The confidential market share data for 2005, seen by the Sunday Tribune, shows that Irish Life & Permanent, Bank of Ireland and a new joint venture between AIB and Hibernian Life & Pensions are steadily squeezing their smaller competitors from the market.

Their dominance is based on their strength in distribution, which includes bank branches, tied agents, direct sales forces and independent brokers. Smaller companies, such as Eagle Star, Friends First, Canada Life and Standard Life, cannot reach as many customers because they rely exclusively on brokers to sell all their products.

Friends First signalled last week that it wants to buy or negotiate a partnership agreement with another insurer in a bid to compete more effectively with the big three.

"We want to acquire, " said chief executive Adrian Hegarty. "The time is right for consolidation in the industry." He added that he had the backing of Friends First's parent company, Eureko, to do a deal over the next 12-18 months.

Eagle Star is seen by many as the most likely merger candidate. It held lengthy discussions with AIB two years ago about a deal that would have given it access to branches of the biggest bank in the country. But the talks ended in failure and AIB shifted its attention to Hibernian, concluding a joint venture agreement late last year.

Industry insiders question the wisdom of a tie-up between Friends First and another broker-based company, because it would not widen the distribution base. Friends has a long-standing tied-agency agreement with mortgage bank First Active. According to some sources, the company could extend its reach considerably by concluding a similar deal with Ulster Bank which, like First Active, is owned by Royal Bank of Scotland.