In an almost mirror image to what’s happening within the major investment banks, the largest insurance brokers have been increasing compensation costs and, in the majority of cases, headcount throughout the course of this year.
The major players – Willis, Aon, Marsh & McLennan and Jardine Lloyd Thompson (JLT) – have now all reported their second quarter results and, broadly, they were positive.
JLT’s revenues grew by 8% year-on-year on the back of strong performance in its broking arm, Marsh crept up by 6% in the first half and Willis by a modest 2%. Aon, meanwhile, was flat with revenues of $2.8bn.
More interestingly, they appear to be keen to invest in their people. JLT hired 400 people in the second quarter, or a 10% increase in its risk and insurance division, and plans to continue to be active in “attracting new talent as we develop our international platform”. Not surprisingly, compensation costs increased to £257m in the six months to June.
Other brokers are less bullish, but recruitment is definitely on the cards. Willis said that the plan was to “increase producer count 3-4% annually” and the focus is on “building out sales capacity and making selective investment hires”. Nonetheless, it’s still looking to weed out people not producing the goods, saying it would be “actively managing under-performers”.
Aon is in the midst of a restructuring programme that has stripped out $82m in staff costs over the last quarter, but is still looking to recruit in Asia and Latin America. Marsh, meanwhile, has increased its compensation costs by 4% to $3.5bn in the first half of this year.
One recruiter focusing on the insurance industry says: “Our broking team is extremely busy, while job numbers have dropped off for underwriters. They want revenue generators, particularly if they work in niche areas and have a strong book of clients to bring to the business.”
We’ve mentioned previously how working for a larger broker is a more secure option, and that specialist knowledge will improve your employability. Size is key in the current difficult market conditions and the cost of implementing regulation – such as the Insurance Mediation Directive – is expected to force some smaller players out of business.
However, some smaller, independent firms are also looking to build their sales teams.
As Paul Turner, chief executive of Seventeen Group told Insurance Times recently: “There are a lot of brokers out there looking for an independent broker home. In the last six months we’ve had more interest than ever in individuals being referred to us.”