What are the advantages of being a private brokerage firm?

What are the advantages of being a private brokerage firm? | Insurance Business America

Insurance News

What are the advantages of being a private brokerage firm?

“I’m not sure a publicly traded firm can do that”

Insurance News

By
Chris Davis

Mike Milligan (pictured), the managing director at C3 Risk & Insurance Services, believes there are plenty of advantages to being a privately held brokerage firm. In an interview with Insurance Business, he highlighted that the absence of shareholder pressure allows a privately held firm like C3 to consistently prioritize clients and employees and provide leading edge research and products for clients’ benefit.

“I’m not sure a publicly traded firm can do that to the specialized extent that we can,” he said.

A significant part of C3’s client and employee focus involves creating technology to better inform their clients. Milligan explained that C3 has developed new tools and platforms, giving them an edge in research and outreach. These tools include C3 Profile, which provides comprehensive public company information instantly; C3 Lightning, which expedites international clinical trial placements across 125 countries; and C3 The Answer, a tool that analyzes 13,000 directors and officers (D&O) lawsuits in 80 different ways.

The technology is not just about efficiency and providing the best information to their clients, but also about advancing the industry. Milligan noted the historical reliance on hypothetical data in D&O. He recounted that in his first IPO, D&O liability insurance cost $428,000 in premium for a $30 million limit.

“The board didn’t spend time on D&O,” he said. “Premiums increased into the millions annually and D&O became a poison in our industry.”

Milligan pointed out that The Answer was built for such situations. It addresses difficult questions like how much insurance a business needs, the implications of insider ownership during litigation, and the impact of various financial scenarios. The technology of The Answer gives C3 clients a more accurate, nuanced assessment and outlook of their insurance needs, all based on actual collected data instead of hypothetical projections.

With their specialized technology and platforms, Milligan emphasized the ways in which specific data can better forecast insurance needs for their clients.

“We meet with a D&O prospect who has Phase 3 results coming,” Milligan explained. “They will file an NDA and get an FDA decision. We can look up Phase 3, NDA, CRL lawsuits and show how many suits have happened. We can tell boards suit dismissal rates, settlement rates, settlement amounts, and market cap considerations.”

Commitment to clients

The commitment to individual clients and employees is more than a talking point for Milligan and his team – it’s the foundation of how they operate. Technology with data driven decisions and guidance is necessary to their strategy of helping their clients – so much so that Milligan even once convinced a board member against buying $100 million worth of insurance.

“I sell insurance for a living. I’m happy to sell you $100 million. But here are your risk factors,” Milligan advised the board member after utilizing The Answer to develop a comfortable solution.

While the industry has seen significant consolidation with a relentless pace of mergers and acquisitions, there has been a subsequent shift from privately held to publicly held ownership. However, C3 has seen growth by 35% annually for four years, all as it remained privately held.

With plans to maintain its independent growth and technological edge, C3’s client roster – including companies with market caps ranging from $100 million to $50 billion – is a testament to its approach.

“We work with really amazing companies because they trust us,” said Milligan. “We are totally focused on our clients and our employees, and that’s what makes the difference.”