The battle for market share and leadership in the risk management and insurance brokerage business has never been more fierce, according to an exclusive report in the Aug. 8 BestWeek.
Gut-wrenching changes in the industry are forcing the world’s largest brokerage firms, Marsh & McLennan Cos. and Aon Corp., to compete even more aggressively for new business — while fighting off poaching by mid-level competitors offering lower up-front fees.
Both Marsh and Aon are looking desperately for ways to reduce expenses through restructuring and other cost-cutting measures, as they reel from the loss of contingent commissions, intense regulatory investigations and softening prices in the property/casualty insurance market.
Both companies released their second-quarter earnings the week of Aug. 1, with Marsh’s profit down 57%, and Aon’s up 10%. Donald Light, a senior consultant with Celent, said it’s easier to explain Marsh’s disappointing second-quarter results than the earnings at Aon.
“Marsh has taken the biggest hit in the whole Spitzer scandal, in terms of reputation, and certainly in terms of wrongdoing they’ve admitted, which is the bid rigging,” Light said.
Also in BestWeek, growth in direct premiums written for private-passenger automobile insurance declined for the second consecutive year to 3.4% in 2004. BestWeek details how much premium the leaders wrote in 2004, based on data derived from A.M. Best’s proprietary database. Similar studies rank the leading U.S. fraternal life societies, property/casualty writers in Canada, and top writers of U.S. credit life.
Other exclusive content in the Aug. 8 issue of BestWeek:
— Why Michael Geeslin, the newly appointed insurance commissioner of Texas, is at the forefront of a drastic transformation at the state Department of Insurance.
— How increasingly complex capital management issues are driving more insurers toward nontraditional strategies for raising and deploying capital.
— Why Philip Broadley, Prudential plc’s group finance director, describes his company’s theme across Asia, as serving the “needs of a rapidly emerging middle class with a very strong savings ethic.”
BestWeek is published by A.M. Best Co. for insurance professionals, including home office executives, agents and brokers.
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A.M. Best Co., established in 1899, is the world’s oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best’s Web site at http://www.ambest.com.