Brokers are justified in thinking independence is shrinking due to increased consolidation in the P&C industry, according to Lorie Phair, president of the Canadian Broker Network (CBN), Canada\u2019s largest network of independent brokers.<\/p>\n
To think ownership does not influence a brokerage\u2019s decision-making would be \u201cna\u00efve,\u201d she adds.<\/p>\n
Phair refers to a finding in\u00a0Canadian Underwriter<\/em>\u2019s 2022 National Broker Survey, which shows 50% of brokers think P&C industry consolidation poses a strong threat to the broker channel, whether through insurance company mergers or brokerage M&A.<\/p>\n CBN\u2019s independent, largely employee-owned members have grown to represent over $2 billion in property casualty premiums. But Phair says the amount of industry consolidation has the potential to overwhelm the independent broker channel. And at the end of the day, she believes, it will affect insurance buyers.<\/p>\n \u201cI think we need to look at what true brokerage independence is: an owner\u2019s ability to make decisions without being influenced by outside equity ownership,\u201d Phair said. \u201cThat is the reason we look for independent brokerages as potential members of CBN, because they\u2019re free to make decisions they feel is right for their firms.\u201d<\/p>\n More importantly, look at how brokerage ownership plays out for clients, Phair says.<\/p>\n \u201cWhen you\u2019re not influenced by an outside controlling interest, you\u2019re free to hire the people that best meet your customers\u2019 needs, you\u2019re free to partner with the right insurance providers to meet your customers\u2019 needs, and you\u2019re free to provide services and operate your business overall, emphasizing the areas that you deem are important to your business and clients,\u201d Phair said.<\/p>\n \u201cTo say it will be business as usual once you sell or bring in an outside equity partner; that you will be able to freely create solutions, services and align your business needs with the needs of your clients, would be na\u00efve.\u201d<\/p>\n The intent of every broker may be to do the best for their clients, but ownership matters, she adds.<\/p>\n At least, that is what CBN believes. From its vantage point, it sees pressure on a brokerage from new owners who have acquired it to support certain markets. Or sometimes the acquired brokerage is unable to protect employees due to cost reduction following the acquisition.<\/p>\n \u201cThese consolidators will influence how you run your business, who you buy from, what resources are available to you and how you service your customers,\u201d says Phair.<\/p>\n It\u2019s why the industry is seeing more startup opportunities, and different types of franchises and brokerage ownership models like CBN are growing, Phair says. \u201cBecause brokers who don\u2019t want to sell or answer to outside [equity] partners, are looking at these options.\u201d<\/p>\n Models like CBN\u2019s are designed to allow brokers to remain truly independent, Phair explained. With the support of a network of like-minded peers, brokers \u201crecognize there\u2019s strength in numbers,\u201d she says.<\/p>\n \u201cOur members are committed to preserving the future for the independent broker channel, and leverage the tremendous value of true independence into the best possible value propositions for insurance customers, employees and insurance partners.\u201d<\/p>\n <\/p>\n