Some brokers are entering into mergers or partnerships so they can more easily place hard-to-find coverage, according to one brokerage executive.
“We just feel that some brokers who do not necessarily have our volume are struggling to find market support and being able to provide solutions to customers who come and see them,” Kenny Nicholls, CEO of Western Financial Group, said in an interview Wednesday. “So we believe that size is very important in this field and that is why a lot of other competitors are moving forward and consolidating as well.”
Nicholls was asked about Western Financial’s recent agreement to take a non-controlling interest in Saint John, N.B.-based brokerage Huestis Insurance Group.
One advantage of Western Financial’s deal with Huestis, announced Feb. 23, is that the brokerages’ combined volumes, alongside their key carrier partnerships, will allow the two brokerages to build solid offerings and diverse products and ensure capacity to customers, he said.
Finding insurance capacity is a challenge for some clients, Nicholls said, citing hospitality as one example.
High River, Alta.-based Western Financial is a brokerage-owned by a subsidiary of Wawanesa Mutual Insurance Company. The exact terms of the Huestis deal were not disclosed. But Nicholls told Canadian Underwriter in an interview that Western Financial will get an equity stake of less than 50% in Huestis.
As a result, Western Financial Group now has about 200 sales and service centres and affiliated business interests in nine provinces. Until a few years ago, Western Financial only had brokerage offices in Western Canada.
“We wanted to make sure we were partnering with a group that offers really strong leadership,” Nicholls said of Huestis. “Our objective is to always learn from each other. As we continue learning more about each other, we will definitely study further options to strengthen that relationship and in due time see how that can evolve.”
Before the deal was done, Western Financial already had customers in Atlantic Canada, since Western has nationally-licenced brokers working out of Western Canada. So some commercial customers, as well as Atlantic Canada residents who own property out west, were going to Western Financial to get their insurance.
“A few years ago, as we were looking at our branding, it kind of became clear that although we have a physical presence in four Western Canadian provinces only, we actually realized we had customers all across the country, in the territories and in all 10 Canadian provinces,” Nicholls said.