Medium-sized brokers face a profit squeeze and tightening of credit terms as insurers use the shortage of underwriting capacity to radically change their approach to trading with intermediaries.
These are the findings of a survey by merger and acquisition specialists IMAS of 70 medium-sized brokers with a turnover of between £3m and £10m.
Report author and IMAS director Oliver Laughton-Scott said a sharp divide was opening up between brokers with a turnover of more than £1m and those with less. Brokers in the UK retail commercial sector were facing the toughest market conditions.
He said: "We anticipate commissions will come under pressure and the drift towards fees will be accelerated. There is increasing pressure to consolidate, and while smaller brokers are as keen to partake in this process, they do not have sufficient firepower to compete."