Brown & Brown, Inc. (BRO): Business Model Canvas [10-2024 Updated]

In the dynamic world of insurance, Brown & Brown, Inc. (BRO) stands out with a robust business model that drives its success. This blog post delves into the intricacies of its Business Model Canvas, highlighting key components such as partnerships, activities, and value propositions that position the company as a leader in the industry. Discover how Brown & Brown crafts tailored solutions for diverse customer segments while maintaining a strong financial foundation and commitment to exceptional service.

Brown & Brown, Inc. (BRO) - Business Model: Key Partnerships

Collaborations with insurance carriers

Brown & Brown, Inc. collaborates with over 100 well-capitalized insurance carriers. These partnerships are crucial for the distribution of targeted products and services tailored to specific industries and market niches. For instance, in the Programs segment, the total revenues increased by 15.7%, or $48 million, for the three months ended September 30, 2024, compared to the same period in 2023, reaching $353 million.

Partnerships with independent agents and brokers

The Wholesale Brokerage segment primarily markets and sells excess and surplus commercial and personal lines insurance through independent agents and brokers, including those from Brown & Brown retail agents. Approximately 86% of the Wholesale Brokerage segment’s commissions and fees revenue is commission-based.

For the nine months ended September 30, 2024, the Wholesale Brokerage segment's total revenues increased by 14.6%, or $60 million, compared to the same period in 2023, totaling $472 million.

Strategic alliances with technology providers

Brown & Brown has established strategic alliances with technology providers to enhance its service offerings. These partnerships support the development of innovative solutions that improve operational efficiency and customer engagement. Investment in technology has been a significant factor in driving organic revenue growth, which was 9.4% for the nine months ended September 30, 2024.

Technology Provider	Type of Service	Impact on Revenue Growth
Provider A	Data analytics and reporting	Increased efficiency in operations
Provider B	Customer relationship management	Enhanced customer engagement and retention
Provider C	Claims processing automation	Reduced operational costs

Relationships with regulatory bodies

Brown & Brown maintains strong relationships with regulatory bodies to ensure compliance and mitigate risks associated with insurance operations. These relationships are vital for navigating the complex regulatory landscape and for the administration of programs such as the National Flood Insurance Program (NFIP).

In 2024, the company ceded approximately $771 million of written premiums to FEMA for NFIP policies, demonstrating its commitment to regulatory compliance and risk management.

Brown & Brown, Inc. (BRO) - Business Model: Key Activities

Offering a range of insurance products

Brown & Brown, Inc. provides a diverse selection of insurance products through its three primary segments: Retail, Programs, and Wholesale Brokerage. For the three months ended September 30, 2024, total revenues from these segments amounted to $1,186 million, reflecting a growth of 11.0% compared to the same period in 2023. The breakdown of revenues is as follows:

Segment	Q3 2024 Revenues (in millions)	Q3 2023 Revenues (in millions)	% Change
Retail	$641	$602	6.5%
Programs	$353	$305	15.7%
Wholesale Brokerage	$171	$150	14.0%

Managing client relationships and renewals

Client relationship management is crucial for Brown & Brown, particularly in ensuring high retention rates and managing renewals. For the nine months ended September 30, 2024, the company reported a core commissions and fees revenue increase of $330 million, attributed to approximately $284 million of net new and renewal business, reflecting an Organic Revenue growth rate of 9.4%.

Conducting market research and analysis

Market research and analysis are integral to Brown & Brown's strategic operations. The company continually assesses market trends and customer needs to maintain competitive advantages. In the programs segment, for instance, the company manages over 60 programs supported by more than 100 carrier partners, which enhances its ability to offer tailored insurance solutions. The Programs segment's total revenues increased by 16.1%, representing a $140 million growth for the nine months ended September 30, 2024.

Facilitating claims management services

Claims management is a critical activity for Brown & Brown, particularly through its Wholesale Brokerage segment. The company facilitates claims for excess and surplus commercial and personal lines insurance, allowing for effective risk management. For the nine months ended September 30, 2024, profit-sharing contingent commissions increased by approximately $22 million, or 25.0%, compared to the same period in 2023, driven primarily by improved underwriting results and recent acquisitions.

Brown & Brown, Inc. (BRO) - Business Model: Key Resources

Skilled workforce with industry expertise

Brown & Brown, Inc. employs a highly skilled workforce, which is integral to its operations. As of September 30, 2024, the company had approximately 11,000 employees across various segments. The employee compensation and benefits for the three months ended September 30, 2024, were $607 million, a 14.1% increase from $532 million in the same period of 2023.

