Insurance brokers facing softer pricing may need to work harder for organic growth as premium-driven revenue slows and competitors become more aggressive in targeting existing accounts.
Felix Morgan (pictured), CEO of Trucordia, identified the soft market as one of the biggest pain points facing brokers and said the competitive environment is putting greater pressure on client retention.
“The soft market has certainly got to be toward the top of the list,” Morgan told Insurance Business. “I think the competitive landscape, particularly in California, but if you are a producer at all in the US, there are always competitors looking to come in.”
Morgan said he sees the consequences of weak client engagement directly when speaking with prospective customers. “As I go on prospective client calls, the number one complaint I get is, ‘My current broker won’t even return my phone calls,’” he said.
“If you’re not taking care of your client, someone else will.”
With competitors able to approach accounts with cheaper alternatives, maintaining growth increasingly depends on selling more business while protecting the existing book.
The challenge becomes even more complicated when competitors can approach existing accounts with cheaper alternatives. “Competing on price, in a soft market, becomes a little bit of a free-for-all,” Morgan said. “So the focus really switches to providing value-add and making sure that you are in that position of being a trusted advisor for the client.”
Trucordia is responding by focusing on its sales process, market access and the products available to producers, while using geographically based leadership platforms to support growth closer to individual offices. The CEO said regional groups have their own P&L responsibility and include operations, sales and marketing leadership alongside functions such as IT and HR.
Maintaining contact with clients and ensuring “that they feel like they’re cared for” has become an important aspect of Trucordia’s retention strategy as competitors look for opportunities to displace incumbents.
Morgan said his message internally is straightforward: “Don’t ever let that be us. Make sure that you are engaged with your clients.”
With rates easing across parts of the commercial insurance market, that competition could become increasingly visible at renewal. Brokers that benefited from premium-driven revenue growth during harder market conditions may have to rely more heavily on new business production and account retention to maintain the same momentum.
“We can’t always give them everything they want,” Morgan said, “but we’re certainly going to do everything we can to make sure that they understand they’re getting the highest service level that they can get in the industry.”
Retaining producers is another concern as brokerages compete for talent alongside business.
“We have over 90% retention in our producers, so we’ve done a pretty good job at managing that, but it’s always sort of top of the list, making sure that we’re keeping the employees and keeping our culture alive in the organization, that people want to be here,” Morgan said.
For Trucordia, the greater emphasis on organic growth follows an acquisition spree that added approximately 200 businesses in two years. The company operates across 42 states and is now becoming more selective in M&A. Morgan said that for every 100 deals Trucordia examines, it may complete around 10.
After building scale through high-volume M&A, the company is now targeting larger deals and opportunities that add specialty products, affinity capabilities or geographic reach.
Higher capital costs and elevated brokerage valuations have also contributed to the slowdown in acquisition volume. But this shift places more weight on generating growth from the existing business at a time when softer insurance pricing can work against brokerage revenue.
“We’ll do the deals that make sense,” Morgan said. “That becomes sharper and sharper as time goes on, and I expect that to continue to evolve.”
