Canadian Underwriter

How acquisitions help P&C brokers boost cross-selling options

October 28, 2022   by Philip Porado

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Several Canadian commercial P&C brokerages are actively acquiring wealth management, retirement planning and employee benefits firms so they can boost revenues by adding to their product ranges.

The simple math suggests a larger product suite — one that brings in verticals beyond property and casualty insurance products — can enhance a brokerage’s bottom line.

In most instances, the actual assets under management at many of these retirement-advisory shops aren’t worth purchasing on their own, said Yan Charbonneau, president of insurance industry acquisition firm Synex Business Performance.

It’s partly why many of these smaller wealth and benefits advisory firms aren’t consolidating through mergers or buyouts from banks. Also, while front-loaded commission structures for many retirement and wealth investment products give advisors a good living, they don’t create repeating revenues that generate free cash for acquisitions.

But cross-selling opportunities can make the acquisitions pay off.

“If I can buy a wealth management shop and then sell [their client base] employee benefits, and sell P&C to that client base, then I’ve got something. But if my offering is limited to the one stream that the clients already have, then you’re just rolling up the book of business, and why do that?” asked Charbonneau. “What I can offer an employee benefits shop [as a buyer] is much higher than what another monoline employee benefits shop can, because I’m going to cross-sell the whole thing with my P&C shop. And same for the advisory practice.

“There’s no way you can get profit if you’re not cross-selling. And this [is] basically why monoline doesn’t work anymore.”

Cross-selling is becoming more natural at what Navacord executive chairman T. Marshall Sadd called “multiline brokers that do P&C, which covers commercial and personal home and auto, and includes the benefits and the group retirement side of the business as well.”

Initially, those cross-sales happen organically. Group retirement and benefits clients can be moved to wealth advisors after they retire. And commercial and personal P&C clients can access retirement, wealth planning and benefits products.

“Having these folks housed in the same space [means] those conversations happen, and those opportunities will present themselves more often than if it happens only by referral,” said Sadd. “They’re all [within] the same business, the same brand and these opportunities are, I would say, warmer.

“You do get revenue synergies by putting these businesses together.”

Executing the strategy well means bringing sales-management structures to the acquired businesses and making the cross-sales deliberate. “That’s what we’re working on,” Sadd said. “What we do is put some better processes in place [at the acquired companies] to accelerate or increase the opportunities.”

But you don’t get those results by relying on referrals, Charbonneau agreed.

“If we were two different entities, and we make an agreement, and I say, ‘I’m going to send you some clients and you’re going to send me some clients,’ it works [for around] two or three weeks,” he said.


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