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12 December 2017

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Wholesale consolidation creates opportunities for independents: Brown & Riding

David Bull 5 May 2016

M&A and panel consolidation involving the largest wholesale brokers is creating opportunities for the next tier of intermediaries, as independent retailers look for alternatives, according to Brown & Riding CEO Jeff Rodriguez.

BB&T's recently completed acquisition of Swett & Crawford effectively reduced the number of wholesale giants from four to three.

With Swett added to a BB&T stable that includes CRC and Crump, the only other $200mn+ revenue wholesalers in the market are Amwins and RT Specialty.

Meanwhile, there was further consolidation of retail broker panels earlier this year when Aon named RT Specialty its sole preferred wholesaler.

The move continued a trend that has seen other retailers such as Marsh and Wells Fargo narrow the number of wholesalers they use in recent years.

In an interview with Inside E&S, Rodriguez said the changing landscape has created opportunities for specialized independent wholesalers to forge bigger relationships with their retail counterparts.

"We've had a number of national retailers contact us recently because they're concerned about some of the consolidation in the wholesale sector.

"There seems to be a growing perception among some retail brokers that over-consolidation and retail ownership of wholesalers may not always promote the purest form of competition that benefits the end consumer," he said.

Employee-owned Brown & Riding is ranked in the top 10 US wholesalers, and has grown rapidly in recent years both organically and through M&A.

Rodriguez attributed organic growth to increasing demand for specialization, which has been a core strategy of the wholesaler since its launch.

"Brown & Riding is one of the few truly independent wholesalers that has the resources and geographic footprint to compete with the big three on a national basis," he added.

And he suggested that independent, and even some national retailers appear to be looking to ensure they have sufficiently diverse panels to promote "healthy competition and accountability" among their wholesale partners.

"There seems to be a recognition that the pendulum may have swung a little too far in recent years, with most retail brokers recognizing their clients will not be best served by having only a few wholesalers available to provide increasingly more specialized and technical placements and services," Rodriguez continued.

The executive said his firm is continuing to expand after growing fivefold since 2010 in a period that included its combination with Alexander, Morford & Woo in 2010, and Travis-Pedersen in 2012, as it moved beyond its West Coast roots.

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