Company Context

Arthur J. Gallagher & Co. (AJG) is one of the largest global insurance brokerage, risk management, and consulting firms, with operations in more than 130 countries and annual revenue of roughly $10.1B. Its business model is primarily fee- and commission-based, helping commercial clients place insurance coverage with carriers while also providing employee benefits brokerage, claims support, and risk advisory services. AJG has built scale through a mix of organic growth and acquisitions, competing against large global brokers such as Marsh McLennan, Aon, and WTW, while also facing thousands of regional and specialty brokers.

Strategic Situation

You are interviewing for a strategy role at AJG. The interviewer wants to test whether you understand the insurance brokerage industry and can think beyond a generic “I want to work here” answer. Assume AJG is evaluating how to accelerate growth in the U.S. middle-market commercial brokerage segment over the next 3 years. Leadership must decide whether to prioritize: (A) deeper penetration of existing middle-market clients through cross-sell and specialty products, (B) acquisition of regional brokers, or (C) a digital go-to-market motion for smaller middle-market accounts. The decision matters now because pricing in several commercial lines is stabilizing after a hard market cycle, acquisition valuations remain elevated, and clients increasingly expect data-driven advisory support rather than pure policy placement.

Data Points

• Existing middle-market client retention: 91% annually
• Current average revenue per middle-market client: $42,000
• Cross-sell opportunity into specialty lines/benefits: +$9,000 average annual revenue for adoptive clients
• Estimated adoption rate for a focused cross-sell program: 20% of current clients over 3 years
• Digital channel could target 25,000 smaller accounts, with expected annual revenue of $8,000 per won client and a projected win rate of 4%

Deliverables

1. Size the revenue opportunity for each of the three growth options using the data provided and reasonable assumptions.
2. Assess the competitive dynamics of the insurance brokerage industry and AJG’s relative position.
3. Recommend which growth path AJG should prioritize over the next 3 years.
4. Outline a go-to-market plan for the recommended option, including capabilities required.
5. Explain why the insurance brokerage industry is attractive for a candidate seeking a long-term career in strategy.

Constraints

• AJG can allocate up to $1.2B of capital to this initiative over 3 years.
• Management wants a plan that is accretive to margin by year 3.
• The company cannot materially increase regulatory or carrier concentration risk.
• Any recommendation should be executable without disrupting AJG’s decentralized sales culture.