Global Market Has Room For Large and Niche Players.

The period of megamergers in the insurance industry may be ending, and the future market will be polarized between big international and niche players, although consolidation will remain an issue, said Gerry Dickinson, vice secretary of the International Association for the Study of Insurance Economics, or the Geneva Association.

"Do we need any more consolidation? We're coming to a point where we've had a significant number of very large players...basically, the job is now to make those acquisitions work and make the benefits come through," Dickinson said.

Small and midsize companies will have to adapt to this environment by providing niche products, rather than competing against the large groups on the traditional grounds of product, customers and geography, said Dickinson, an insurance professor at City University London.

By contrast, the commercial non-life portion of the industry needs to be concerned with the growth of alternative risk transfer. There is a danger of ART becoming more important' than conventional means." This, in turn, raises sensitive regulatory issues that require governments to re-regulate their markets, he said, citing capital adequacy as a case in point. "They have to rethink acceptable sources of capital for insurance companies; that's the solution," he added later.

While the role of the very large insurance groups is important, Dickinson said it depends on the sector.

"With reinsurance, there is a case for mega-reinsurers," he said in the interview, explaining that it was "indisputable with very, very large risks, the law of large numbers applies."

By contrast, he said, "the case for mergers between large commercial banks and large insurance companies is not proven." One qualification, he added, was that such mergers might be possible between smaller players within emerging markets.