Merger and acquisition activity in the insurance sector accelerated in 2021. That trend is expected to continue through 2022 as acquiring companies seek to enter new markets, access additional products that enable them to diversify their offerings and reduce operational costs (which provide a competitive edge by enabling insurers to offer lower prices to customers).

While the potential business benefits to insurers of an M&A are clear and tangible—increased market share, greater breadth of products, access to new markets, economies of scale—mergers and acquisitions in the insurance sector carry some noteworthy risk.