Arthur J. Gallagher: Insurance Broking - [Business Breakdowns, EP.148]
Business Breakdowns
Overview of the Insurance Industry: Value Chain and Major Players
The global insurance industry is valued at approximately $7 trillion in premiums, with life insurance and property and casualty (PNC) each accounting for about half of this total. Within the PNC sector, commercial insurance constitutes roughly 50% of that segment, making it a focal point for commercial brokers. Revenue generation in the insurance sector is primarily fee and commission-based, typically around 10% of premium values. Brokers operate without underwriting risk, meaning they do not place any of this risk on their balance sheets. The industry's growth is influenced by two macro drivers: exposure, which relates to the value of insured properties and liabilities (linked to factors such as property values and employment levels), and rate, denoting the price charged by carriers to insure exposures, which follows its own market cycles—namely, soft, flat, and hard markets. Significant players in the industry include Marsh, the largest insurance broker globally with approximately $22 billion in revenue; Aeon, generating around $13 billion; and Gallagher, positioned third with revenues of $8.5 billion in 2022 and projected $10 billion in 2023.
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