Brett Boadway—Chief Operating Officer, IBAO
In what is becoming an annual tradition in this magazine, I’m once again documenting my predictions for the coming year. IBAO has the unique ability to see data trends and metrics from a 40,000-foot view.
M&A Will Not Slow Down
The story of brokerage M&A can be told in a single phrase—Slowly over the past decade, and now suddenly, all at once. 2022 was the busiest year for M&A activity in the Ontario brokerage channel, but we likely haven’t seen its peak just yet. Prior to 2022, 2019 was Ontario’s busiest year for M&A with 40 transactions recorded by IBAO that year. Now in 2022, IBAO has tracked 57 transactions at the point of publication. Ontario is rich in supply for those shopping, and brokerages remain a safe investment for those looking for a place to invest their capital. But there are other factors influencing this trend too. A relatively homogenous Principal Broker demographic are all barreling toward retirement at the same time. Financial pressures on operational expenses (especially technology) makes consolidation attractive. Pressures from insurers to meet volume minimums is growing and people management challenges leave many leaders feeling fatigued. This all creates an environment ripe for continued mergers.
Regulation Will Show Some Teeth
Regulatory dynamics are likely to develop further in 2023, with much of their motivation stemming from the Fair Treatment of Consumers mandate. Brokers will have already seen some indications of these changing winds, with recent examples including Take all Comers audits, new disclosure statements, CISRO’s Principals of Conduct, and RIBO’s About Your Broker Conduct Sheet as well as the changes to the RIBO auditing process. We do not expect regulatory change to slow down. Interestingly, IBAO is one of the only industry bodies with the capacity, resources and mandate to respond as an advocate for brokers and we are prepared to do just that.
Recruitment Will Be a Top Priority for the Industry, But the Broker Channel Has a Head Start
The CFIB recently listed the top three sectors most impacted by labour shortages, and financial services was on this shortlist. Recruitment to the industry is required, but the broker channel will fare well relative to our industry counterparts. We are ahead of the game, organized and focused. In 2018, IBAO formed a partnership with Humber College with the mandate of attracting more students toward a career as an insurance broker. In its early days, only 5% of the graduates of the insurance program wanted to be brokers. Today, the broker channel can boast that 80% of Humber’s graduates become brokers. This is a trend we are seeing across Ontario as IBAO and its members give more energy and resources to their local education institutions. Brokers have a compelling story and we must continue to get these messages out to job seekers. It will only help shape the future we’re creating. The good news is our efforts are working. Let’s do more of it.
Diversity Amongst Brokerage Leadership Will Make Progress
From our vantage point, it is a time of transition as many esteemed brokers shift leadership to the next generation. We are anticipating an increase in the representation of women and under-represented, minority talent in leadership positions at brokerages over the next coming years. Here’s to a future of diverse compositions.
Ontario Auto Reform Is Likely
After a three-year delay—the initiative was postponed due to the pandemic—all indications suggest that we will experience reforms to the auto insurance product in Ontario in 2023. For those that have lived through similar reform in past years, you know this comes with a big role for insurance brokers. Brokers will play an active role in educating and communicating these changes to Ontario consumers. IBAO will be ready to support you in these efforts.
No Matter the Size of the Brokerage, Individual Broker Voices Will Grow to Matter More Than Ever
The truly competitive differentiator of the broker channel will be recognized by each contributor’s reputation in local communities—geographical communities, cultural communities, and industrial communities. Your reputation and expertise will increasingly account for more than corporate marketing. The individual human voice will be valued over corporate mission statements. Keep your pencil sharp, hone your craft and ride the wave of success.