Lockton CEO: Softening Market Offers Brokers Chance to Create Value for Clients

Global insurance broker Lockton is conditioning itself for a potentially long and difficult soft market cycle as it begins a new fiscal year May 1.

The privately held brokerage firm will close out the 2007 fiscal year with double-digit top line growth thanks to a high retention rate and significant new business, says chief executive officer John Lumelleau.

Lumelleau, who is attending the Risk and Insurance Management Society?s annual conference in San Diego, said the growth trends in 2007 show Lockton is positioned to grow the way it has in the past, notwithstanding the soft market.

Also, the CEO added, ?a large portion of our business is fee driven, and to some degree, that's outside the vagaries of a soft market or a hard market.?

The challenges are more directly felt on commissioned-based business, he said. ?In those cases, what we?re constantly doing is positioning ourselves with our clients so that the true value of what we bring, we?re compensated for.?

Lumelleau said the current environment also presents opportunities to provide clients with value. ?What we often see is our client is a direct beneficiary of pricing and also can benefit from our involvement in other ways that are very meaningful and not price driven,? he said.

The benefits include enhancing client?s safety programs and helping them maximize coverage in areas that in hard market cycles are not as easily achieved, he said.

Lockton, the largest privately held broker in the world, generated $667.1 million last year ? a 63% increase over the previous year. Last year?s growth was driven by a 14% organic growth in the U.S. business and by the acquisition of Alexander Forbes International Risk Services, which accounted for $205 million of total revenue.

(For more of the interview with John Lumelleau, visit www.bestdayaudio.com).

(By David Dankwa, senior associate editor, BestWeek: David.Dankwa@ambest.com)