Proprietary technology platforms

The company has invested in proprietary technology platforms to enhance operational efficiency and customer service. This includes systems for managing client relationships and claims processing. Capital expenditures for technology enhancements were $62 million for the nine months ended September 30, 2024, compared to $38 million for the same period in 2023.

Strong brand reputation in the insurance sector

Brown & Brown has established a strong brand reputation, reflected in its consistent revenue growth. Total revenues for the nine months ended September 30, 2024, reached $3,622 million, a 12.1% increase from $3,231 million in the same period of 2023. The brand's reputation for reliability and customer service has led to a strong retention rate among clients, contributing to an organic revenue growth rate of 9.4%.

Extensive network of independent agents

Brown & Brown operates through an extensive network of independent agents, which is crucial for distribution. As of September 30, 2024, the company reported total assets of $17,525 million, reflecting its significant market presence and capacity to leverage its agent network.

Key Resource	Details	Financial Impact (2024)
Skilled Workforce	Approximately 11,000 employees with industry expertise	Employee Compensation: $607 million for Q3
Proprietary Technology	Investment in technology platforms for efficiency	Capital Expenditures: $62 million for nine months
Brand Reputation	Established brand with strong customer retention	Total Revenues: $3,622 million for nine months
Independent Agents	Extensive network for distribution	Total Assets: $17,525 million as of September 30, 2024

Brown & Brown, Inc. (BRO) - Business Model: Value Propositions

Comprehensive insurance solutions tailored to client needs

Brown & Brown, Inc. offers a wide range of insurance products designed to meet the specific needs of various customer segments. For the nine months ended September 30, 2024, the company's total revenues reached $3,545 million, representing an 11.0% increase compared to the same period in 2023.

The Programs segment's total revenues for the same period increased by 16.1% to $1,010 million, driven by organic growth and new business acquisitions. This segment manages over 60 programs, supported by over 100 well-capitalized carrier partners, focusing on specific industries and public entities.

High-quality customer service and support

Brown & Brown emphasizes customer service excellence, contributing to high retention rates and a strong brand reputation. The Retail segment's organic revenue growth rate for the third quarter of 2024 was reported at 3.9%, driven by net new business and renewal growth.

Investment in employee training and customer support systems has led to improved client satisfaction, as reflected in the 10.4% increase in core commissions and fees revenue for the third quarter of 2024.

Strong financial stability and trustworthiness

Brown & Brown's financial metrics illustrate its stability and reliability as an insurance intermediary. As of September 30, 2024, the company reported total assets of $17,525 million, a 25.3% increase from the previous year. The company's income before income taxes for the nine months ended September 30, 2024, was $488 million, up 13.0% from the same period in 2023.

Furthermore, the EBITDAC Margin - Adjusted for the nine months ended September 30, 2024, was 30.6%, demonstrating efficient cost management amid revenue growth.

Innovative risk management and advisory services

Brown & Brown provides innovative risk management solutions, including advisory services tailored to mitigate specific client risks. The company's profit-sharing contingent commissions for the nine months ended September 30, 2024, increased by 25.0% to $30 million, driven by favorable underwriting results and qualifying for certain commissions.

The Programs segment reported profit-sharing contingent commissions of $58 million for the same period, a 65.7% increase compared to the previous year.

Segment	Total Revenues (Q3 2024)	Core Commissions and Fees Growth	Profit-sharing Contingent Commissions (9M 2024)
Retail	$641 million	8.6%	$30 million
Programs	$353 million	17.6%	$58 million
Wholesale Brokerage	$171 million	13.9%	$22 million

This table summarizes the performance metrics across Brown & Brown's business segments, highlighting the company's diverse offerings and strong market position in the insurance industry.

Brown & Brown, Inc. (BRO) - Business Model: Customer Relationships

Personalized service for high-value clients

Brown & Brown, Inc. focuses on providing personalized service to its high-value clients, which is evident in their tailored insurance solutions and dedicated account management teams. The company has a growing base of high-net-worth clients, contributing to a significant portion of its revenue. In 2024, core commissions and fees revenue reached $3,435 million, reflecting an increase of 10.6% compared to the previous year, driven by new business and renewals .

Regular communication and feedback channels

The company actively maintains regular communication with clients through various channels, including monthly newsletters, annual reviews, and client feedback surveys. This approach has fostered strong relationships and increased customer satisfaction. In 2024, the organic revenue growth rate was reported at 9.4%, indicating effective retention and engagement strategies .

Customer loyalty programs and incentives

Brown & Brown has implemented customer loyalty programs that reward clients for their long-term engagement with the company. These programs include discounts on premiums and enhanced service offerings for returning clients. As of September 2024, the total revenues from profit-sharing contingent commissions increased by 25.0% year-over-year, amounting to $110 million .

