Agents and brokers are under a great deal of pressure to raise rates, he said, but much of the market is still “wormy,” with rates still dropping.
“The moment you relax, someone will come in and eat your lunch with a 10% reduction in premium,” Brown said during the company’s fourth-quarter conference call.
“So I would say, A— the push to increase rate is intensifying. B—I would say the economy has bottomed out in most areas,” Brown said.
Brown described a market that varies widely by line, location and region, even in the same state.
For instance, in Northern Florida, new property rates are flat to negative 5%, while renewal rates are flat to up 5%, “if it sticks,” Brown said. “There’s a lot of push back depending on construction, depending on location, etc.”
In central Florida, even though the RMS version 11′s new model has increased potential losses from hurricanes, new property rates are down 5% to 10%, and renewal rates are up 2% to 5%. New entrants into the market have increased competition there, he said.
Non-catastrophe exposed areas and vanilla product lines are still very competitive, Brown said.
In Louisiana, “the rates are squirrelly and the capacity is diminished,” Brown said. “You don’t know where rates are at the moment. There is pressure to push them up and if you have competition, they go down.”
Personal lines along the coast are moving up 5% to 10%, he said.
Brown & Brown posted a 13.5% increase in fourth quarter net income boosted by a 6.2% increase in revenue. Net income was $36.5 million for the quarter, up from $32.1 million. Revenue grew by 6.2% to $244.1 million.
For the year, the brokerage exceeded $1 billion in total revenue for the first time. The company set the goal of reaching $1 billion in revenue in 2001, when the company had just $395 million in total revenue.
In January, the company said that J. Powell Brown, president and chief executive officer of broker Brown & Brown, is taking a temporary leave of absence for health reasons. J. Hyatt Brown, who has served as the chairman since 1994, and who previously served as CEO until his retirement from that position in 2009, will serve as acting president and CEO during Powell Brown’s absence, the company said.
