Insurance brokers saw modest revenue gains during the past year.
But it’s the coming year that should stand out, with the fallout from an unprecedented hurricane season, rising healthcare rates and workers’ compensation cuts expected to play out in the sector.
The 20 biggest insurance brokerages operating in Orange County reported a 2% rise in local revenue to $377 million during the 12 months ended June 30, according to this week’s Business Journal list.
The revenue gain is less than the 7% increase posted by the brokerages on the 2004 list.
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Higher premiums in most insurance sectors have boosted revenue in recent years. The insurance industry upped rates to make up for the lingering effects of the 2001 terrorist attacks, as well as the hurricanes and wildfires of recent years.
Hurricane Katrina is expected to boost property insurance costs next year.
Meanwhile, premiums on workers’ comp insurance have fallen substantially during the past two years following Gov. Arnold Schwarzenegger’s reform. Rates have fallen 26.8% between January 2004 and last month.
State Insurance Commissioner John Garamendi wants rates to fall another 20%, and plans to issue a recommendation this month stating the decline in rates he’d like to see for 2006.
Garamendi’s recommendation is nonbinding, as is one from the Workers’ Compensation Insurance Rating Bureau, an industry group that has recommended cuts of 15.9% next year.
“Reform was huge. I don’t know if we’ve turned the corner on workers’ compensation, but reduced premiums bodes well for the economy in California, and it should bode well for employers,” said Greg Pe & #324;a, president of the commercial real estate insurance unit of USI of Southern California Insurance Services Inc. in Irvine.
USI, a unit of USI Holdings Corp. in Briarcliff Manor, N.Y., was No. 6 on the list with an estimated $20 million in local billings in the past year.
Healthcare premiums for OC employers could rise as much as 15% next year,outpacing a predicted 10% increase nationally.
The number of licensed property and casualty brokers working at OC brokerage offices rose 1% to 351 from a year ago. There were 279 licensed life and disability insurance brokers at OC companies, up 1% from a year earlier.
Total support staff at the brokerages rose 9% to 1,014 in the past year.
Rankings for the top three brokerages were unchanged from last year’s list,the third consecutive year they held steady.
The past couple of years have been marked by investigations into the business practices of top insurance brokerages. Marsh & McLennan Cos. of New York and Aon Corp. of Chicago were among the brokerages that settled charges over alleged payments received for directing business to insurance providers.
The Newport Beach-based office of No. 1 Marsh easily held the top spot with estimated revenue of $67 million during the past year.
The Irvine office of No. 2 Aon Risk Services Inc., a unit of Aon, reported a 3% rise in revenue to $49.6 million for the period.
One newcomer to the list was McGriff, Seibels & Williams Insurance Services Inc., which opened a West Coast office in Irvine during the past year. McGriff, which is based in Birmingham, Ala., tied at No. 17 with an estimated $6 million in local revenue.
Daniel Carreras, executive vice president of McGriff, left Marsh in Newport Beach to head up the local office. He took 10 others with him.
“Orange County is a booming area, and the economy is one of the largest in the country,” said the 44-year-old Carreras.
Two brokerages dropped from the list: former No. 19 Santa Ana-based Andreini & Co. and last year’s No. 20 Irvine-based John Burnham Insurance Services, which is a sister company of No. 5 Armstrong/Robitaille Business & Insurance Services of Fullerton.
Armstrong/Robitaille, San-Diego-based Burnham Insurance and Pleasanton-based Tanner Cos. were bought by UBOC Insurance, a unit of UnionBanCal Corp., during the past few years.
Bob Dennerline, president of Armstrong/Robitaille, said the trio could be brought together under one name next year, though a final decision hasn’t been made.
