Canadian Underwriter

How consolidation is changing broker-insurer relationships

July 7, 2023   by Alyssa DiSabatino

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Brokerage consolidation is changing how insurers interact with their broker partners, panellists said during the Insurance Brokers Association of B.C. (IBABC) AGM and Leader’s Conference in Whistler, B.C., last week. 

The impact of consolidation is most acute for insurers who typically deal with small brokerage firms but are now required to adapt to large brokerage conglomerates, one panellist shared.  

“The consolidation of brokers is a really significant consideration for us,” said Paul Jackson, chief operating officer at Gore Mutual Insurance Company. “When I joined Gore, we had about 500 brokers and our business was built to support small-medium enterprises on a national canvas.” 

Today, however, a majority of Gore’s portfolio business involves working with consolidated brokers or with large regional or national broker groups.  “That’s the reality that we’re dealing with, and our business just wasn’t built for that,” Jackson said. 

Working with large brokerage groups has required Gore to reengineer the way they do business. At times, that’s meant making trade-offs about where to place resources or capacity, Jackson added. 

Consolidation doesn’t seem to be slowing down anytime soon. 

Geographic expansion (43%) and M&A activity (41%) were cited as the two strategies broker owners (with 100 or more employees) reported strengthened their businesses the most, according to responses from more than 150 brokers in Canadian Underwriter’s most recent National Broker Survey.  

In Ontario alone, brokerage consolidation spiked by 60% in 2022 from the previous year. Of the 48 finalized transactions, 87% were sold to large consolidators, according to data from the Insurance Brokers Association of Canada. 

“We’re preparing for a scenario, if you fast forward three to five years, where there [is] a much [smaller] number of brokers still servicing the same number of customers. [There is] still probably the same number of people working in the industry…but with fewer decision makers,” he said, “and that just changes the whole dynamic of the business.” 

Debbie Coull-Cicchini, executive vice-president at Intact Insurance, shared the metrics her company uses to decide which brokers to do business with.  

“We get a lot of brokers through acquisitions,” said Coull-Cicchini. “When we appoint brokers, or we cancel them — and we do [cancel them] — there are two reasons.” 

One reason has to do with whether the organizations’ values align, she said. The other is the presence of fraud. 

When the opportunity to appoint an acquired broker to a new position arises, “in some cases the answer is no, because their values didn’t match ours,” she said. “Profanity with staff is unacceptable, for example, and we still see it some cases periodically in the industry.”  

As for fraud, if every car in a brokerage’s auto portfolio has winter tires so the broker can save money on their client’s policy, for example, that may be a red flag for Intact to reconsider a potential appointment or partnership, Coull-Cicchini suggested. 

“We do appoint new brokers, [but] we draw on our values, we draw on recommendations that begin in the marketplace as well as where they might be coming from,” she said. 

As consolidation continues, the entire definition of a broker is changing alongside it, another panellist observed. 

“You can’t use the term ‘broker’ anymore; and the reason that you can’t do that is [because] it’s not even close to [a] homogenous [definition],” said Graham Haigh, senior vice president and COO, West, at Wawanesa Mutual Insurance Company. “If you go back 20 years and you described a ‘broker,’ you could hit a pretty decent percentage of your partners.

“[Today], you go from a small rural broker that deals with largely walk-in clients and the age category that they might have, and then you go to the large multinational brokers. We’re trying to decide how the service this wide swath of sophistication. It’s incredibly complex for us. We have to design our processes for 500 different broker partners that are so distinctly different.” 

For a brokerage, the key to getting an insurer appointment is to be proactive, Haigh suggested. “If you come with a good business plan, and you can show the path forward with us, we’re interested.” 


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