For the fiscal year ended December 31, 2021
Business
General
Brown & Brown is a diversified insurance agency, wholesale brokerage, insurance programs and service organization with origins dating from 1939 and is headquartered in Daytona Beach, Florida.
brokerage : the business of being a broker / an amount of money charged by a broker for work that he/she does
The Company markets and sells insurance products and services, primarily in the property, casualty and employee benefits areas.
casualty : a person who is killed or injured in war or in an accident / a person who suffers or a thing that is destroyed when something else takes place / the part of a hospital where people who need immediate treatment are taken
We provide our customers with quality, non-investment insurance contracts, as well as other targeted, customized risk management products and services. We primarily operate as an agent or broker and therefore do not assume underwriting risks.
assume : to think or accept that something is true but without having proof of it / to take or begin to have power or responsibility / to begin to have a particular quality or appearance
underwrite : to accept financial responsibility for an activity so that you will pay for special costs or for losses it may make / to accept responsibility for an insurance policy so that you will pay money in case loss or damage happens / to agree to buy shares that are not bought by the public when new shares are offered for sale
An exception is the activity in The Wright Insurance Group, LLC (“Wright”), in which we operate a write-your-own flood insurance carrier, Wright National Flood Insurance Company (“WNFIC”).
WNFIC’s underwriting business consists of policies written pursuant to the National Flood Insurance Program (“NFIP”), the program administered by the Federal Emergency Management Agency (“FEMA”), excess flood and private flood policies which are fully reinsured, thereby substantially eliminating WNFIC’s exposure to underwriting risk, as these policies are backed by either FEMA or a reinsurance carrier with an AM Best Company rating of “A” or better.
pursuant : according to or following something, especially a rule or law
reinsure : if an insurance company reinsures, it buys insurance from other companies to protect itself against large demands from its customers
We also operate a capitalized captive insurance facility (the "Captive") for the purpose of having additional capacity on a quota sharing basis, currently focused on property insurance for earthquake and wind exposed properties underwritten by certain managing general agents. The Captive buys reinsurance, limiting, but not eliminating the Company's exposure to underwriting losses.
captive : kept as a prisoner or in a space that you cannot get out of; unable to escape / not free to leave a particular place or to choose what you want to do
quota : a limited number or amount of people or things that is officially allowed / an amount of something that somebody expects or needs to have or achieve / (politics) (in a system of proportional representation) a fixed number of votes that a candidate needs in order to be elected
As of December 31, 2021, our activities were conducted in 331 domestic locations in 44 states, and 20 international locations in Canada, Ireland, the United Kingdom, Bermuda and the Cayman Islands.
Segment Information
Our business is divided into four reportable segments: (i) the Retail segment, (ii) the National Programs segment, (iii) the Wholesale Brokerage segment and (iv) the Services segment.
The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers, as well as non-insurance warranty services and products through our automobile dealer services (“F&I”) businesses.
The National Programs segment, which acts as a managing general agent (“MGA”), provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through a nationwide network of independent agents, including Brown & Brown retail agents.
liability : the state of being legally responsible for something / a person or thing that causes you a lot of problems / the amount of money that a person or company owes
The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents.
surplus : an amount that is extra or more than you need / the amount by which the amount of money received is greater than the amount of money spent
The Services segment provides insurance-related services, including third-party claims administration and adjusting services, comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services and Social Security disability benefits advocacy services.
advocacy : (formal) public support that somebody gives to an idea, a course of action or a belief / support, advice and help given to people, often with special needs or aims, who are unable to speak for themselves / the work of lawyers who speak about cases in court
The following table summarizes (i) the commissions and fees generated by each of our reportable operating segments for 2021, 2020, and 2019 and (ii) the percentage of our total commissions and fees represented by each segment for each such period
The majority of our operations are in the United States. In addition, we operate retail operations based in Ireland, Bermuda and the Cayman Islands, a wholesale brokerage operation based in England and a managing general agent operation in Canada.
These operations generated $78.0 million, $35.1 million and $17.7 million of revenues for the years ended December 31, 2021, 2020 and 2019, respectively. We do not have any material foreign long-lived assets.
