Aviva acquisition of Direct Line investigation launched by CMA

The Competition and Markets Authority (CMA) has opened an investigation into Aviva’s £3.7 billion acquisition of rival insurer Direct Line. This significant move could reshape the UK’s insurance sector, combining the operations of two of the largest players in the market. The scrutiny by the CMA will determine the deal’s potential effects on competition within the industry.

The first phase of the investigation, which began on Wednesday, allows the CMA up to 40 working days to evaluate the merger. By 10 July, the regulator will decide whether to approve the deal or proceed to an in-depth second phase of investigation. The review comes amid concerns about how the merger could impact consumer choice and service diversity in the insurance market.

Aviva, recognised as the UK’s largest insurer, agreed to acquire Direct Line last year. Aviva already serves over 20 million customers with a wide range of insurance, wealth, and retirement products. Chief Executive Amanda Blanc has focused on strengthening the company’s presence in the UK, Ireland, and Canada, while exiting operations in other international markets.

Direct Line, a major player in the sector with well-known brands such as Churchill and Green Flag, offers home, travel, pet, and life insurance policies. The merger will maintain key brands like Churchill. However, both companies are planning substantial cost-cutting measures, which include job reductions. It has been revealed that the combined group could cut 5–7% of the workforce over three years, equivalent to around 1,600–2,300 jobs out of their total 33,100 employees. Attrition and unfilled positions may reduce this figure slightly.

The merger comes as Aviva looks to consolidate its market dominance while streamlining its operations. Direct Line, already undergoing its own turnaround efforts, had previously announced over 550 job cuts in November to address rising costs. For investors and industry observers, the CMA’s decision on this merger will be vital in determining the future structure of the UK insurance market.

Aviva’s acquisition of Direct Line mirrors a notable trend of consolidation in the insurance industry, following its £5.6 billion purchase of Friends for Life in 2014. This latest deal highlights ongoing efforts by insurers to remain competitive in a challenging and crowded marketplace.