Canadian insurance leader predicts US-owned brokerage layoffs, M&A slowdown

Canadian insurance leader predicts US-owned brokerage layoffs, M&A slowdown

Canadian insurance leader predicts US-owned brokerage layoffs, M&A slowdown | Insurance Business Canada

Insurance News

Canadian insurance leader predicts US-owned brokerage layoffs, M&A slowdown

‘Canadians are having to answer to bosses in Chicago’

Insurance News

By
David Saric

M&A activity may be a regular part of the Canadian brokerage landscape, but the COO of one brokerage believes that there is a “deafening silence” around the increasing Americanization of local businesses and has predicted that an M&A slowdown could drive layoffs at US-owned firms based in Canada.

“No-one’s talked about how the Americans have swooped in and bought up basically all of the big brokerages except for the two that are owned by insurance companies, which presents a whole other set of challenges about potential conflicts of interest,” Bruce Rabik (pictured), chief operating officer at Acera Insurance Services said. “Now, Canadians are having to answer to bosses in Chicago or are having big decisions made elsewhere.”

Rabik predicts M&A slowdown, potential layoffs at big brokerages

A slowdown of M&A activity in the Canadian market will result in industry-wide disruption, especially on the talent side, Rabik predicted.

“I expect to see a lot more movement of producers into other companies, as well as employees,” Rabik said. “As soon as M&A activity slows down in Canada, the big American players are going to start to wonder why they’re in a foreign country, which may result in these larger companies laying off employees.

“We’re going to witness a lot more pressure on the big brokers this year.”

Rabik sees “a lot of opportunity to hire staff and producers who have been disrupted with all the M&A activity,” he told Insurance Business.

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“Our focus in 2024 is getting out there and attracting talent with our model of employee ownership,” the COO said. “It’s just a matter of making sure people know about it and making connections with them.”

The company is looking forward to hitting its targets for M&A in 2024, but Rabik tempered that it will not be taking a scattergun approach to deals.

“We’re not necessarily going out there and just participating in every auction and paying the highest price. What we’re really looking for is owners that want to sell, or more importantly, partner with us,” he said.

The latest addition to Acera’s brokerage roster is KRS Insurance Brokers, a Newmarket-based specialty provider servicing the Canadian pet care and beauty industries.

“We see lots of opportunity for geographic expansion across the country, with [KRS’ PROfur and PROtique] programs and certainly with that expertise,” Rabik said. “We will be able to present these products in a more direct-to-consumer manner and we see lots of opportunity to cross sell to those business owners, from personal lines to commercial.”

Specialty challenges – insurers are “very particular these days”

Specialty expertise has proved a valuable driver of growth and relationships in today’s insurance industry, but Rabik flagged certain market nuances that specialty brokers are keeping an eye on, among them carrier appetite.

“Insurance companies are very particular these days,” Rabik said. “You have to watch your loss ratios very carefully, and it’s pretty easy for somebody to lose market [share], lose capacity and competition is fierce everywhere.”

Technology is also an increasingly vital part of the specialty brokerage package.

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“Another challenge is utilizing technology to be hyper efficient,” the CEO said. “If you’re in the specialty market and have a lot of smaller clients, it is extremely important to get as efficient as possible, whether that’s just processing paper internally or using technology to interface with customers, such as quoting, binding and self-service.

“Those kinds of considerations are becoming more and more important.”

What are your thoughts on Rabik’s M&A and specialty predictions? Leave a comment below.

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