Insurance 'mega merger' is no great deal for consumers

The City loves a deal. Consumers, not so much. For them, a tieup between insurance giants Aviva and Direct Line, at a time when car insurance prices are at historic highs, is a far from enticing prospect.

- JAMES MOORE

Aviva has dangled £3.3bn in a combination of cash and shares in front of Direct Line, the third takeover proposal the company has received and rejected this year. Belgian multinational Ageas was rebuffed twice. Its best offer was £3.2bn or 239p a share versus Aviva’s 250p.

From the consumer perspective, the more important point is that Ageas is a lot smaller in the UK than Aviva. Confused.​com, a price comparison website, puts Aviva at number one in home insurance, with 8.7 per cent of the market, while Direct Line comes third at 6.2 per cent. Ageas isn’t even in the top five.

It has Aviva at number two and Direct Line at number three when it comes to motoring cover, with the former on 10.6 per cent and the latter on 10.2, behind market leader Admiral (11.3). Again, Ageas isn’t in the top five.

Aviva and Direct Line would thus create a UK Godzilla. While the combination would be bigger in home insurance, it is the motor side that could cause the most controversy because of the battering consumers have recently taken.

A report to the House of Commons shows that car insurance quotes have risen by a brutal 82 per cent since May 2021. The figure for consumer goods and services generally comes to just 21 per cent.