Insurance brokers benefit from recovering economy and rising prices

Insurance AgentThe economic recovery and the increases in prices have helped to boost the largest publicly traded insurance brokers as a whole throughout 2011 when compared to the year before.

According to the director at Stifel, Nicolaus & Co. Inc., Meyer Shields, these two factors were very helpful to the collective fortune of these insurance brokers. He stated that “It’s not the strongest recovery we’ve ever seen. It’s not the strongest rate cycle we’ve ever seen. But it’s helping.”

The industry has discovered that as there is not as much income to be invested, their best path for ensuring their financial future is to increase the income from their underwriting. Moody’s Investors Service vice president and senior credit officer, Bruce Ballentine, said that though brokers have been performing steadily throughout the recession and global economic crisis, as well as in the slow recovery, the change in insurance pricing remains a welcome one.

Ballentine explained that brokers and underwriters have maintained the feeling over the last few quarters that there has been a bottoming out in pricing, and that it has been solidifying in some areas.

Some lines of business – such as some specialty lines and the middle-market property and casualty – saw quite modest increases in price, but they were still able to benefit the insurance brokers. This, according to managing director and senior insurance analyst, Paul Newsome, from Chicago-based Sandler O’Neill & Partners L.P. Newsome added that the improved prices influenced brokers rapidly because they – unlike insurance companies – don’t receive their commissions earnings over a period of time.

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