All but one of the brokers among the top 10 in Business Insurance's latest ranking of the world's largest brokers showed growth in brokerage revenue in 2011 amid signs that improved economic and market conditions are having an impact on broker results.

Among the 10 largest brokers, Arthur J. Gallagher & Co. posted the largest brokerage revenue growth on a percentage basis in 2011 with a nearly 16.9% increase over 2010. Others enjoying double-digit brokerage revenue growth in 2010 were Hub International Ltd. at 15.3% growth, Brown & Brown Inc. at 15.0%, and Jardine Lloyd Thompson Group P.L.C. at 11.3%.

The remainder of the top 10 ranked by 2011 brokerage revenue percentage growth were Lockton Cos. L.L.C. at 9.4%, Marsh & McLennan Cos. Inc. at 8.7%, Aon P.L.C. at 5.9%, Willis Group Holdings P.L.C. at 3.5%, BB&T Insurance Services Inc. at 2.3% and Wells Fargo Insurance Services USA Inc., where brokerage revenue dropped 1.4% in 2011 from its 2010 level.

Wells officials attributed the decline in brokerage revenues there to the sale of their wholesale operations and the ongoing effects of a soft insurance market.

As for the growth at other brokers, many broker industry analysts and experts cited the impact of the economy and a firming insurance market.

“Overall...we're sort of seeing the unwinding of the perfect storm,” said Timothy J. Cunningham, principal at OPTIS Partners L.L.C. in Chicago, referring to the combined effects of the economic collapse and the prolonged soft market.

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“Having a more stable economy is helpful,” said Meyer Shields, managing director-equity research, property/casualty insurance at Stifel Nicolaus & Co. Inc. in Baltimore, adding, “There's certainly more trepidation on the global economic front than there was six months ago.”

“We're looking for gradual improvement in U.S. market conditions from slightly better exposure,” said Adam Klauber, co-group head-financial services and technology sector at William Blair & Co. L.L.C. in Chicago. “I think you'll see more each quarter because it takes a while for the rate increases to roll into the results of brokers.”

Mr. Shields noted that an ongoing low-interest-rate environment continues to put negative pressure on brokers' results, hitting them both in terms of the fiduciary invested income they'd earn in the time between collecting premiums and passing them along to insurers and in their own pension liabilities.

John W. Wicher, principal at John Wicher & Associates Inc. in San Francisco, said 2% or 3% of brokers' growth likely can be attributable to the impact of economic growth. Insurance rate increases could be responsible for another 1% or 2% of growth of middle-market brokers who tend to have fewer clients involved in alternative risk transfer or self-insuring programs.

Another factor differentiating 2011 growth and its sources between the very largest brokers and others is the prevalence of fee-based business among the largest brokers vs. commission-based business for others.

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While some brokers benefit from rate growth, “that only goes so far, particularly for a Marsh or an Aon,” said Mark Dwelle, insurance analyst at RBC Capital Markets, a unit of RBC Dominion Securities Inc. in Richmond, Va. “Those businesses are basically fee-driven.”

“What's been driving organic growth from the middle-market brokers is they remain ostensibly commission-based,” Mr. Wicher said. “For the larger brokers, in that they're providing a constant level of service, it tends to immunize their revenues from market cycles,” he said. But, while the commission-based middle-market brokers tend to experience more volatility in their results as cycles shift, now they've been able to enjoy the benefit of the economic uptick in 2011 and some firming of rates.

“I think when you start looking at companies like Aon and Marsh, most of the growth they've seen has been outside of the U.S.,” said Mr. Dwelle, noting that those brokers are seeing particular growth in emerging market countries that are enjoying faster economic growth and where insurance penetration is increasing.

“In mature markets, obviously there's not the kind of economic growth that stirs a lot of fresh demand,” he said.

Another factor driving revenue growth is acquisitions, said Mr. Wicher. “Gallagher was very active last year, as was Brown & Brown,” he said.

The 10 largest brokers all derive significant amounts of revenue from benefits business, and they're likely to see growth opportunities for those services as employers looking to address health care reform requirements seek their consulting services, some suggest.

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Ranking the 10 largest brokers by their percentage of 2011 employee benefits revenue, Marsh was first at 32.7% followed by Lockton at 25.7%, Gallagher at 18.8%, Brown & Brown at 17.2%, JLT at 16.7%, Hub at 14.9%, Wells Fargo at 14.2%, Willis at 13.9%, Aon at 13.6% and BB&T at 10.9%.

While there are concerns about the impact health care reform regulations that would include broker commissions in health insurers' minimum medical-loss ratio calculations will have on broker compensation, several analysts see an opportunity for brokers in employers' need for expert advice as they look to comply with the measure's requirements.

“I think there's a real opportunity for the consultative broker...because employers are going to need a lot of help weaving these their way through the morass,” Mr. Cunningham said.