Many insurance companies, including brokerages, are struggling with a worsening talent gap. Some industry stakeholders say helping younger professionals start their own brokerage firms as authorised representatives (ARs) could attract and keep more people in the industry.
“It's not just about bringing more young people into the industry, it's about creating pathways for them,” said Stacy Finnegan (pictured). “Being an authorised representative insurance broker offers a dynamic and less mundane career option.”
Finnegan has more than two decades of experience with broking and insurance firms. She’s also chair of the Australian and New Zealand Institute of Insurance and Finance’s (ANZIIF’s) Insurance Broking Faculty Advisory. Finnegan said repX helps aspiring qualified insurance professionals start their own AR brokerage.
The idea of creating more insurance firms to stimulate industry talent, offer more career options and, hopefully, increase options for customers, could be an antidote to the ongoing march of mergers and acquisitions (M&A). In recent years, according to some sources, the number of brokerages operating in Australia has shrunk annually by at least several percent.
Data points to industry mergers – across the business world, not just involving insurance firms – as stifling competition and also causing recruitment issues, including less employment opportunities and career options.
Industry stakeholders like Finnegan would like to turn that around. She recommended that industry professionals interested in setting up their own brokerage should take the following into consideration.
Finnegan said aspiring ARs need to ask themselves why they want to become an AR broker?
“Understanding your motivation - whether it's financial, cultural, or related to client service and support - is crucial for long-term success,” she said.
Differentiation is also important, said Finnegan.
“Identify your client base and specialisation because knowing your niche helps in standing out in a competitive market,” she said.
“Are you fully prepared?” Finnegan said. “Or do you have gaps to fill? Assess your technical knowledge, financial stability - especially during lean times - and existing financial commitments.”
The COO said it’s also “essential” to have a clear plan for managing your finances.
“How will you find your clients?” she said. “Developing a robust and adaptable strategy for client acquisition is vital.”
“When do you want to start?” Finnegan said. “Do you have a business plan, business name, and target market that align with your business and financial goals?”
The structure of the business is also an important building block. “Choosing the right structure is crucial for both operational efficiency and financial success,” she said. “Is your business set up to maximise financial benefits?”
Finnegan also suggested that the industry’s adoption of new technology would be easier if there were more small, nimble insurance firms.
“Many authorised representative networks or even individuals within the network have been able to more easily embrace new technology than working for a large broking house working on frustrating legacy systems,” she said.
“The younger generation is increasingly drawn to freelance and fulfilling opportunities and the YOLO (You Only Live Once) mindset,” said Finnegan.
She gave the example of a younger industry colleague who took over his father’s farm-focused brokerage. Instead of taking on farm policies, he hired another broker to manage those responsibilities, she said, and then focused on his passion: the firm’s cyber and tech clients
As the leader of their own AR brokerage, Finnegan said, brokers can set their own financial and client goals and choose charitable and social contributions that interest them.
“There is the option to grow a large business, raise children or follow any other dreams while servicing their own book,” she said.
Starting an AR brokerage offers the possibility, said Finnegan, of “writing their own future.”
“Young talent entering the industry now will shape the future of the intermediated market.”
A recent Deloitte’s article referred to talent retention as “one of the most pressing challenges in mergers and acquisitions.” The article cited a study that found a firm’s voluntary attrition rate increases by over 30% during M&A transactions.
Would expanding the number of ARs help ease the industry’s recruitment issues? Please tell us your view below
