Insurance brokers saw revenue gains for the 12 months ended June 30, though stepped up competition tempered growth from a year earlier.
The 20 biggest insurance brokerages operating in Orange County reported a 7% jump in local revenue to $366 million for the 12 months through June 30, according to this week’s Business Journal list.
The gain is impressive, but it’s not as dramatic as the 13% increase posted by the brokerages on last year’s list. Back then premium hikes for property and casualty, healthcare and workers’ compensation policies were at their peak.
Higher premiums across the insurance board have boosted revenue in recent years. The insurance industry had upped rates to make up for the lingering effects of high payouts for the 2001 terrorist attacks, as well as the hurricanes and wildfires of recent years.
To be sure, premiums still are high. But rates aren’t skyrocketing as much as a year ago, in part because the higher premiums have been encouraging competition and the return of some brokerages into the insurance business.
“The market is getting extremely competitive,” said Sam Cargill, president and resident managing director of Aon Risk Services of Southern California Inc., part of No. 2 Aon Risk Services Inc.
Brokerages are grow-ing, adding brokers and support workers.
The number of licensed property and casualty brokers working at OC offices
of the brokerages on the list grew 12% to 352 from a year ago. The number of licensed OC life and disability insurance brokers grew 19% to 293 from a year
earlier.
The number of workers supporting brokers on the list grew 7% to 959 workers. That’s about 1.5 support workers per broker on the list.
The top three brokerages were unchanged in ranking from last year’s list.
The Newport Beach office of No. 1 New York-based Marsh & McLennan Cos. easily held the top spot with 8% revenue growth to $67 million for the 12 months ended June 30.
The company has been the subject of headlines in recent weeks after New York Attorney General Eliot Spitzer launched a lawsuit claiming anti-competitive practices. (See related stories, pages 14, 19.)
The scandal has spurred major changes at Marsh and could result in a falloff in revenue for the company as other brokerages look to lure customers away.
Officials at Marsh’s OC office did not return calls seeking comment.
Aon Shift
The Irvine office of No. 2 Aon Risk Services Inc., a unit of Chicago-based Aon Corp., saw revenue fall 14% to $48 million for the period.
Aon officials chalked up the decline to a shift of the company’s healthcare insurance practice to other Western offices.
“We’re not losing business in OC,” Aon’s Cargill insisted. “We’re very excited about prospects in OC and North San Diego County as well. Business growth here should outpace the rest of the state. There is a lot of venture capital and private equity that is very active right now.”
Aon sells policies in a number of sectors here, including construction, healthcare, technology and real estate.
“We’re looking for 10% sales growth this year,” Cargill said. “The market is getting extremely competitive.”
Irvine-based Precept moved up a notch to No. 8, growing revenue 20% to $15.6 million for the period.
“We’re expanding the services that we’re offering,” said Wade Olson, chief executive of Precept. “We’re dealing with a
larger caseload in areas such as disease management as well as wellness initiatives.”
The growth also has expanded Precept’s workers by more than 10%. The company counted 16 life and disability brokers, up by two people from a year ago, and 102 support workers, up by 10 people.
“We’ve added quite a bit of staff on the technology side and on the data management side,” Olson said.
Precept expects 20% to 25% revenue growth this year, Olson said.
Also gaining a notch from last year: No. 9 Irvine-based Complete Insurance Inc., which grew revenue 20% to $15.4 million.
“We’ve doubled in size every three years we’ve been in business,” said Steven Berg-Hansen, president. “We’re continuing to grow in the energy sector, construction, hospitality and manufacturing. A number of our larger clients continue to grow as companies.”
Complete Insurance sells property and casualty as well as life and disability
insurance, also known as benefits insurance.
“Benefits is another area of growth,” Berg-Hansen said. “We’re building up the benefits side of our business. We think we’ll continue with steady growth, though we think we’ll see some softening in the insurance markets and it could be a difficult time to grow. On the other hand, recent developments with Marsh and other national brokers may create new opportunities for us.”
No. 14 Santa Ana-based Tutton Insurance Services Inc. moved up three notches, growing revenue 30% to $7.3 million.
“We wrote new business, so internal growth helped drive sales,” said Stanley Tutton, president of Tutton.
Also driving the growth was the acquisition of Armstrong Insurance Group in 2002, which didn’t appear on Tutton’s books until 2003.
“We’re still on an acquisition trail,we’ll put one to bed next year,” Tutton said.
The company could grow revenue to $8.5 to $9 million next year, he said.
The Santa Ana office of No. 19 San Mateo-based Andreini & Co. moved down a spot to No. 19 despite growing revenue 25% to $5.9 million.
“Employment benefits have been hot in terms of rate increases in recent years,” said Ed McClements, senior vice president and branch manager. “While we’re not seeing dramatic decreases in rates, we are seeing a leveling off as workers’ comp carriers enter the market in California.”
Workers’ Comp Cools
In a bit of good news for employers,
the market for workers’ compensation
insurance is shifting, according to McClements.
“We are seeing a lot more interest with the competition in the past that we haven’t had the pleasure of enjoying in recent years,” he said. “We were seeing 30% to 40% rate increases in the workers’ comp market and we’re not seeing that now.”
Andreini & Co expects 20% to 25% revenue growth locally this year, McClements said.
New to the list at No. 16 was the Irvine office of Glen Allen, Va.-based Hilb Rogal & Hobbs/Profession Practice Insurance Brokers Inc., which grew revenue 14% to $6.7 million.
Hilb Rogal displaced Willis Risk and Insurance Services of Orange County,
part of Britain’s Willis Group Holdings Ltd., which ranked No. 20 on last year’s list. n