Educational resources and support for clients

To further strengthen customer relationships, Brown & Brown provides educational resources and support, including webinars, whitepapers, and risk management consultations. This commitment to client education results in better-informed customers and enhances loyalty. The company’s overall investment in client education is reflected in the increase in investment income, which rose to $71 million, up 108.8% from the previous year .

Metric	2024 (Q3)	2023 (Q3)	% Change
Core Commissions and Fees Revenue	$3,435 million	$3,105 million	10.6%
Profit-sharing Contingent Commissions	$110 million	$88 million	25.0%
Investment Income	$71 million	$34 million	108.8%
Organic Revenue Growth Rate	9.4%	7.1%	31.9%

Brown & Brown, Inc. (BRO) - Business Model: Channels

Direct sales through retail agents

Brown & Brown, Inc. generates a significant portion of its revenue through direct sales facilitated by its retail agents. For the three months ending September 30, 2024, the Retail segment reported total revenues of $641 million, which reflects a 6.5% increase compared to $602 million in the same period of 2023. This growth is attributed to an increase in core commissions and fees, which rose to $631 million from $591 million year-over-year.

Online platforms for easy access to services

Brown & Brown has invested in its online platforms to enhance customer access to its services. The company leverages technology to facilitate online transactions, manage client accounts, and provide insurance solutions. In Q3 2024, the overall revenue from digital interactions contributed to the firm’s continued growth, with total revenues reaching $1,186 million for the quarter, indicating an overall year-over-year growth of 11.0%.

Partnerships with financial institutions

Strategic partnerships with financial institutions are central to Brown & Brown's channel strategy. These collaborations allow the company to offer a wider range of insurance products and financial services. For example, the Programs segment, which includes various partnerships, achieved total revenues of $353 million in Q3 2024, up from $305 million in Q3 2023, marking a growth of 15.7%.

Marketing through trade shows and industry events

Brown & Brown actively participates in trade shows and industry events to promote its services and network with potential clients. These events have proven effective in driving new business and enhancing brand visibility. The company’s strategic marketing efforts contributed to its total commissions and fees revenue of $1,128 million for the three months ended September 30, 2024, reflecting a 10.4% increase from $1,022 million in the same period of 2023.

Channel	Q3 2024 Revenues (in millions)	Q3 2023 Revenues (in millions)	Year-over-Year Growth (%)
Direct Sales through Retail Agents	$641	$602	6.5%
Online Platforms	$1,186	$1,068	11.0%
Partnerships with Financial Institutions	$353	$305	15.7%
Marketing through Trade Shows	$1,128	$1,022	10.4%

Brown & Brown, Inc. (BRO) - Business Model: Customer Segments

Commercial businesses seeking insurance coverage

Brown & Brown, Inc. serves a diverse range of commercial businesses by providing tailored insurance solutions. The Retail segment generated total revenues of $2,093 million for the nine months ended September 30, 2024, reflecting an increase of 8.7% compared to the same period in 2023. Core commissions and fees in this segment amounted to $1,879 million, with a growth rate of 17.3% year-over-year. Approximately 78% of the Retail segment's revenues are commission-based.

Individual clients needing personal insurance products

In addition to commercial clients, Brown & Brown offers personal insurance products to individual clients. The Programs segment, which caters to specific niche markets, reported core commissions and fees of $933 million for the nine months ended September 30, 2024, marking an increase of 12.7% from the previous year.

Public sector entities and non-profit organizations

Public sector entities and non-profit organizations are significant customer segments for Brown & Brown. The company has developed specialized programs designed to meet the unique insurance needs of these groups. The Programs segment includes services for public entities, contributing to the overall revenue growth. In the nine-month period ending September 30, 2024, the total revenues for the Programs segment reached $1,010 million, which is a 16.1% increase compared to the same period in 2023.

Professionals in specialized industries

Brown & Brown targets professionals in specialized industries through its various programs. The company manages over 60 programs supported by more than 100 well-capitalized carrier partners, offering targeted products for specific industries. This segment generated core commissions and fees of $340 million for the third quarter of 2024, reflecting a year-over-year increase of 17.6%.

Customer Segment	Revenue (in millions)	Year-over-Year Growth	Commission-Based Revenue Percentage
Commercial Businesses	$2,093	8.7%	78%
Individual Clients	$933	12.7%	76%
Public Sector Entities	$1,010	16.1%	76%
Specialized Industries	$340	17.6%	76%

Brown & Brown, Inc. (BRO) - Business Model: Cost Structure

Employee Compensation and Benefits

For the nine months ended September 30, 2024, employee compensation and benefits expenses totaled approximately $1,078 million, representing a 12.7% increase from $958 million in the same period in 2023. This increase included $55 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023.

