Crystal Ball: 2024 Predictions

Brett Boadway—COO, IBAO

No one likes being wrong on predictions, so why do we put them in writing for later scrutiny? Because we want our members to know what’s on our mind based on our vantage point. Many contributing factors are pointing to changing competition and distribution over the next few years. And with any change, there are ways to set yourself up for success. Here are my crystal ball predictions for 2024 and how you can prepare your brokerage to come out on top. 

High numbers of M&A transactions will remain, but the characteristics of brokerages being acquired will likely shift.

IBAO’s final 2023 M&A numbers won’t be confirmed until early 2024, but if industry press is any indication, the number of brokerages who sold will almost be equivalent to 2022—a levelling off of activity. We expect that count to continue into 2024. 

While the volume of transactions is predicted to stay the same, we’re seeing a shift in the characteristics of the brokerages being acquired. Larger deals that impact a large number of policyholders and brokerage staff were announced in 2023: multi-office, multi-city and multi-provincial brokerages. 

It’s still possible we’ll see one or two of these major transactions continue in the coming year. Today, the main acquirers are well known. These buyers appear very comfortable with their own appetite. Expect them to continue their energetic pursuit of growth but realign their target acquisitions within their expected price bracket and their required return on investment. Ontario is rich in supply of quality businesses for those shopping and brokerages remain a solid investment for those looking for a place to earn a good return from their capital. 

Commercial Lines will see emerging competition. 

Brokerages are the commercial lines superpower in Canada. We’ve always dominated the space. But all great superpowers have adversaries looking for their cut of the pie. TD Insurance announced its interest in the small commercial space with a specific focus on Ontario. Regulators are open to discussing innovative ideas with others who come knocking. The big four management consultants are pitching embedded insurance, tied to the sale of another product. 2024 will place pressure on commercial lines brokerages to continue to evolve their value proposition as they maintain their dominance in the market. 

Brokerages will be eager to invest in technology solutions.

Brokerages have always been keen to invest in tech solutions when it makes sense, but vendors often say the bulk of brokerages are more likely to invest in the late majority rather than the early adopter period. In 2024, brokerages will adopt technology at a much faster rate than in prior years, driven by two major factors—the quality and quantity of brokerage specific tech products have matured and proven useful, and there’s an imminent need to shore-up operations due to staffing shortages, operational pressures and the continued evolution of consumer needs. 

Regulatory congestion will be an issue.

What do waiting for a bus in Toronto and insurance regulatory change have in common? You wait for a while, nothing shows up, and then too many arrive at the same time. 

The industry’s list of required regulatory changes is only growing longer. Treating Financial Service Consumers Fairly Guideline, Take All Comers Guidance, CCIR Position Paper on Climate Change, Natural Catastrophes and Consumer Awareness, OSFI’s Third Party Risk Management Guideline B-10, changes to RIBO exams—all of these efforts are likely necessary and noble, but it’s the pace of change coming from different regulatory groups paired with different implementations from multiple industry stakeholders that will come to a head for one common group—brokerages. Watch for IBAO to lead logistics throughout 2024. 

Solution: Invest in Your People

M&A Transactions

The strength of your team is a leading contributor to the value placed upon your brokerage. 

Commercial Lines Competition

It’s extremely hard to compete against a trusted professional who’s a well-informed, educated commercial lines advisor with access to multiple markets. 

Technology Investment

Take mundane tasks off your staff’s plate. Invest in your most prized assets and add value to their professional development to really make your business shine.

Regulatory Change

Take a deep breath and grab the upcoming opportunities with both hands. Our environment is changing and the opportunity to pitch the broker value proposition has never been brighter.

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