The insurance market may be at “a tipping point” in terms of overcoming the reluctance to engage in mergers and acquisitions (M&A) activity.

That is the view of professional services firm PwC, which is predicting a “quiet revolution” in global insurance M&A in its paper entitled “Insurance 2020: The future of insurance M&A”.

Arthur Wightman, insurance leader at PwC Bermuda, said M&A decision-making was complex, but named a string of drivers putting pressure on companies to seek consolidation.

“The global insurance industry’s outlook is improving,” Mr Wightman said. “The mature economies of Europe and North America are moving towards recovery, while the emerging markets of Asia and Latin America continue to grow. A pick-up in global premiums is forecast, but the industry should not expect a return to the old ways.”

PwC’s 17th Annual Global CEO Survey, released earlier this year, highlighted that 92 percent of insurance CEOs think their revenues will increase over the next three years and 47 percent of CEOs see building existing market share as the main opportunity for growth.

On the other hand, 50 percent of CEO’s are concerned about the threat from new entrants, 72 percent are concerned about slow or negative growth in developed markets, 86 percent are concerned about over-regulation and 72 percent are concerned about Government response to fiscal debt burden. Mr Wightman said: “These data points highlight the complexity of decision making surrounding succeeding in the current environment and have probably also influenced CEO appetites for bold M&A strategies. We are likely at a tipping point, however, where low profitability, interest rates and valuations as well as an abundance of capital and vast cash reserves on balance sheets will drive the market to greater consolidation.”

He added that the bigger deals would seek scale, diversification and quality but we will also see smaller deals as CEOs seek to compensate for an absence of organic growth opportunities and open up new and complementary product lines or distribution channels.

The paper finds that technology will continue to grow in influence in insurance deals; and political risks, the economic climate and regulatory reform will all continue to shape the market; and Asian and Latin American targets top the wish lists for insurers with capital to spend.

PwC Bermuda also announced that it has been named Deals Adviser of the Year (Financial Services) Bermuda.

Winners of Acquisition International’s prestigious 2014 M&A Awards are voted for by a global network of expert M&A professionals, advisers, clients, peers and industry insiders. The awards celebrate excellence in all areas of M&A, recognising not only individual deal success but also the firms and individuals behind the scenes who’ve contributed to the dramatic increase in global M&A activity in the past year.

Commenting on the award, Mr Wightman said: “This significant accolade reinforces our position as a leading provider of advisory services in Bermuda and is a clear recognition for our team of professionals across our Deals practice who are all working to create value for our clients by helping them to exploit transactional opportunities and address their most complex challenges.”