Insurance companies turn into nervous Nellies around hurricane season. But even if the storms get especially bad this year (as some forecasters are predicting), one part of the industry could see sunny days ahead: insurance brokers.

Selling insurance has been a brutal business lately, even with the economy rebounding. Sales growth has been muted at the big brokerage firms, and many insurers have cut premiums since 2004. Low interest rates have slashed brokers investment income. And in 2005, state regulators killed a cash cow by banning big brokers from taking controversial contingent commissions bonus payments from insurers in return for policy sales. It s been a quadruple whammy, says Morningstar analyst Bill Bergman.

Yet some pros, including Bergman, are turning more optimistic on the sector. Insurance sales often pick up in the latter stages of an economic recovery, and brokers could start to post revenue growth in late 2010 or 2011, says Stifel Nicolaus analyst Meyer Shields. Insurance-rate decreases have slowed and could soon stabilize. And some bans on contingent commissions have eased up, prompting firms like Arthur J. Gallagher to start taking those commissions (now fully disclosed). This is a cyclical business, says Shields, and we re past the worst of it.

Many brokers also downsized during the recession, and their lower cost structures are starting to pay off. The big global firm Marsh & McLennan, for instance, posted flat revenue in the first quarter but boosted operating income by 35 percent from a year earlier, to the highest level in five years. CEO Brian Duperreault has streamlined operations since taking over in 2008, says Bergman, creating a leaner and cleaner firm. The stock trades at a price/sales ratio of 1.1, half its level in 2003. And with revenue expected to pick up next year, the stock should be in for gains, according to Shields.

Granted, there s no guarantee the brokers will bounce back. Demand for insurance could falter if the economy loses steam. But rates can t stay down forever, says Bergman. And it can pay to be patient. The last time insurers started hiking rates, back in 2000, the brokers went on to beat the market for several years.