Brown & Brown saw net income rise 12 percent in 2012's thirdquarter, as an improving economic climate benefited the firm'smiddle market clients and a market of generally rising insurancerates boosting commissions.

The Dayton Beach, Fla.-based insurance broker says net incomerose $5.33 million in the quarter to $49.5 million.

Revenues were up 17 percent, or $43.4 million to $303.8million.

For the first nine months of this year, net income rose 11percent, or $14 million, to more than $141 million. Revenues rose17 percent, or $128 million, to over $897 million.

“We are pleased with our record earnings in the third quarter,”says J. Powell Brown, president and chief executive officer, in astatement. “Our retail division continues to show increasingorganic growth, which suggests that economic conditions areimproving for our clients across the country, who are predominantlyin the middle market.”

Organic growth was up 1 percent in the quarter with thewholesale and services segment showing the most gains.

Total commissions and fees for the third quarter rose 18percent, or more than $45 million, to $302 million. For the firstnine months of the year, commissions and fees increased 16 percent,or more than $124 million, to $889 million.

During a conference call with financial analysts today, Browndescribed an insurance marketplace where rates are generally flatto on the increase up to 10 percent.

On workers' compensation in California, Brown says he spoke toone of the Brown & Brown offices out there where one of theexecutives notes that “their clients now are either beginning togrow or have already gone out of business. It's upward now,hopefully, and they are seeing a little push.”

Rates on workers' comp in California, he says, arefirming, up 10 to 15 percent. Large national carriers “that are notwork comp specific seem to be pulling back,” he continues.Specialty workers' comp carriers are picking up the slack.

State officials are trying to hold down increases, he says, andthe State Fund, the state's residual writer of workers' comp, andthe largest writer of the coverage in the state, cut rates.

“I think this is really a question of who blinks first,” saysBrown. One positive, he says. is that in audits of workers' compaccounts in the state, carriers are not finding themselves givingpremium back for the first time in years.

In the area of employee benefits, he says small groups are undera lot of rate pressure, 5 to 10 percent or more, while large groupis flat to 5 percent rate increases and 10 percent or more onaccounts with “not good experience,” says Brown and depending onwhat part of the country one is in.

One exception to the overall insurance rate climate is New YorkCity contracting, which Brown says has “its own little hard market”in both primary and excess.

Nationally, habitational risks are under upward rate pressure,he says, adding “Carriers are looking more carefully at accountswith losses and everyone is looking for products liabilitycoverage.”

“Carriers all want rate in certain lines,” says Brown.“Sometimes they get it and sometimes they don't. As we look intonext year, we think there is still some rate pressure in certainareas, but moderating across the board except in workers'compensation and homeowners.”