Australia has been second only to Japan for insurance industry merger and acquisition (M&A) activity in the Asia-Pacific region in recent years, according to global law firm Clyde & Co.

From January 2009 to June this year, Japan recorded 76 deals, Australia 54 and South Korea 32.

“Anecdotal evidence suggests Australia may be another market on the radar of Chinese as well as Indian insurers, after a number of enquiries about opportunities in the country,” the report says.

Opportunities for domestic consolidation are few because QBE, Suncorp and IAG control about 75% of the Australian insurance market.

But access to distribution channels here is likely to spur interest from foreigners following IAG’s acquisition of Wesfarmers’ underwriting businesses and its retail point of sale Coles.

M&A activity is expected in this space as small independent broking groups consolidate, the report says.

Across the Asia-Pacific region the number of insurance M&A deals grew in the first half of this year to 33 completed transactions, up from 27 in the previous six months.

In the year to June 30 the region accounted for 18% of global deals, with 60 transactions, down from 66 the previous year.

Global insurance M&A activity grew in the half-year for the first time since 2011, with 192 transactions, compared with 157 in the preceding six months.

The report says activity in the sector appears to be recovering after a three-year slide.

Europe is driving the growth, with other regions largely flat due to excess capital in the market and a “stubbornly soft” pricing cycle.

“There has been a significant regional shift over the past year,” the report says.

Europe has overtaken the US due to differing buyer/seller perceptions of company value and ongoing regulatory uncertainty in America.

In the year to June 30 there were 139 transactions in Europe, up from 123, while the US fell to 97 from 113.

“The overall level of insurance transactions in North America over the past five years shows activity peaking in 2011, and then trending steadily downward.”

Clyde & Co Asia-Pacific Corporate Insurance Regional Head Michael Cripps says the region remains attractive for insurers seeking growth, with increasing GDPs and growing insurance penetration.

China and India are markets to watch, with new regulations affecting insurance ownership rules.