Filed Under:Agent Broker, Agency Management

Agent & Broker 2012 Outlook

Tightening underwriting and carriers courting independents seen as top trends

To gain some producer-level perspective on the outlook this year for the P&C business, NU spoke with some major players across the agent & broker spectrum to discover where the greatest opportunities—as well as the most daunting challenges—lie in the year to come.

Continue to see who we spoke to, about what's ahead.


David Eslick
Chairman and CEO
Marsh & McLennan Agency LLC, a subsidiary of Marsh

For P&C carriers, there is no question that there is greater underwriting discipline and more focus on where they will provide capacity and why. There is also greater focus on managing the expense side of the business and determining what producer relationships are bringing them significant value.

Regarding the dynamic between captive writers and independent agents: We will see more and more captive writers pursue a relationship with independent insurance brokers. They are thinking about growth and the opportunity to expand their distribution platform.

On the benefits side, health-care reform will be a primary driver for change. These carriers will look more closely at their producer relationships than they ever have before.

Kevin T. Kenny
Executive Vice President/Head of Distributed Insurance Brokerage
Wells Fargo Insurance Services USA Inc

We should not overcomplicate our role. Agents and brokers aspire to be trusted advisors to their clients, and in that role we must adapt intuitively to the needs and expectations of our clients. Times change, technology changes, the economy changes, regulations change…we must change, also.

But the most important aspect of our relationship remains trust. Our clients must trust that we can develop and deliver state-of-the-art advice, products and solutions while maintaining a cost structure that allows them to procure these services at a fair price. Full transparency and balanced accountability will remain forever linked in successful client/broker relationships.

Ken Crerar
The Council of Insurance Agents & Brokers

Consultative sales, where a broker works as a partner with the client in identifying and managing risks, is the way of the future. As more businesses embrace enterprise-risk management, the broker’’s role and value becomes more important to them. Many brokers are responding to customers by adding more professional services and expertise to assist the client. Brokers are morphing into consultants along the lines of lawyers, accountants and other similar professionals.

Turning to the mergers-and-acquisition landscape, brokers will continue to struggle for organic growth in 2012 as a result of lower demand and soft pricing. The need to grow will fuel M&A activity. M&A activity picked up considerably in 2011 compared to previous years, and we expect to see an active M&A season in 2012. Consolidation will shrink the ranks of the smaller firms as they are bought by the larger firms. 

Brian Kawamoto
Executive Vice President/Managing Director
Lockton Inc.

Data analytics is growing in importance to clients in both our actuarial and our benefits and health-and-welfare practices. We are using data in a transformative way to guide our clients to make informed decisions.

Risk is becoming more complex, so clients are seeking a deeper level of expertise from risk advisors. Some of our clients have asked that we develop predictive models to help determine with more specificity the likelihood that certain claims will reach certain thresholds. This involves using multiple variables and the interrelationships therein, including jurisdiction, type of injury, claimant demographics, third-party administrators, et cetera. This significantly enhances a standard actuarial forecast.


Dave Evans
Senior VP, Independent Insurance Agents & Brokers of America
& Executive Director of Trusted Choice

As the direction of the insurance market starts to change—but before the broad market-price increases of a hard market—carriers begin to tighten their underwriting criteria, which tends to leave agents to scramble to find other markets to place risks that they have had for years. That is the one dynamic that we are going to see the most of in 2012 as the underwriting appetite tightens up. Independent agents will have to become creative in solving hard-to-place risks.

Between independent agents and captive writers, no doubt some of the direct writers will continue their large investment in advertising to drive business to them. That only increases the competition between captive and independent agents for customers. 

Jim Gault
President of Brokerage Services
Arthur J. Gallagher

We’re transitioning from a market that has been very soft to one that is much more underwriting-focused. It appears that for 2012 insurance carriers will be much more focused on underwriting for profit, especially in the lines of Property and Workers’ Compensation.

The acquisition landscape continues to look favorable. The majority of firms in the P&C world are owned by baby boomers, and if they don’t have an internal perpetuation plan they’ll look to acquirers like Gallagher—so we continue to see a terrific supply of opportunities.

