To gain some producer-level perspective on the outlook this yearfor the P&C business, NU spoke with some major playersacross the agent & broker spectrum to discover where thegreatest opportunities—as well as the most daunting challenges—liein the year to come.

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

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

For P&C carriers, there is no question that there is greaterunderwriting discipline and more focus on where they will providecapacity and why. There is also greater focus on managing theexpense side of the business and determining what producerrelationships are bringing them significant value.

Regarding the dynamic between captive writers and independentagents: We will see more and more captive writers pursue arelationship with independent insurance brokers. They are thinkingabout growth and the opportunity to expand their distributionplatform.

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

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

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

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

Ken Crerar
President
The Council of Insurance Agents & Brokers

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

Turning to the mergers-and-acquisition landscape, brokers willcontinue to struggle for organic growth in 2012 as a result oflower demand and soft pricing. The need to grow will fuel M&Aactivity. M&A activity picked up considerably in 2011 comparedto previous years, and we expect to see an active M&A season in2012. Consolidation will shrink the ranks of the smaller firms asthey 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 ouractuarial and our benefits and health-and-welfare practices. We areusing data in a transformative way to guide our clients to makeinformed decisions.

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

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

As the direction of the insurance market starts to change—butbefore the broad market-price increases of a hard market—carriersbegin to tighten their underwriting criteria, which tends to leaveagents to scramble to find other markets to place risks that theyhave had for years. That is the one dynamic that we are going tosee the most of in 2012 as the underwriting appetite tightens up.Independent agents will have to become creative in solvinghard-to-place risks.

Between independent agents and captive writers, no doubt some ofthe direct writers will continue their large investment inadvertising to drive business to them. That only increases thecompetition between captive and independent agents forcustomers.

Jim Gault
President of Brokerage Services
Arthur J. Gallagher

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

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

Christopher A. Brassard
Executive Vice President
Ten Eyck Group

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

The other big issue is that independent agents must become wellversed in social marketing and learn to capitalize on the newresources available to them. The electronic medium has to be abigger part of what we do as independent agents.

Keith Savino
President, Professional Insurance Agents of NewJersey
& COO of WRG

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

Matt Keeping
Chief Placement Officer
Willis North America

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

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

The insurance business will always be a people business thatrelies on relationships and solid decision-making. Yet we seestrong demand for technology to help with these decisions from bothclients and the carrier community. The role of technology in theinsurance industry is changing in a dramatic fashion, and savvybrokers who sit squarely in the distribution arena will bewell-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 projectconducted by the PIA Partnership, our company council, whichfocused on what insurance customers really want. Our research showsthat insurance customers are looking for expert advice andcounseling; personalized attention and interaction; the ability toreceive comprehensive protection to meet individual needs; andexcellent relationship-based customer service.

On the M&A front, the prolonged soft market is making itdifficult for smaller agencies to maintain profitability; as aresult, there has been a tendency to be larger, with marketsoftness driving agency mergers and acquisitions. We expect thistrend to continue in 2012. However, it could slow with the eventualarrival of a harder market with improvements in profitability.

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

We will see the market harden slightly in 2012, but not all atonce and not consistently across all lines of business. Theunusually heavy snowfall of early 2011, coupled with the storms weexperienced in the Northeast in the fall of 2011, are going tocontribute to a hike in prices. It will be the challenge ofinsurance agents in this area to explain to their clients thatthere are a multitude of factors that affect their premium prices,including last year’s increase in natural disasters andinsurance-carrier rating changes/withdrawals. Agents may want touse tools provided by their associations to help educate theirclients.

Eric Andersen
CEO of Americas
Aon Risk Solutions

We are optimistic about 2012 for our business and the industryin general. In this world of increasing risk and increasingawareness of risk and its complexities, we think there is hugeopportunity for Aon and other players who can truly bringfact-based expertise to clients to help manage it, from the largestto the smallest companies.

The use of data and analytics is getting more sophisticated, andwe have devoted more time and resources to understand what ishappening in the world of risk. Whether it is our proprietaryrisk-analysis system or benchmarking capabilities, this is an areathat has been a big driver for us and will continue to be goingforward. With the recent introduction of SEC guidelines to addressthe whole concept of privacy, cyber liability will continue togrow. It was growing in 2011 and we have high expectations for itin 2012.

Supply-chain consulting and management is another area ofgrowing risk concern in 2012. No doubt the natural disasters intheUnited Statesand around the world in 2011 brought home tocompanies of all sizes the need to really understand whatsupply-chain risk management is all about.

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