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John Mina joined the insurance industry as a broker in 1986 and spent much of his career at Willis Towers Watson PLC and its predecessor companies before joining Boston-based brokerage Risk Strategies Co. as president in 2017. He was named CEO in 2019. Risk Strategies, which marked its 25th anniversary this year, has grown rapidly since private-equity firm Kohlberg & Co. invested in the brokerage in 2013. The brokerage has made 135 acquisitions over the past 12 years and stands at No. 16 in Business Insurance’s ranking of the Top 100 brokers of U.S. business, with close to $1 billion in revenue. Mr. Mina recently spoke with Business Insurance Editor Gavin Souter about the future of Risk Strategies and how to navigate the insurance market. Edited excerpts follow.
Q: Risk Strategies has been built up over the past 25 years. What’s your vision for the next 10 years?
A: Long term, I’d like Risk Strategies to become a top five global broker. I think it’s going to take longer than 10 years, but if we’re going to start with long-term aspirations, that would be where I would set my goalpost. My background is international, and I view that as an important aspect or element of being a broker.
For the next 10, I think Risk Strategies is going to evolve in a couple of ways. We’re going to continue to make investments in technology to deliver on how tomorrow’s clients want to be served. We’re all starting to see that shift in buying habits where buyers are increasingly technology natives. Over that same 10 years, we’ll continue to grow within our specialty practices and go even deeper and deliver more industry and product expertise for clients. And we’ll likely expand into a few new industry verticals where we don’t currently do a lot of business, and we’ll likely do that by strategic acquisitions.
Q: Any particular verticals in mind?
A: Infrastructure, agriculture, technology and energy are probably the top four right now. There are a couple of others as well, but I view all of those as having a long-term need within the United States.
Q: And you mentioned international. Do you see international growth, too?
A: I do. Our typical approach to expand into a new vertical or geography is to find the right partner first and use that as a cornerstone to build from. We’re not going to rush into it, we’ve got lots of opportunities here in the United States, but we will probably go into international waters certainly within that 10-year period.
Q: You mentioned growing into a top five broker. Presumably that would require some pretty sizable acquisitions.
A: Yes, and if I look at the consolidation that takes place in the industry it isn’t likely to end anytime soon. If we look at history and what happened in the 1990s, at some point there comes the consolidation of the consolidators. So, the number where we are right now at 16 to the top five might see some players consolidating within that space or even ourselves.
Q: Are changing conditions, such as the rise in interest rates, affecting the price of brokerage mergers and acquisitions?
A: I think the interest rates will eventually cool the market a little, especially if they start rising to upper single-digit rates, but they don’t seem to be having much effect to date. The multiples are as high as they’ve ever been, and I don’t see any trend right now indicating that they’re decreasing.
Q: Commercial insurance market rates have been going up for the past four or five years. Do you think we’re beginning to move into the next phase of the pricing cycle?
A: If the next phase means significant decreases or a sustained soft market, I don’t think we’re there yet. Rates are not increasing at the same rate that we’ve seen over the past couple of years. They’re certainly tempering and for some clients there are some decreases.
Some lines of business, like cyber, homeowners and catastrophic property, those continue to be stressed. What’s interesting is I don’t see it as a capacity constraint as much as underwriters are more intently trying to determine what exactly is the underlying risk and then how to properly underwrite it. But I would say it’s slowing; it’s not reversing yet.
Q: With that in mind, what advice would you give to commercial policyholders to help them navigate the market?
A: I would give three recommendations. Clients need to do a real assessment of how much risk they can take as a business, and I don’t see this done very often. If you’re confident with your exposure and your ability to mitigate your risks, that’s a good place to start when considering deductibles, for example. Too often I see clients just renewing at expiring and not accounting for whether their risk tolerance or their approach to risk mitigation has changed.
Second, I would say when vying for the best price with limited capacity a quality submission absolutely matters. It’s a lot of work to put together a good story for underwriters that properly assesses the risk but glossing over the details only adds uncertainty and that comes with increases in price, reductions in capacity or both. So, partnering with your broker to build the best and most accurate picture of your risk possible is critical. And with that, get it out in the market early; don’t run out of time.
And then the last thing I would say, and I would be remiss if I didn’t say, that choosing a broker and ensuring you have a quality guide to the marketplace is critical. Less effective is having multiple brokers shopping the same risks and muddying the waters trying to find the best price.
I’ve experienced very few insureds that have the time to compare quotes from different insurers, much less multiple brokers, and even fewer have the ability to drill into the details that can really make a difference when comparing those options.