Insurance broker outlook bright despite market challengesReprints
NEW YORK — Insurance brokerages enjoy optimistic prospects this year despite challenging market conditions, speakers and attendees said Thursday at the Standard & Poor’s Insurance Conference 2017 in New York.
During a panel discussion featuring large brokerage chief executives, 70.73% of the audience voted that they were bullish on the sector when asked via a live interactive poll.
“Clients have risks that are increasing around the globe,” said Greg Case, president and CEO of Aon P.L.C. “There has never been more risk out there; there has never been more complexity; and there has never been more opportunity to make a difference on behalf of clients.”
“The world has gotten much more dynamic and complex, so it’s natural that the need for advice has risen,” said Dan Glaser, president and CEO of Marsh & McLennan Cos. Inc. “So, I would say advisory has risen a little bit.”
The middle market and small commercial businesses offer opportunity, they said.
For Aon, 80% or more of the firm’s business is in the middle market and small commercial, according to Mr. Case. “We love the space,” he said.
“We see opportunity in small business that most people don’t see,” said Steve DeCarlo, CEO of AmWINS Group Inc., Charlotte, North Carolina.
Mr. Glaser noted that some 50% of the $6 billion that has been deployed in mergers and acquisitions since 2009 was in the middle market.
Market conditions, however, remain challenging.
“From a market perspective, speaking domestically, there are some tough things going on,” Mr. DeCarlo.
“The market is still highly competitive and likely will remain so,” Mr. Glaser said. “The broad operating environment is similar to this time last year with low global GDP relative to the long-term growth of the world.” Business confidence, which varies with the uncertainty in the world, moves up and down, he added.
The property/casualty rating environment also is soft, Mr. Glaser said.
“On property/casualty in general, we see property rates coming off faster than casualty rates,” he said, with some growth in exposure units “barely” offsetting rate reductions.
The most difficult region, he added, is the U.K., followed by Europe, Asia, Latin America and the U.S.