More specialists will enter the industry to meet the rising demand for risk services.
Los Angeles, CA (PRWEB) May 29, 2013
The past five years have been kind to the Risk Management, Insurance Advisory and Consulting industry; demand for the industry's services rose over the period, especially as business sentiment skyrocketed 24.2% in 2010. According to IBISWorld industry analyst Agata Kaczanowska, downstream demand from insurance brokers and agents as well as noninsurer businesses is rising as such companies increasingly outsource to risk management and insurance advisory experts to minimize in-house costs. Additionally, natural disasters led to record numbers of insurance claims during the past five years. These claims could not be processed with in-house insurer capacity and led to more outsourcing to industry experts. In 2013, revenue is expected to rise 2.8%. Overall, industry revenue is estimated to grow an annualized 5.8% to $5.3 billion in the five years 2013.
The Risk Management, Insurance Advisory and Consulting industry has a high level of concentration due to the sheer size and power of the larger players. In 2013, the major players are Marsh & McLennan Companies Inc., Aon Corporation, Willis Group Holdings and LexisNexis. However, barriers to entry are low, allowing for more owner-operators and other companies to enter. Rising demand has led insurance and risk management specialists to enter the industry. During the past five years, the number of enterprises has grown at a 3.5% annualized rate to reach 29,071 in 2013. The majority of new businesses has been non-employers, empowered by improving communications technologies that enable experts to more easily establish credibility and reach potential clients, says Kaczanowska. Overall, concentration has increased slightly as major companies have consolidated to better compete and become more efficient.
In response to escalating competition from non-employers, consolidation has been a significant trend among established businesses in the industry. During the past five years, major companies made significant industry-relevant acquisitions to broaden their service scope and market reach. This trend has led to above average revenue growth for major companies Aon Corporation and Willis Group Holdings. Restructuring costs for larger firms and the lower profitability of nonemployers is expected to drag down industry profitability. Continued business outsourcing and rising business sentiment will support industry growth during the next five years. Downstream demand from insurance brokers and agencies is forecast to strengthen as higher business sentiment enables them to begin charging more for insurance products. More experts are expected to enter into the industry to meet this demand. Consequently, IBISWorld projects revenue to grow during the five years to 2018. For more information, visit IBISWorld’s Risk Management, Insurance Advisory and Consulting in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides insurance advisory and risk management services to insurers and other businesses.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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