L.A.'s insurance brokerage industry is both booming and consolidating, with more than one-third of the businesses on the List posting double-digit revenue growth in 1996.

Two of the 15 brokerages on the List No. 6-ranked ISU Insurance Group of Pasadena and No. 11-ranked Lockton Insurance Brokers Inc. of Los Angeles reported revenue increases of 50 percent or more in 1996, compared with 1995.

The List's top five insurance brokerages were largely the same as they were last year, with Johnson & Higgins being the largest. The New York-based firm's Century City operation generated $82 million in revenues in 1996, up 14.7 percent from the previous year. Like most other businesses on the List, Johnson & Higgins added a few more employees since last year five, for a total of 520 workers at its L.A. office.

The one change among the top five this year is that Aon Risk Services of Southern California replaced Alexander & Alexander of California Inc. in the No. 3 spot which Aon accomplished by acquiring Alexander & Alexander early this year. It subsequently trimmed 35 employees from the companies' combined L.A.-area staff of 485, said Doug Brown, president of Aon's L.A. office.

None of the firms reported a revenue decline for their L.A. operations in 1996, although Dodge Warren & Peters reported flat 1996 revenues for its local operations. The Torrance-based brokerage slipped to No. 12 on the List, from No. 9 in 1995.

The traditional role of insurance brokerages has been to find the best deal for a client, then sell a policy to the client. But in recent years, many brokerages have expanded their roles to offer such additional services as risk management consulting and employee drug testing.

"The insurance brokerage business used to be a transaction," said Brown of Aon Risk. "But now our focus is on the cost of risk management."

The L.A. operations of Chicago-based Aon Risk reported revenues of $59.1 million in 1996, up 19.9 percent from 1995. Brown attributed the increase to more business from construction, technology and service industry clients.

The fastest-growing company on the List is the No. 6-ranked shop, Pasedena-based ISU Insurance Group. Its L.A. County revenues grew by 55.3 percent in 1996, a phenomenal pace by industry standards.

The brokerage experienced changes in both its fortunes and leadership last year. In 1995, ISU's L.A.-area operations suffered a 10.9 percent drop in revenues. This year, the brokerage vaulted from No. 8 to No. 6 on the List and added 18 employees. Also, Donald Anderson became president in October when his brother, Kenneth, who had been the firm's president, passed away.

Anderson said ISU's revenue jump is the result of companywide efforts, noting that "there's been nothing dramatic. We've just been building relationships with more and more companies."

A new entry to the List is Lockton Insurance Brokers Inc, debuting at No. 11. The brokerage's L.A. office, which opened in 1995, posted 50.8 percent revenue growth in 1996.

Tim Noonan, president of the L.A. office, said Lockton capitalized on the climate of rapid consolidations in the insurance brokerage industry to build its revenue.

Lockton, a privately held company, has not itself pursued acquisitions to accomplish its growth. Instead it has succeeded in attracting "exceptional clients and associates" from its bigger, consolidating competitors, Noonan said. He expects Lockton will continue to profit by serving niche markets as the larger brokerages consolidate.

"The regional brokers can capture the lower-hanging fruit," he said. "We have fewer offices than the bigger, national firms, so our brokers can better focus on their smaller markets, because that's where their bread and butter is."

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