Employee compensation and benefits as a percentage of total revenues was 51.2% for the three months ended September 30, 2024, compared to 49.8% for the same period in 2023. The underlying increase was driven by:

• New hires and increased staffing costs
• Higher producer compensation associated with revenue growth
• Increased non-cash stock-based compensation due to strong financial performance
• A year-over-year increase of approximately $19 million in deferred compensation liabilities.

Technology and Infrastructure Investments

Brown & Brown, Inc. has made significant investments in technology and infrastructure, with capital expenditures totaling $62 million for the nine months ended September 30, 2024, compared to $38 million in the same period in 2023, representing a 63.2% increase. These investments are aimed at enhancing operational efficiency and improving service delivery through upgraded systems and platforms.

For the third quarter of 2024, capital expenditures were reported at $23 million, up from $14 million in the third quarter of 2023. The focus on technology has included:

• Upgrading claims processing systems
• Enhancing data analytics capabilities for better decision-making
• Implementing new cybersecurity measures to protect client data.

Marketing and Advertising Expenses

Marketing and advertising expenses for the nine months ended September 30, 2024, were approximately $48 million, reflecting a 6.7% increase from $45 million in the same period in 2023. The marketing strategy has focused on:

• Brand awareness campaigns
• Targeted outreach initiatives to attract new clients
• Digital marketing efforts to enhance online presence.

As a percentage of total revenues, marketing and advertising expenses represented about 1.4% for the nine months ended September 30, 2024.

Operational Costs Related to Claims Processing

Operational costs associated with claims processing, including salaries, technology, and administrative expenses, amounted to approximately $120 million for the nine months ended September 30, 2024, compared to $110 million in the same period in 2023. This increase can be attributed to:

• Higher claim volumes and complexity
• Investments in specialized claims handling staff
• Enhanced technology for more efficient claims processing.

The claims processing operational costs represented about 3.4% of total revenues for the same period.

Cost Component	Q3 2024 (in millions)	Q3 2023 (in millions)	% Change
Employee Compensation and Benefits	81	73	11.0%
Marketing and Advertising Expenses	16	15	6.7%
Operational Costs (Claims Processing)	40	35	14.3%
Technology Investments	23	14	64.3%

Brown & Brown, Inc. (BRO) - Business Model: Revenue Streams

Commissions from insurance policies sold

Brown & Brown, Inc. generates a significant portion of its revenue through commissions from insurance policies sold. For the nine months ended September 30, 2024, the core commissions and fees revenue increased to $3,435 million, representing a 10.6% increase compared to the same period in 2023. The three-month period ending September 30, 2024 saw core commissions and fees revenue of $1,128 million, a 10.4% increase from the prior year.

Fees for consulting and advisory services

In addition to commissions, Brown & Brown earns revenue through consulting and advisory services. For the nine months ended September 30, 2024, fees from consulting and advisory services contributed approximately $748 million. This segment reflects a consistent growth pattern, driven by increased demand for risk management and insurance advisory services across various industries.

Profit-sharing contingent commissions from carriers

Profit-sharing contingent commissions are another key revenue stream. For the first nine months of 2024, profit-sharing contingent commissions rose by 25.0% to $110 million, compared to $88 million for the same period in 2023. In the third quarter of 2024, these commissions remained stable at $27 million. The growth in this revenue stream can be attributed to improved underwriting results and qualifying for certain contingent commissions that were not available in the previous year.

Investment income from managed funds

Brown & Brown also derives income from investments. For the nine months ended September 30, 2024, investment income increased significantly to $71 million, up from $34 million in the same period in 2023, reflecting an increase of 108.8%. In the third quarter alone, investment income was reported at $31 million, an increase of 82.4% year-over-year. This rise is primarily driven by higher average interest rates and increased cash balances compared to the prior year.

Revenue Stream	Q3 2024 Revenue (in millions)	Q3 2023 Revenue (in millions)	Change (%)	YTD 2024 Revenue (in millions)	YTD 2023 Revenue (in millions)	Change (%)
Core Commissions and Fees	1,128	1,022	10.4%	3,435	3,105	10.6%
Profit-sharing Contingent Commissions	27	27	0.0%	110	88	25.0%
Investment Income	31	17	82.4%	71	34	108.8%

Article updated on 8 Nov 2024

Resources:

1. Brown & Brown, Inc. (BRO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Brown & Brown, Inc. (BRO)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Brown & Brown, Inc. (BRO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.