James W. Crystal is chairman and CEO of New York-based independent insurance brokerage Crystal & Company. Mr. Crystal recently spoke with Business Insurance Associate Editor Matthew Lerner about the challenges that independent brokers face and ongoing changes in the industry. Edited excerpts follow.

Q: What are the biggest challenges for an independent broker like Crystal?

A: We are always challenging ourselves to provide better service and to find the top professionals in our industry. We've been doing it for 80 years. The challenges are different for a private company as compared to a public company. As a private company, you can allocate your resources where you want rather than worrying about earnings per share. Clients get better services.

Q: Who is your target market, and what do you do to set Crystal apart to reach the target market?

A: We want clients who desire a consultative partnership — not just a broker — clients that want to partner with us on a consultative basis and use Crystal as an extension of their risk management team.

Q: What is the largest segment of your business and what special skills does this require?

A: Financial institutions are the largest single segment of our business. It is a unique industry segment that continues to see significant change both to its business challenges and regulatory environment. This area requires an in-depth knowledge of your client's business, and a dedicated focus and approach in order to be in a position to advise your clients on their ever-changing risks and exposures, and to advocate on their behalf in what is a very segmented and specialized insurance marketplace for financial institutions.

Q: What have been the biggest changes in the brokerage industry in the past five years?

A: The elimination of competition, as private equity firms buy out brokers and bigger firms have to acquire for capital purposes. Also, there has been a premium on excellence; you have to be multiservice; you can't just sell a policy. The quality of people in the industry is also better by far. Younger people are coming into the industry as a choice rather than as an alternative. Insurance companies are stronger. The insurance buyer has a better position than five to 10 years ago.

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Q: Will consolidation continue?

A: I don't doubt that for a minute. It professionalizes the business and creates a barrier for entry. Further, as you consolidate, clients consider new alternatives that may not have been available before. As consolidation continues, I believe we will see more fee business than commission business.

Q: Is there an advantage to critical mass?

A: Definitely. You wind up with better leverage and also have the ability to access different insurance markets. And over time, there's not much you haven't seen.

Q: Has technology changed the insurance business?

A: Technology has changed the structure of this country and every other country. The world has changed. Business is global and immediate, and technology makes it easier. Clients have access to more data and more analytics. Technology also allows people to stay in contact better, so we have more frequent interaction with our clients.

Q: Is it different having your name on the door?

A: Absolutely — particularly in the area of responsibility. Your responsibility to clients is much greater.

Q: Is the industry rewarding?

A: For me it is. Every day is a challenge, and every day is a competitive plan. It is not for the faint of heart.