Friday, May 30, 2008

Consolidations Mean Less Small Agencies

A decades long trend toward insurance distribution consolidation is accelerating, with the heaviest impact being felt at the level of the smallest agents and brokers, as they struggle to find a way to grow, are bought or are forced out of business, according to a story in BestWeek

Consolidation on the distribution side is continuing to happen, and its happening very, very aggressively, said Ken Crerar, president of the Council of Insurance Agents and Brokers. This industry has long been ready for consolidation. Its driven by the need to be more efficient, by the need for stronger balance sheets.

Crerar cites an analysis by industry consultant Marsh-Berry that says of a total of 38,000 agencies in 2000, 22,754 agencies earned under $500,000 in commercial property/casualty revenue. More than 19,000 of those will be out of business by 2015a decline of approximately 75%.

The number of agencies doing $10 million or more in revenue will have more than tripled, to more than 600, during the same time period.

The study said that market share is following the same trend line.

Also, in BestWeek Europe:

London based independent specialist insurance and reinsurance broker Cooper Gay (Holdings) Ltd.s acquisition of almost all of the wholesale and reinsurance business of Heath Lambert Group reflects forces that are pushing the brokering sector toward consolidation, according to Toby Esser, Cooper Gays group chief executive officer.

Also, in BestWeek U.S./Canada:

The equine insurance industry has rebounded from a severe capacity problem, as the impact of the soft insurance market has trickled down to the paddocks and new capital has entered the market.

And in both editions of BestWeek:

The Bests Global Insurance Composite Index finished the week of May 29 down 15.28% from a year ago. The composite index reflects the performance of 168 insurance stocks. The weeks top stocks were National Interstate Corp., NYMagic, Berkshire Hathaway, Kansas City Life Insurance Co., and Delphi Financial Group.

The bottom five stocks were Atlantic American Corp., American International Group, QBE Insurance Group, Paris Re Holdings, and American National Insurance Co.

BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, call A.M. Bests customer service department at (908) 439-2200, ext. 5742, or e-mail your request to

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