Main Street independent agents and brokers will soon face a major competitor, after the world's largest insurance broker announced it will pursue the producer's bread and butter: the small commercial client.
Marsh, the insurance brokerage subsidiary of the New York-based professional services firm Marsh & McLennan Companies, announced it is forming a new unit, Marsh & McLennan Agency, LLC. The agency will be devoted to serving the insurance needs of small and emerging growth U.S. companies.
The new unit will conduct its business separately from Marsh brokerage, the broker said. It will offer customers commercial property-casualty, directors and officers liability, surety, employee benefits, and personal lines products through a dedicated sales and service force in retail locations throughout the United States.
"By combining the product and service capabilities of chosen insurance companies with our industry expertise, our dedicated teams will deliver local customer service focus, valuable insurance market relationships and access to global resources," Jack Butcher, president and chief executive office of Marsh & McLennan Agency, said in a statement.
Joe McSweeny, president of the U.S./Canada division of Marsh, said, "We believe that the Marsh & McLennan Agency will be a positive development for the insurance buyers and anticipate that the agency will be able to offer customers favorable coverage at competitive rates, as well as differentiated insurance solutions."
Mr. Butcher told National Underwriter that a few years ago MMC made the decision to exit the unprofitable small commercial market. He said the market was not profitable because of the way MMC was servicing the clients.
The company's new management, led by Dan Glaser, chairman and CEO of Marsh, however, reviewed its business opportunities and decided that this was a segment missing from its portfolio, Mr. Butcher explained. To find success in this line, it was decided the customer relationship needed to be different.
"It was clear to us that the customer in this segment requires a very different experience than the customer in the global 500," Mr. Butcher said. "We decided this is a very attractive segment for us and can be profitably served, but we have to service this customer the way they want to be served, not the way we service our larger clients around the world."
To accomplish this goal, the new unit will use technology and the expertise of carriers that have developed insurance solutions for small commercial accounts. Marsh & McLennan Agency is still building relationships with carriers to have the products available for their customers' needs.
"We are identifying [carriers who will] provide an effective insurance product solution," he said.
Marsh & McLennan Agency can offer customers its deep expertise in complex risk and the brand that represents that expertise. "We do have customers still coming to us, asking if they can do business with us," noted Mr. Butcher. "It may be the brand at work there, where people recognize the Marsh & McLennan brand."
The broker still has a substantial book of small business currently, he added, and so will not be starting the unit off from scratch. He said the unit will focus on a customer that does not need complex risk management solutions and has a typical revenue size of $75 million or less.
"The question of how small we go will ultimately be driven by our carriers' appetite," said Mr. Butcher. "There are a lot of neat products that can serve [Main Street businesses] very well."
He added that the new unit will be a competitor to many agents and brokers and will launch in the first quarter of next year.
Current small-business customers will continue to be serviced through Marsh Inc. He said the service offerings of the agency will be reviewed with clients and that customers will determine whether the new agency will benefit their insurance needs.
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