Consolidators will have to tread the line between growing rapidly while also ensuring growth doesn’t hinder operations, particularly customer service, said experts at an industry panel.
Amid consolidation, small and medium-sized brokerages will be able to remain competitive if they can find a way to leverage technology for the better, panellists discussed during the Young Brokers Conference in Niagara Falls.
“I think a lot of the consolidation companies are struggling from a customer service perspective,” said Dario Battista, president and CEO at isure.
“They’ve got a lot of pieces they’ve acquired, because that’s what the capital behind them wants to do — because their business model is to grow,” he explained. “So, they’re acquiring and acquiring, but at some point, a lot of these organizations have to start thinking about how they’re going to run their operation.”
It requires more business unity and sophistication for a company with 10 or 20 offices to grow to 50 or 60 offices through scale, for example.
Plus transactions usually take years to fully get worked out, meaning operations could be left in the lurch until then.
“At a personal level, I do wonder if consolidation ultimately is best for the client,” Battista said.
However, M&A — which increased by 60% in 2022 in Ontario from the year previous (mostly led by large consolidators) — doesn’t mean an end to the small- or medium-sized enterprise (SME).
But it does mean the market is changing, and SMEs will have to adapt to stay afloat, said another panellist.
“I really believe in the small- and medium-sized brokers. The ones I feel are going to last and not get acquired are the ones that embrace technology…[and create] that efficient and easy process for the customer,” said Sean Satar, director of personal insurance at Wawanesa.
“Customers are expecting fast, easy, efficient service. I think the small- and medium-sized [brokers] will be challenged to embrace technology as quickly as the larger ones. But the ones that do, and they can do it well, I think that they can [fly].”
But as Battista puts it, the tools are only useful if you know how to use them. “It’s adopting the technology, but then also having strategy and management insight on how to use it.”
Regardless of the speed of M&A, “brokers aren’t going away; they’re going to be here forever,” said Satar.
“But you can be very successful just carving out a niche and understanding the upcoming, emerging risks and be able to help customers to navigate through that.”
Feature image by iStock.com/PeopleImages
