In the next, you're the acquisition target. It keeps everything pretty lively. The insurance industry has too many players with too much capitalization. Pricing capacity remains relatively non-existent because of the large number of players all attempting to grow market share. This creates a self-fulfilling spiral of mediocre results.
Mergers gradually reduce the number of players and removes excess capital from the system.
As yet, there is no one players in today's insurance market that has a double digit market share. In a stagnant pricing environment, competitive advantage is often shifted to cost. In our industry there are a wide variety of pricing structures supporting delivery of essentially the same product. This trend gets further amplified as distribution begins to change from the relatively high cost traditional agency system to other forms of direct distribution or channels like the Internet. Many transactions today are strategically oriented to rounding out the product offering of the two organizations.