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Arthur J Gallagher deserves the commission it is paid because it has more and better data than insurers, special adviser Dave McGurn has said.

Speaking during an investor call McGurn, Gallagher’s former chairman of risk placement services, said that while insurers were trying to cut what they paid brokers, Gallagher now has more information to help during negotiations including where it asked for more commission.

Key points:

  • McGurn says Gallagher has in-depth information about how and where it is getting paid
  • Tone of conversations with insurers has shifted dramatically in recent years
  • Gallagher is still looking to acquire small businesses

McGurn said: “Insurers are always pushing back, but because we have the data to support what they are paying us or ask for more we tend to at least keep what we have. In some cases we get a bit more, because they agree that on that particular transaction we are right,” he added.

“It’s a dynamic that we will always have in our business.

“Would they like to find a way to curb our appetite for more? Sure. The carriers used to have all the information and we had to go with what they told us, but now we have more information than they do.”

McGurn said that Gallagher was able to use the data it had to support what it was already getting paid.

“We know what we are getting paid, where we are getting paid, where we are getting the maximum or not, right down to the producer.

“The tone of the conversations has shifted dramatically over the last couple of years where we have a lot more say so than we used to.”

During the call retail property and casualty president Jim Gault stood in for Tom Gallagher to provide an update on Gallagher’s international business, which includes the UK arm.

Gault said organic growth was flat in the UK, while Australia, New Zealand and Canada were up slightly.

Retention is just above 90% while new business is in high single to low double digits.

Across the three divisions Gault said the broker was looking to increase its margins.

It is also looking for experienced producers, to improve its internship programmes, and is also planning to develop internal sales staff.

Gallagher is also continuing on its acquisition strategy to buy small businesses.

 

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