The increase in insurance broking company profit margins comes on a wave of increased average profit margin figures for several countries in Europe

Average company profit margins for UK insurance brokers have hit an eight-year high amid a surge in profits across most of Europe, a new report has revealed.

The study, released by financial markets research firm Plimsoll, shows a 0.3% increase in profit on the average figure recorded last year.

The boost in profit comes amid a surge in margins across European countries, with the exception of Spain, where brokers’ margins decreased from 7.7% to 7.4%.

The report said: “Average company profit margins are currently 5.7% for UK insurance brokers this year, up from an average profit margin of 5.4% for the previous year.

insurance company profit margins
Average UK broking company profit margins over the last 8 years (Credit: Plimsoll Publishing Limited)

“Data from France, Italy, Spain and the rest of Europe reveals similar increases in average profit margins for insurance brokers across the continent to those of the UK, with the exception of Spain.”

Despite an overall rise in profit margins for insurance brokers, the figures were more favourable for companies with sales below £3m and above £10m, with the highest results coming from those with sales over £30m.

Plimsoll’s review added: “Average company profit margins have increased consistently across the industry over the past year, with the exception of companies with sales between £3m and £5m , which saw average margins drop from 10.6% to 7.6% for the current year.

“Those companies with sales between £5m and £10m also saw margins decline, dropping from 15.6% to 13.5% for the current year.”


Continued drop in UK home and motor insurance profit

Home and motor insurance were two lines that experienced a significant reduction on last year’s profit margins, despite the overall increase.

In the home insurance market, average company profit margins dropped from 12.1% last year to 9.2%, a seven-year low for the sector, which before now had enjoyed two consecutive years of increased average profit margins.

insurance company profit margins
Average UK broker profit margins in home insurance (Credit: Plimsoll Publishing Ltd)

Meanwhile, in the motor insurance sector, average profit margins have been on the decline since 2017 after having stayed flat for the three years prior.

Plimsoll’s figures put the decline between 2017 and the current year at 2.3%, with 0.9% of that occurring between 2018 and now, a timeframe that saw a drop from 5.9% to 5%.

Data used to compile the analysis was based on company accounts filed at Companies House and represents the performance of 2,100 independent financial advisors and 288 insurance brokers in the UK.


Insurance Brokers’ company profit margins increase in Europe

Europe as a whole increased its broking profitability to 12.4%, up from last year’s 11.9% margin.

France is currently the most profitable country for insurance brokers, logging a 13.7% profit margin for this year after staying flat at 13% in the two years prior.

Despite bucking the trend of rising profit margins in Europe, Spain’s brokers reported the second-highest profit margin at 7.4%, dropping from 7.7% from last year’s figures.

Italy experienced the biggest increase out of the four European countries analysed, logging a 0.4% increase on its 2018 average profit margin of 5.6%, giving it a figure of 6%.