Posted on 02 Jun 2009
A global economic downturn and a continuing soft insurance market combined to drain revenue opportunities from the world's major brokers in the first quarter.
While some noted a leveling in the downward pressure on rates, brokers said competition for new business - and on premiums to attract that business - continued to be fierce.
At the same time, brokers said, the sour economy drove clients to cut back on coverage and demand tight limits on insurance purchases.
Pressure on Rates Continues
J. Hyatt Brown, chairman and chief executive officer, Brown & Brown Inc.: There's a difference between push-back on renewals and the bloodthirsty hunt for new accounts. "If it's a new piece of business, and it kind of fits the niche, then it is very competitive."
Daniel Glaser, chairman and CEO, Marsh Inc.: "I mean, obviously a deep recession is causing lower exposures. We are seeing rate competition among insurers."
J. Patrick Gallagher, chairman, president and CEO, Arthur J. Gallagher & Co.: Most carriers are talking about needing increases but I'd say, at present, it's more talk than action -- but the pain is evident."
Joe Plumeri, CEO and chairman, Willis Group Holdings Ltd.: "Overall, we are still seeing declining rates. There are some places where rates are higher, property cat in the southeastern part of the United States and places like that, but generally speaking, the headwinds are pretty severe as it relates to rates."
Impact of the Economy
Gregory C. Case, president and CEO, Aon Corp.: "The global recession has had significant impact in reducing exposure base and client budgets for premiums. We think this impact was material, and substantially reduced organic growth for the quarter."
Glaser: "We are seeing clients delay decisions, cut back discretionary work and purchase less insurance in certain instances, all of which are affecting our revenue retention in new business."
Gallagher: "Every one of our businesses is dealing with struggling clients. And we do think this is going to have an impact on us over the next three quarters."
No Early Relief
Brown: "Everybody talks about the fact that things are going to change next week and next month, and we think it's probably '10 before that happens."
Case: "The realities of the economic recession for our clients will continue to pressure volume and constrain organic growth of the industry in the near future."
Gallagher: "I've heard from a number of our people that clients have simply told them they will not pay more premium this year, period. The quote is, "Help me buy what I can with the dollars I've got. Those are your instructions." So, even if the market were to tighten a bit, in this economy, I don't know what impact that would have."