Blog Key insights into the UK insurance brokers industry in 2022 - Plimsoll Publishing UK

As with all areas of the British economy, the UK’s leading Insurance Brokers have seen something of a sea change over the past few years.

Whether it’s the implementation of hybrid working, the impact of demand for insurance brought about by strict lockdowns and the increased uncertainty Brexit has brought to the sector, British brokers have collectively weathered much unpredictability.

As we, hopefully, move past the pandemic and Brexit, regulatory disruption is never too far away, and the investigation into insurance market regulation by The House of Lords Industry and Regulators Committee could bring further disruption to brokers large and small.

But is the market the same for all brokers as we move through 2022?

With the next couple of post-pandemic years in mind, Plimsoll has produced their latest “Insights”. Designed to highlight the latest market condition and provide decision-makers with the insight they need to develop their strategy, this new analysis, exclusive to Plimsoll subscribers, has revealed the following:

Growth trends in the insurance broking industry:

As this chart shows, growth in the market has been broadly positive aside from a fault in the trend in 2020 due to the COVID-19 pandemic.

However, growth is not being shared equally across the market. While the industry may be worth approximately £9 billion in the latest year, almost half of the revenue is generated by the 10 largest companies. In contrast, while those companies with less than £1m sales comprise the highest number of companies, they account for less than 5% of the industry.

The following table shows the breakdown of market share by size:

The latest Plimsoll Analysis shows a market full of growth opportunities. It also reveals a market dominated by larger companies. Could this lead to a wave of consolidation in 2022/23 as we move beyond the pandemic and companies look to shortcut growth strategies by buying smaller competitors?

The latest profitability trends in the market

1.  Profit trends across the market are complex and often stark. As the chart shows, average margins are increasing strongly as we emerge from the pandemic. Brokers with higher margins appear to have found a commercial edge and are adding extra value to their offering.

Those that are losing money warrant further investigation. Is their funding coming from banks and eroding margins?

As with sales performance over the past decade, results vary according to size and other variables. Certainly, as the table below shows, the smaller an insurance broker is, the lower the return on investment.

Further, the phenomenon is even more acute when measuring the percentage of companies that are making a loss. Those with sales less than £750k are far more likely to be posting a loss in the latest year. This is up from 54% a year ago. Clearly, the latest year has been increasingly difficult for recently established, smaller companies in the market, while the established order continues its march towards domination.

The latest Plimsoll Analysis includes an individual performance rating on each of the UK’s 1700 leading Insurance Brokers. It provides convenient means to see the companies behind these cross-industry statistics. Within each category, there will be winners and losers. Will those large companies making a loss be able to recover? Will the smaller companies that are powering ahead join the upper echelons of the market?

Subscribe to the Plimsoll Analysis today and join the growing legion of business leaders in the insurance industry that are making more informed decisions. For more information visit: https://www.plimsoll.co.uk/market-reports/insurance-brokers