Retail segment
The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public, professional and individual insured customers, and non-insurance services and products through our automobile dealer services (“F&I”) businesses. Significant lines of coverage and capabilities are:
No material part of our retail business is attributable to a single customer or a few customers. During 2021, commissions and fees from our largest single Retail segment customer represented 0.5% of the Retail segment’s total commissions and fees.
attributable : probably caused by the thing mentioned
As of December 31, 2021, our Retail segment employed 6,301 employees. Our Retail segment has physical locations in 42 states and Ireland, Bermuda and the Cayman Islands. In connection with selling and marketing of insurance coverages, we provide a broad range of related services to our customers, such as risk management strategies, loss control surveys and analysis, consultation in connection with placing insurance coverages and claims processing.
consultation : the act of discussing something with somebody or with a group of people before making a decision about it / a formal meeting to discuss something / a meeting with an expert, especially a doctor, to get advice or treatment
National Programs segment
As of December 31, 2021, our National Programs segment employed 2,842 employees. The National Programs segment specializes in the development and management of insurance program business, often designed for niche, underserved markets. Our largest National Programs segment customer represented approximately 7.6% of the segment’s total commissions and fees. We offer program management expertise for insurance carrier partners across numerous lines of business, which can be grouped into five broad categories as detailed below
niche : a comfortable or suitable role, job, way of life, etc. / (business) a small section of the market for a particular kind of product or service / a small hollow place, especially in a wall to contain a statue, etc., or in the side of a hill
Professional programs. Professional liability and related package insurance products are tailored to the needs of professionals in the following areas: dentistry, legal, eyecare, insurance, financial, physicians and real estate title professionals. Professional liability programs also offer supplementary insurance-related products to include weddings, events, medical facilities and cyber liability.
supplementary : provided in addition to something else in order to improve or complete it
Personal Lines programs. Personal lines programs offer a variety of insurance products to personal lines consumers including homeowners and personal property policies; residential earthquake; as well as private passenger automobile and motorcycle coverage.
Commercial Lines programs. Commercial programs serve a broad segment of industries with our Core Commercial offering. Specific industries and market niches are served by our specialty programs including automotive aftermarket, professional and amateur sports, motor sports, special events and the entertainment industry; commercial transportation and trucking; forestry; manufactured housing; and workers’ compensation.
Public Entity programs. Public entity programs range from providing fully insured programs to establishing risk retention insurance pools, and excess and facultative specific coverages, including administration of various insurance trusts for cities, counties, municipalities, school boards, special taxing districts and quasi-governmental agencies.
retention : the action of keeping something rather than losing it or stopping it / the action of keeping liquid, heat, etc. inside something rather than letting it escape
municipality : a town, city or district with its own local government; the group of officials who govern it
Specialty programs. Specialty programs include flood insurance, commercial difference-in-conditions (earthquake), all-risk commercial property, collateralized risk, coastal property programs including wind, lender-placed solutions, sovereign native-American nations and parcel insurance.
collateralize : to give property as collateral for a loan, bond, etc.
Wholesale Brokerage segment
As of December 31, 2021, our Wholesale Brokerage segment employed 1,594 employees. Our Wholesale Brokerage segment markets and sells excess and surplus commercial insurance products and services to retail insurance agencies (including Brown & Brown retail offices). The Wholesale Brokerage segment represent various U.S. and U.K. surplus lines insurance companies.
