Brown & Brown: Mid-Market Broking | In Practise

Brown & Brown: Mid-Market Broking

Former EVP Operations & Chief Global Broking Officer at Aon Risk Solutions and Current EVP at NFP

Learning outcomes

  • How competitive dynamics in the market are shifting due to technology
  • How mid-market players compete
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Executive Bio

Former EVP Operations & Chief Global Broking Officer at Aon Risk Solutions and Current EVP at NFP

This executive has 40 years of strategic experience and expertise in the property and casualty (P&C) space. He is currently responsible for managing NFP’s P&C operations and resources across the company. He previously served as Aon’s Global Chief Broking Officer and Executive Vice President in the company’s construction and infrastructure practice. Prior to that, he spent 25 years as Allied North America’s President and Chief Operation Officer.Read more

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This executive has 40 years of strategic experience and expertise in the property and casualty (P&C) space. He is currently responsible for managing NFP’s P&C operations and resources across the company. He previously served as Aon’s Global Chief Broking Officer and Executive Vice President in the company’s construction and infrastructure practice. Prior to that, he spent 25 years as Allied North America’s President and Chief Operation Officer.

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

I’m eager to hear what you have to say about the insurance brokerage business; you have a lot of experience in the industry. Could you give us an overview of your experience in the industry?

I started in the business and did a stint at Alexander & Alexander way before your time, but I ended up going into partnership with some individuals and we built a business starting in the 80s that focused on construction.

I just happened to see a list of top brokers from 1972 and Alexander & Alexander is number three. What’s also interesting about that list is out of the top 10 there’s only one that still remains, which is Marsh.

If you go through that list, Marsh took Johnson & Higgins out. Alexander & Alexander actually went out of business and was acquired by Aon. Then you have Corroon & Black which really was the genesis for Willis, Corroon. When you go through that list of the top brokers at the time, I think the number 20th broker was a broker called Walter Kay in New York City who might have been about $20 million and it's interesting how the business has evolved with the different acquisitions and what's gone on there.

I worked for Alexander & Alexander and then I actually ran their Long Island practice which was part of a spoke and hub so I was involved as the number two individual at Alexander & Alexander and I learned the corporate world which I decided wasn't for me. I ended up with a small business that, in 1987, were doing about $2.1 million, insuring contractors in New York, New Jersey and Connecticut.

I went in, had some equity, we built the company and over the next number of years into the 2000s we got the company up to $80 million of construction only commissions; 12, 13 offices. Our business really got involved more with international businesses because contractors were buying businesses in the United States. We were insuring businesses that were owned by Skanska which was Swedish, the Italians, the Spanish and our concern was that we didn't have a footprint in Europe though we did a lot of business with JLT. We actually tried to get JLT to merge. They wanted to merge with us once; we said no. Then we went back to them and they said it wasn't the right time. We sold to Aon in 2010.

What was your average commissions? What was the range you were doing then?

We were at $80 million of total commissions.

Per contract?

It varied because we had big accounts. We had very large accounts in some geographies and, in other geographies, they were smaller. We had accounts where we were earning $1 million of commissions and then we had accounts that we were earning $5,000 and it depended on the geography and where you were. Naturally, the accounts in New York were a lot larger from a commission standpoint and we made more. We did a lot of big projects, so we did the Arizona Cardinals. We did the Giants Stadium, things like that, so you made a lot of money on those projects, but they were 18 months, 36 months and you were done and you had to go get another project.

We sold to Aon. I was Aon’s chief global broker for construction. So the Aon US piece ran about $240 million of commissions and then we had Canada and the rest of the world. When you put it all together, we were roughly about $400 million of commission; not always property casualty but the bulk of it was. I was the individual that worked with the markets, coordinated what we did on tough placements, worked with international to make sure that we had connectivity on more of a global basis. So if you came to us and you were a Spanish contractor, we were able to handle you in Spain, in the United States and if you went to China, we could help you there.

I did that for seven years, at which point Aon decided it was time for me to retire. I had done my gig there, I guess, and I retired. At that point, I had actually become acquainted with NFP’s CEO Doug Hammond. We talked on a regular basis. He would call me to get my insight on the business. NFP was really more of a roll-up of benefit companies, life insurance companies. They had started to get property casualty. I told him I had retired and he asked what I was doing. I had offers from Willis and a couple of other markets. He said, why don't you come talk to us? So I went, I talked to him and he said why don't you come and work for us for a while? See what you could help me with, tell me what we're doing.

I spent a couple of months and I said, this is what your business is. This is what it should look like. He came back and he told me he’d like me to take over property casualty. That wasn't the deal. I was retired. Today I run NFP’s property casualty. When I got there, we were about a billion one. That was 2017 and property casualty was about $210 million. Today, our run rate gets us to about $650 million and in property casualty, we’re just under $2 billion. Some of that is naturally acquisitions and some of it is the acquisition of talent within the industry and building out a talent base. That's kind of my career in a small nutshell.

How would you lay out the competitive landscape of the industry? People talk about middle market and usually something between $20,000 and $3 million in premiums, but how do you segment it? Do you think about it in terms of verticals, national market?

It's a great question because a middle market account in New York, because of the rates, is going to generate more premium than it's going to generate in Texas or California or in other parts of the world. As long as I’ve been in business people get confused with trying to define middle market. I look at the business as being three groups. You and I went to college and you decided you were going to go into business and I'm a young guy and I'm going to sell you everything. You go, “I don't need fidelity because my brother and my wife are my partners and we're not going to steal from each other and I don't need employee practices liability. All I need is a liability policy and I need workers' comp and some other things.”

That's a relationship sale. The next level, as you become successful, is relationship with strategy. You and your family now become successful and you have five locations, whether they're restaurants, retail stores. But now you start to look at okay, what do I really need to protect my bottom line? So there’s still a relationship but it becomes strategic. To me that’s a middle-market account. When you look at middle-market what you have to look at is the account growing, what does the account need from you and how are you going to service their needs?

The next tranche that you get to, it's a strategic buyer. Listen, I like you. You're a good friend. We've known each other forever but I’ve got Marsh and Aon and Willis all telling me that I should be on a fee basis and they can talk about captives and analytics and you're a good guy but what are you bringing to the table? That becomes a strategic sell.

If I were to break the business down, I think the majority of the business is still in that relationship, smaller, middle-size accounts. Most brokers get to get a strategic relationship account, but most brokers never get to that big account unless their brother-in-law or their brother is the CEO and says, here, you can have my insurance. That’s the way I look at it. Then when you look within the top 10 agencies, if you think about it you can start to break where they fit.

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