Amid this merger and acquisition activity, the question becomes: Can independent insurance agents and brokers compete with mammoth insurance brokers? According to a survey released this week by Greenwich Associates, the answer is yes. The 2010 Large Corporate Insurance Study, a survey of 683 corporate risk managers, found that some of most well known names in the business do little to differentiate themselves from the competition. The survey indicates that corporate risk managers are generally dissatisfied with the level of service they get from both brokers and insurers, and very few of these insurance providers distinguish themselves in the marketplace. The survey, conducted by telephone from October to December 2009, interviewed risk managers at companies with annual revenue of $500 million or more in the United States. Among its findings, of the 10 major insurance brokers in this niche business, only two—Beecher Carlson Insurance Services and BB&T insurance services—were rated excellent, Greenwich Associates said. The three major insurance brokers—Aon Corp., Marsh & McLennan and Willis Group—were rated below the median favorability rating, while Integro Insurance Broker and Lockton Companies Inc. were at the median—receiving excellent ratings from 30%f respondents. Wells Fargo Insurance, Arthur J. Gallagher & Co. and Willis Group fell at or below 20%.
While the survey sample included risk managers from very large U.S. companies, it is not a stretch to assume that in the mid-market commercial space, independent insurance agents typically vie with the largest brokers if they offer the products and services that these companies need. The survey cited “ethics of the firm” as a desired attribute. Independent agents need to reinforce their philosophy on delivery of services.
To compete effectively with larger brokers, agents need to develop relationships with firms and insurance companies that can offer needed resources in the areas of loss control, use of captives and other alternative arrangements and assistance in placing international risks. As the big firms continue to get bigger, independent insurance agencies can survive and thrive if they are dedicated to developing and executing a strategy that positions their agency as a viable alternative. Agents should expect more mega deals to occur after the announcement of events this week.