Brokers will maintain their dominance of commercial insurance distribution over the next 10 years, according to CGU CEO Mario Pirone. Speaking at the Steadfast Convention yesterday, he said brokers will maintain a market share of about 80% in commercial lines.

But he also says consolidation at the top end of the underwriting and broker markets will continue.

While he declined to put an exact timeframe on future mergers – or name companies which won’t be around by 2016 – he says the top five insurers will inevitably become the “top three”.

He also predicts that merger activity will see the top seven broker groups – including the three major clusters Steadfast, IBNA and Austbrokers – become the top five.

Mr Pirone says insurers and brokers have a range of challenges to deal with over the next 10 years. Many of those relate to personnel issues, the curse of legacy technology systems and the cost of regulation.

Warning that the “recycling” of experienced insurance staff can’t be sustained indefinitely, he says insurers are now paying people up to 40% more than they presently receive to move across.

“I’m aware of a case where one relatively inexperienced young person was offered an extra $35,000 plus car to move,” he said. “There’s a huge premium being paid for people without a lot of experience in the industry.

“Good people are moving too quickly.”