Insurance broking, especially in the US, has traditionally been a very fragmented industry, with a large number of small companies in the market.
But there has been a spate of consolidation, with the big brokers getting bigger. Willis and Towers Watson merged in 2015, while this year Marsh & McLennan, the number one in the market, bought Jardine Lloyd Thompson, the number eight.
Gallagher is the fourth-biggest in the market, according to data from AM Best. Patrick Gallagher, the chief executive and grandson of the founder, said small rivals would have to change. “Ultimately, if you’re just a local generalist your survival days are limited. You need to be specialist.”
In an interview with the Financial Times, Mr. Gallagher said there were about 39,000 firms of insurance brokers in the US but many of them had big decisions to make as their owners got older.
“At least 50 per cent of them are owned by baby boomers,” he said. “They have to consider what they do next.”
Mr. Gallagher said that his own company planned to grow. “Consolidation gives us a great opportunity. It is a vast business and very fragmented.”
Gallagher has made more than 500 acquisitions since 2002 and is still buying more businesses at a rate of 50-60 a year, mostly to add scale to its existing businesses.
Marsh & McLennan’s acquisition of JLT has created a company with combined revenues of almost $17bn, more than double Gallagher’s revenues of less than $7bn. But Mr. Gallagher said the increased scale of his biggest rival was not a problem.
“In the US, 90 per cent of the time we are competing with a player that is smaller than us. Most of the time we are competing with a local agency who doesn’t have anything like our capabilities,” he said.
Gallagher has been embroiled in a court case in the UK this year after a rival poached some of its staff. During the hearing it emerged that an executive at a Gallagher subsidiary had called one of the staff members who had left a “complicated fat Arab”.
Mr. Gallagher said that the language was “unfortunate” and did not represent what the company stood for. He added that the company had taken action over it but declined to specify what it had done.
He said Gallagher had focused on its culture for 90 years. “We are big, but we feel like a smaller enterprise where people care about each other.”