Top insurance brokers: Wells Fargo Insurance Services USA Inc.Reprints
Wells Fargo Insurance Services USA Inc. increased its brokerage revenue in 2015 as it focused on cross-selling insurance and luring senior talent from competitors, while selling its crop insurance business to focus wholly on distribution.
While Wells Fargo historically sought to be a one-stop shop for all customers' financial needs, insurance has been “the one product that they still just haven't solved yet,” said Marty Mosby, Memphis, Tennessee-based director of bank and equity strategies at Vining Sparks IBG L.P.
Less than 10% of Wells Fargo & Co.'s approximately 28,000 commercial customers also buy insurance from the brokerage unit, said Mr. Mosby and Todd Wartchow, the brokerage's Chicago-based head of strategy.
“It would be the key thing if they could turn that into one in three customers buying insurance. That's the real opportunity that they're looking at,” Mr. Mosby said.
But banking customers may already have other insurance partners, and that “inertia” of an existing relationship works against the insurance brokerage part of the company and the brokerage must find a way to differentiate itself, he said.
Still, Wells Fargo boosted its 2015 brokerage revenue 1.3% to $1.32 billion, while gross revenue fell 2.9% to $1.51 billion due to a one-time income bump in 2014 from the sale of several insurance offices.
Organic growth was in the “low single digits,” said Laura Schupbach, the brokerage's Phoenix-based executive vice president and head.
Even so, other brokers' gains pushed Chicago-based Wells Fargo Insurance down two places to No. 10 in Business Insurance's 2016 ranking of the world's largest insurance brokers.
“We had growth across the board in all of our lines of business,” Ms. Schupbach said. In particular, some of the fastest growing segments include small business, business banking and employee benefits, which continues to grow “given the evolving (health insurance) marketplace,” she said.
Despite challenges stemming from flat commercial rates and a sluggish U.S. economy, Wells Fargo Insurance drove growth primarily by introducing banking customers to its insurance capabilities and introducing insurance customers to other insurance products.
“We have a lot of customers where we may do their (property/casualty) business but not their benefit business,” Ms. Schupbach said. “We are trying to figure out where our existing customers are buying their insurance products and services from others and ... how we can win more of that business.”
Recruiting to spread expertise
Wells Fargo Insurance has hired about 90 senior staff members in the past year, Ms. Schupbach said.
While the brokerage reported having fewer brokerage employees in 2015 versus 2014 — 5,264 compared with 5,419 — some employees have been placed in the “shared services” category and now report to the corporate parent while still supporting the insurance operation, she said.
The brokerage drew talent from competitors and insurance partners such as CNA Financial Corp., Marsh L.L.C., QBE North America, American International Group Inc. and others.
“We really think we're winning in the area of recruiting talent,” Ms. Schupbach said.
The brokerage plans to soon begin “building out industry expertise,” starting with health care, she said.
The hiring is necessary to spread expertise throughout the national branch network so it “becomes second nature for people to think of Wells Fargo for not just banking or investments but now getting into insurance,” Mr. Mosby said.
Moreover, the brokerage is focused on “strengthening and building out more or our analytics capabilities to really enhance our customer experience,” said Mr. Wartchow. By considering both banking experience and prior insurance underwriting and claims, the company can work with a more holistic view of its clients to better meet their needs, he said.
To focus entirely on distribution, Wells Fargo Insurance in April sold its crop insurance business, Rural Community Insurance Agency Inc., and its subsidiary, Rural Community Insurance Co., to Zurich American Insurance Co. in a deal valued at $700 million, Zurich said in a statement.
“We weren't really an insurance company. That was the only line we underwrote, and that business was a better fit with a carrier,” Ms. Schupbach said.
The sale helps Wells Fargo avoid some “capital and operational risk” about which regulators are wary, Mr. Mosby said.