Christopher A. Brassard
Executive Vice President
Ten Eyck Group

The challenge for the independent agent in this firming environment is that they will have to work a lot harder and perform their due diligence for their clients. There is plenty of capacity in the marketplace, but carriers will continue to seek rate increases where they can. Losses have put pressure on earnings.

The other big issue is that independent agents must become well versed in social marketing and learn to capitalize on the new resources available to them. The electronic medium has to be a bigger part of what we do as independent agents.


Keith Savino
President, Professional Insurance Agents of New Jersey
& COO of WRG

Independent agents and brokers can expect our field’s evolution to continue and even accelerate, as we and our clients continue to use new and improved tools. The continuous introduction of new channels of communication will allow those of us who plan for this to become more efficient and effective. While this is taking place, those of us who remember that the P&C field is a relationship-based business will prosper both in personal and commercial lines.

Matt Keeping
Chief Placement Officer
Willis North America

After many years of a soft market, the industry is in flux. We are not expecting a widespread hard market in 2012, but there is upward pressure on pricing, and we are seeing pockets of hardening.  

For brokers, helping insurance buyers mitigate this upward trend will be critical. The conditions we face create an uncertain environment in which to be advising clients as to the best deal in the market at any one time.

The insurance business will always be a people business that relies on relationships and solid decision-making. Yet we see strong demand for technology to help with these decisions from both clients and the carrier community. The role of technology in the insurance industry is changing in a dramatic fashion, and savvy brokers who sit squarely in the distribution arena will be well-positioned to execute such innovation.

Leonard C. Brevik
Executive Vice President and CEO
National Association of Professional Insurance Agents

We just concluded an 18-month, nationwide research project conducted by the PIA Partnership, our company council, which focused on what insurance customers really want. Our research shows that insurance customers are looking for expert advice and counseling; personalized attention and interaction; the ability to receive comprehensive protection to meet individual needs; and excellent relationship-based customer service.

On the M&A front, the prolonged soft market is making it difficult for smaller agencies to maintain profitability; as a result, there has been a tendency to be larger, with market softness driving agency mergers and acquisitions. We expect this trend to continue in 2012. However, it could slow with the eventual arrival of a harder market with improvements in profitability.

James R. Berliner
President, Professional Insurance Agents of Connecticut
& President, Berliner-Gelfand & Co.

We will see the market harden slightly in 2012, but not all at once and not consistently across all lines of business. The unusually heavy snowfall of early 2011, coupled with the storms we experienced in the Northeast in the fall of 2011, are going to contribute to a hike in prices. It will be the challenge of insurance agents in this area to explain to their clients that there are a multitude of factors that affect their premium prices, including last year’s increase in natural disasters and insurance-carrier rating changes/withdrawals. Agents may want to use tools provided by their associations to help educate their clients.

Eric Andersen
CEO of Americas
Aon Risk Solutions

We are optimistic about 2012 for our business and the industry in general. In this world of increasing risk and increasing awareness of risk and its complexities, we think there is huge opportunity for Aon and other players who can truly bring fact-based expertise to clients to help manage it, from the largest to the smallest companies.

The use of data and analytics is getting more sophisticated, and we have devoted more time and resources to understand what is happening in the world of risk. Whether it is our proprietary risk-analysis system or benchmarking capabilities, this is an area that has been a big driver for us and will continue to be going forward. With the recent introduction of SEC guidelines to address the whole concept of privacy, cyber liability will continue to grow. It was growing in 2011 and we have high expectations for it in 2012.

Supply-chain consulting and management is another area of growing risk concern in 2012. No doubt the natural disasters in theUnited Statesand around the world in 2011 brought home to companies of all sizes the need to really understand what supply-chain risk management is all about.

Finally, the whole topic of health-care costs is on the minds of business leaders. We have high expectations in that area. This is a problem area for businesses and is something they are asking about and want expertise in. Certainly, change creates concern among our customers, and getting the expertise to them to manage through that change in 2012 is a priority.

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