiaries.

But it said significant moves towards integration were being made in the areas of asset management and information technology.

It was widely believed that the European Union's different national legal systems represented the largest barrier to insurers integrating different national businesses.

However, Koningswijk, a vice-president of AT Kearney, said that this was not the case as insurers listed cultural and language barriers as more important in holding back integration.

He said there was scope for insurers to achieve large cost reductions by consolidating their operations across national boundaries.

“The ball is in the court of the insurers and not national governments – it is up to them whether they take advantage of the European single market's large economies of scale.”

The largest share (£1.7bn) of the projected £3bn savings is said to be derived from the integration of different computer systems. Another potential large source of savings is in streamlining claims handling.

A spokesman for CGNU said the report was based on sound theory but putting its recommended chan-ges into practice would be difficult.

He said CGNU had retained different brands such as Norwich Union in the UK and Hibernian in Ireland to take account of cultural differences.

Europe's 11 largest insurers according to AM Best International are: Axa, Allianz, Generali, Zurich Financial Services, CGNU, Winterthur, Royal & Sunalliance, Groupama, ING, Aegon and Ergo.