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&#39Top five firms to take 70% of life and pensions&#39

The top five players in the life and pension market will increase their market share over the next five years to 70 per cent from the present 50 per cent, according to consultancy Oliver Wyman& Company.

The top five providers are likely to change from the current composition because of accelerated consolidation in the marketplace, says Wyman in a series of predictions published this week.

The consultancy says providers which aspire to join this exclusive club will have to resort either to buying distribution by investing in IFA firms or by raising commission and accepting tighter margins.

The top five have an inherent advantage, says Wyman, because they have a strong brand name to build upon. They will focus on building this brand name in the future as well as improving customer service, it says.

Oliver Wyman senior partner Richard Surface says it will be a “flight to quality” rather than concerns over solvency margins which will dictate who will be the winners and losers.

Surface says: “The pace of consolidation will accelerate, with the top five players increasing their market share of new business from around 50 per cent currently to around 70 per cent over the next few years although there is likely to be change among the membership of the top five.”

Norwich Union spokesman Ian Beggs says: “We expect a lot of consolidation because of the 1 per cent world and we expect a lot of companies to pull back from selling 1 per cent products. In the current environment, what you need to have is scale and a strong brand to survive.”

IFA Johnston Financial Services director Johnny McGlynn says: “The number of providers around will become fewer. We will look to deal with six to seven top firms who will probably pick up market share.”

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