Property/casualty insurance wholesalers are beginning to enjoy the benefits of an improving economy, while investor interest in the business segment continues, observers say.

The business remains highly competitive, say observers, who describe the market as highly fragmented, with growth opportunities for everyone.

Meanwhile, many expect continued consolidation in the sector (see related story).

Jeremy Johnson, president and CEO of Boston-based Lexington Insurance Co., a unit of American International Group Inc., said, “We've certainly seen some pretty significant consolidation over the last decades as many regional wholesalers have moved to a national model” and several have introduced needed international capabilities.

“I would continue to see a focus on specialty, and the development of expertise in areas of risk that requires a high level of specialty, and I would expect the whole market to continue to see growth over the coming years, as the need for both capacity and expertise continues,” Mr. Johnson said.

Julie Herman, associate director for rating agency Standard & Poor's Corp. in New York, said market conditions for wholesalers are improving as a result of higher rates and a movement from standard to excess and surplus lines of business. “It's very case-specific,” she said. But “the general trend in terms of impact on wholesalers is favorable right now,” said Ms. Herman.

“It's clearly competitive among the wholesaler community,” said Ronald S. Austin, chief operating officer of Los Angeles-based wholesaler Worldwide Facilities Inc.

“Even in light of the fact there's been consolidation in the brokerage community, it still is an extraordinarily competitive field between brokers,” said Linc Trimble, Jersey City, N.J.-based executive vice president for e-commerce at Torus Insurance Holdings Ltd., which focuses on small commercial umbrella business.

Matt Nichols, president of Hunt Valley, Md.-based All Risks Ltd. and president of the Kansas City, Mo.-based National Association of Professional Surplus Lines Offices Inc., said while there is certainly competition going on, “because of the increase in business flowing to the wholesale marketplace, there's more business available, so I think there is opportunity for anybody who's doing their job particularly well to grow their business right now.”

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At All Risks, for instance, revenues will increase about 25% to 30% this year, Mr. Nichols said. “It's been a solid year,” with all 27 of its units showing growth, he said. “The wholesale market continues to attract great talent. I think we continue to do a fairly effective job within our world of training people and keeping them within our industry,” he said.

“It's certainly a time when a wholesaler has the opportunity to prosper, because there's an awful lot of business coming in our direction,” he said.

“There's very limited market share even among the higher-end players because it's such a fragmented market,” with many local and regional wholesalers having “long-standing relationships and expertise that they bring to the table,” said Ms. Herman.

“There's still plenty of competition,” said Maureen Caviston, Stamford, Conn.-based president and chief operating officer of wholesaler Partners Specialty Group L.L.C. Smaller wholesalers “can certainly have a good business if they operate more reasonably locally,” even if they cannot present themselves as having 50 state licenses “and everything that goes with that,” she said.

Randall G. Goss, chairman and CEO of Dallas-based wholesaler U.S. Risk Insurance Group Inc., said that with consolidation, “there will actually be opportunities for some of the smaller brokers to compete for some of that business.”

“Even though the major brokers may be very, very strong and may be controlling certain sectors of the market, I think there's robust competition for business in the medium- to small-market area,” he said.

Christopher J. Cavallaro, managing director at Jericho, N.Y.-based wholesaler ARC Excess & Surplus L.L.C., said, “It's competitive, but our business is all about service, all about access to market and all about added value. If you add value, you'll be fine. If you don't add value, then, candidly, you won't be fine.”

With rates increasing, new business starting up “and the economy teetering on the side of improvement,” there is “clearly opportunity for people to participate,” said Mr. Nichols.