More takeovers are likely in the PMI market, according to research group, Datamonitor.
Business analyst Ben Dutton said PMI providers had to reach wider audiences, as the product continued to be bought only by the wealthy.
“Consolidation will mean providers will be able to sell policies at lower costs. Smaller PMI insurers will find it harder to entice new customers,” he said.
He added it was essential for PMI providers to reach new customers in socio-economic groups C1 and C2.
If PMI penetration could be increased by 3% among the C1 group, the total number of policies sold would rise by 9.5% to cover an extra 575,000 people.
But while PMI sales remain sluggish, Dutton said critical illness and income protection sales to cover middle income groups had improved and were also increasing as employee benefits.
“Given the decline in state cover, IFAs are now actively able to sell the benefits of income protection cover to individuals, as well as highlighting their value in employee relations,” he said.