Broker independence is alive and well: IBAO president

Insurance Brokers Association of Ontario (IBAO) president Joseph Carnevale is not concerned about a brokerage’s ownership structure, since he sees it playing no part in whether or not brokers are “trusted advisors” to clients.

“Every broker in the country is independent because we always have to put the best interests of our clients ahead of our own,” Carnevale says in an interview with Canadian Underwriter. “The idea that because of an ownership structure a broker might not be independent, I think, unfortunately maybe it had its day many, many years ago, but it no longer does.”

Carnevale, who is also the vice president of wholesale broking with Excess Underwriting in Markham, Ont., was speaking to Canadian Underwriter recently about a finding in the 2022 National Broker Survey. The survey showed 50% of brokers thought P&C industry consolidation posed a strong threat to the broker channel.

Carnevale clarified whether brokers in the survey were talking about insurance company mergers or brokerage M&A. In their answers, respondents referenced both. Canadian Underwriter asked whether consolidation on the brokerage side posed a threat to independent brokers.

“I think we need to just pause that for a second and revisit what it means to be an independent broker,” Carnevale replied, when asked a similar question in a subsequent interview. “Ultimately, every single broker and every brokerage is going to do the best job they can for their clients. If we figure there’s easily thousands and thousands of brokers working for insurance brokerages today that may be owned wholly or partially by insurance companies or other potential specialists, it’d be unfortunate if somehow we want to paint them with a brush that it’s somewhat different from all the other brokers.

“We all have the same licence and we’re all doing what we need to do for our clients to make sure that they’re served well,” Carnevale adds. “When we look at this today in 2022, we have to stand back and say that all brokers are independent and the ownership structure or who the owners are really plays no part in making sure that clients are looked after.”

Carnevale adds that in his discussions with brokers across Canada, decisions that brokerages make at the executive level based on ownership “certainly don’t get down to the local level where a broker is looking out for their clients and describing what his or her coverage should be, what the limits should be, and which insurer is the best one to cover that.”

As far as M&A on the brokerage side goes, there are still plenty of choices for brokers, who decide to sell for a variety of reasons. “No one’s forcing anyone to sell their brokerage,” Carnevale says. “If someone’s purchasing it, it’s because someone’s decided they want to sell.”

Brokers could decide they want to work for a smaller brokerage that’s more local in nature, or they would decide they want to work for a large multinational corporation.

“Everyone has choices available to them – where they want to work, who has the values and culture that they want to work with, who represents what they think their clients are really going to be interested in, and ultimately they’ll make those decisions,” Carnevale says. “I don’t think there’s any shortage of supply of the sorts of brokerages that everyone’s looking for.”

And Carnevale doesn’t see the pace of brokerage M&A slowing down any time soon. “The fact that there’s still buyers who want to buy brokerages shows you that there’s a huge desire and a huge demand to have even more brokerages because they feel the future is amazing. People are willing to invest in this industry going forward.”

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