Restructuring and consolidation of the European insurance marketplace is occurring due to the creation of a single integrated European insurance market. Consolidation raises public policy questions concerning the impact on consumers from consolidation. The structure-conductperformance (SCP) hypothesis states that a decrease in the number of firms within a market may lead to collusion among firms, while the relative market power hypothesis states that firms that accrue market power may use this power adversely for consumers (eg, to raise price and increase profit). Finally, the efficient structure hypothesis states that more efficient firms can charge lower prices than competitors, allowing them to capture a larger market share. In this case, consolidation may benefit both firms and consumers because the more efficient firms can charge lower prices and earn higher profits. The purpose of this research is to test these three hypotheses in the European property-liability insurance market. Panel data covering twelve countries and the years 2003 to 2007 are used to test the hypotheses. Both group and company data are tested. The results strongly support the efficient structure hypothesis, and there is extremely little or no support for the SCP hypothesis or the relative market power hypothesis. a Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602, Tel.:+ 1-706-542-5160, Fax:+ 1-706-542-4295, trbs@ terry. uga. edu b Department of Risk, Insurance, and Healthcare Management, Temple University, Alter Hall, 1801 Liacouras Walk, Philadelphia, PA 19122, Tel.:+ 1-215-204-1916, mary. weiss@ temple. edu c Department of Risk Management and Insurance, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany, Tel.:+ 49-221-470-2330, Fax:+ 49-221-428-349, sabine. wende@ uni-koeln. de