The Irvine office of Gallagher was the fastest grower on the Business Journal’s annual list of insurance brokers in this week’s issue (see list, page 25).
It reported 2019 sales jumped 60% to $55.5 million, helping it climb four notches to No. 5. That comes after 2018 when it fell the most on that list, declining 24% to $34.5 million.
“Due to discrepancies in numbers in 2018, that year wasn’t as bad as it looked and 2019, while it was a good year, wasn’t as good as it looked,” Gallagher Area President Mike Bialik told the Business Journal last week.
He attributed 2019 growth to a combination of organic sales and acquisitions.
“We’ve always had a culture of very good consultants that worked for Gallagher,” Bialik said. “Now we’re adding good salespeople.”
Gallagher made almost 400 acquisitions from 2010 to 2018, according to its website. That includes a 2015 acquisition of Huntington Beach-based Madison Risk & Insurance Services, which serviced the healthcare industry.
Last year, Gallagher made another 49 acquisitions, spending about $1.8 billion, according to its annual report. While these acquired companies were based elsewhere, if they had operations in Orange County, that profit and loss statement is now attributed to Gallagher’s Irvine office.
Two of the more notable purchases last year that affected its business in Orange County included Parsippany, N.J.-based RPA Insurance Services LLC, which was known for providing insurance and risk management services to the restaurant and hospitality industries, for $65 million, and Iowa-based Partners Advantage Insurance Services LLC Inc., known for its life insurance wholesale unit, for $219.5 million.
Gallagher has 133 employees in the county, a number that should remain steady in the coming year, Bialik said.
Ethical Company
Gallagher is one of the world’s largest insurance brokerage firms, reporting $4.9 billion in revenue in 2019. It’s best known for property and casualty insurance, as well as employee benefits. It’s also growing in the areas of executive benefits, individual life insurance and disability plans.
Bialik said he’s proud that Gallagher has for nine straight years won an award from Ethisphere as one of the “world’s most ethical companies.”
“We’re the only insurance brokerage firm that’s won the award,” Bialik said. “To be an adviser in any industry, to be looked as one of the most ethical in the world is a big differentiator for us.”
Trends
A notable national trend is that healthcare premiums, which typically rise 6% to 7% annually, are rising at a slower pace of 3% to 6%, he said.
The reason is the coronavirus caused many people to postpone elective medical procedures, he said.
“We’re not seeing as many claims,” he said. “What scares us is these participants not getting these services will be getting them done.”
Property and casualty costs are increasing, “which we’re trying to battle off,” he said.
Technology firms that try to provide automation in the industry are struggling, he said.
“Where they created great technology, they don’t have the consulting,” Bialik said. “They don’t have the people who understand the business. They don’t have the individual who can advise the client.”
Consolidation is also slowing down and isn’t as prevalent as five to 10 years ago, he said.
Competition for talent remains fierce. Last week, Gallagher sued Newport Beach rival Alliant Insurance Services and its financial partners, alleging Alliant “targeted nearly 40 Gallagher staff and has taken on more than 80 of its clients in an ongoing illegal staff poaching scheme,” according to trade industry reports.
The suit, filed in state court in Delaware, alleges that Alliant “embarked on a campaign last December to lure some of Gallagher’s top producers and their colleagues to breach nonsolicitation agreements” to join OC’s largest brokerage, with financial incentives to bring Gallagher clients with them, the suit alleges.
