Over the long run, there is a need for locally-incorporated insurance firms to achieve greater scale economies if they are going to be able to compete on level terms with their international competitors. Firms will only be able to achieve economies of scale if they become larger. Inevitably, this means that there will need to be some industry consolidation.
The improvement in the market situation was also helped by the progress made by euro area governments towards instituting more binding common fiscal rules and strengthening the financial firewalls EFSF and ESM and by the progress in fiscal consolidation and economic reform in many countries.