Additionally, certain offices are also Lloyd’s of London correspondents. The Wholesale Brokerage segment also represents admitted insurance companies for purposes of affording access to such companies for smaller agencies that otherwise do not have access to large insurance company representation.
correspondent : a person who reports news from a particular country or on a particular subject for a newspaper or a television or radio station / (used with an adjective)a person who writes letters, emails, etc. to another person
Excess and surplus insurance products encompass many insurance coverages, including personal lines, homeowners, yachts, jewelry, commercial property and casualty, commercial automobile, garage, restaurant, builder’s risk and inland marine lines. Difficult-to-insure general liability and products liability coverages are a specialty, as is excess workers’ compensation coverage.
encompass : to include a large number or range of things / to surround or cover something completely
Wholesale brokers solicit business through mailings and direct contact with retail agency representatives. During 2021, commissions and fees from our largest Wholesale Brokerage segment customer represented approximately 1.4% of the Wholesale Brokerage segment’s total commissions and fees.
solicit : (formal) to ask somebody for something, such as support, money or information; to try to get something or persuade somebody to do something / to offer to have sex with people in return for money
Services segment
As of December 31, 2021, our Services segment employed 974 employees and provided a wide range of insurance-related services.
Below are brief descriptions of the capabilities within the Services segment.
Social Security Advocacy. Social Security advocacy assists individuals throughout the United States who are seeking to establish eligibility for coverage under the federal Social Security Disability program and provides health plan selection and enrollment assistance for Medicare beneficiaries.
eligibility : the state of being able to have or do something because you have the right qualifications, are the right age, etc. / the quality of being considered a good choice as a husband/wife, usually because of being rich or attractive
beneficiary : a person who gains as a result of something / a person who receives money or property when somebody dies
We work closely with employer sponsored group life, disability and health plan participants to assist disabled individuals in receiving the education, advocacy and benefit coordination assistance necessary to achieve the fastest possible benefit approvals. In addition, we provide second injury fund recovery services to the workers’ compensation insurance market.
Claims Administration. Claims administration provides third-party administration (“TPA”) services for commercial and personal property and casualty, medical, vocational, and professional liability insurance markets on a nationwide basis, providing claims adjusting, administration, subrogation, litigation and data management, claims investigations services, claim investigations, and audit services to insurance companies, self-insureds, public municipalities, insurance brokers and corporate entities. We source claims activity from various Arrowhead programs in our National Programs segment, as well as from third parties.
vocational : connected with the skills, knowledge, etc. that you need to have in order to do a particular job
Medicare Secondary Payer compliance and Medicare Set-Aside. Medicare secondary payer compliance and Medicare set-aside provides statutory compliance services, conditional payment negotiation and resolution, structured settlements/annuity funding, professional administration and a post-settlement durable medical equipment and pharmacy program administration.
compliance : the practice of obeying rules or requests made by people in authority / the quality of being too willing to agree with somebody or do what they want
statutory : fixed by law; that must be done by law
Self-Insured Trust Administration. Self-insured trust administration provides TPA services for government entities and self-funded or fully-insured workers’ compensation and liability plans and trusts including claims administration and a dedicated subrogation recovery department.
subrogation : the ability that an insurance company has to get the money it has paid to a customer back from the person who caused the accident, damage, etc.
Workers’ Compensation and Liability Plan Administration. Workers’ compensation and liability plan administration provides claims administration, cost containment consulting services for secondary disability and subrogation recoveries, certified and non-certified medical management programs, access to medical networks, case management, utilization review services and risk management services such as loss control.
In 2021, our five largest contracts represented approximately 19.4% of fees revenues in our Services segment.
Competition
The insurance intermediary business is highly competitive, and numerous firms actively compete with us for customers and insurance markets. Competition in the insurance business is largely based upon innovation, knowledge, understanding of terms and conditions of coverage, quality of service and price. A number of firms and banks with substantially greater resources and market presence compete with us.
intermediary : a person or an organization that helps other people or organizations to make an agreement by being a means of communication between them
A number of insurance companies directly sell insurance, primarily to individuals or small enterprises, and do not pay commissions to third-party agents and brokers.
In addition, the internet and startup technology companies continue to be a source for direct placement of personal lines or small business insurance. We have our own technology capabilities to also serve single-line and small businesses.
While it is difficult to quantify the impact on our business from individuals or small businesses purchasing insurance over the internet, we believe this risk would generally be isolated to personal lines customers with single-line coverage, or small businesses that do not have a complex insurance program, which represent a small portion of our overall Retail or National Programs segments.
quantify : to describe or express something as an amount or a number
(the rest omitted)
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