As the economy continues to recover, insurers can learn from the financial crisis and improve their deal-making and integration, especially as they move forward with mergers and acquisitions, according to a report released Monday by consulting firm Deloitte & Touche L.L.P.

New York-based Deloitte focuses on five specific areas in its report of insurer M&A activity, “Insurance M&A: Overcoming the challenges and leveraging the lessons learned from the financial crisis.” Those five areas are risk management, the changing regulatory environment, integration, international financial reporting standards and tax reform.

The report, put together by Deloitte's Howard Mills, who is director and chief adviser of the firm's insurance industry group and a former New York state insurance superintendent, and David Simmons, director of insurance M&A group for Deloitte Tax, said 2010 opened similarly to the way 2009 closed—as an “acquirer's market” with companies up for sale, but with those in a position to buy not having enough capital to acquire them all.

However, with credit conditions improving, equity markets rising and low interest rates, Deloitte said there are several insurers with “significant” cash positions that would allow them ample opportunities for consolidation.

“As we see signs of recovery unfold in the marketplace, it is likely that insurers will leverage the increasingly favorable conditions to improve deal-making and integration activities—all of which can lead to premium growth and strong competition advantages onward,” the report said.

Deloitte points out the increased presence and importance of risk management that is needed during the evaluation process of a merger or takeover, with particular focus on areas of risk that can arise from the transaction itself, such as potential risks that could emerge from the deal, regulatory risks that may arise from the deal and operational risk increases.

An increased regulatory reform environment fueled by bills in the House and Senate are likely to have an impact on M&A deals moving forward, Deloitte said, adding that although there are differences in the bills in terms of approach to regulatory reform and systemic risk handling, one of the bills eventually will pass.

“From a pure insurance M&A perspective, insurers considering and evaluating potential M&A transactions should be examining these potential regulatory changes from a risk and operational perspective as they continue to stay tuned to the evolving regulatory reform debate.”