A brokerage in Alberta has started a new chapter, thanks to its partnership with a global broker. At the end of the summer, Arthur J. Gallagher revealed that it was extending its Canadian footprint in the province with the acquisition of Insight Insurance & Risk Management Ltd., which is the official brokerage of the Edmonton Oilers. Insight was founded in 2013 by CEO Alexis Harke (pictured), and serves a diverse client base across western Canada, with a focus on the construction, real estate, hospitality, and sports and entertainment industries.
Harke recently spoke to Insurance Business to shed light on what prompted the deal with Gallagher, while reflecting on the brokerage’s major milestones from the past seven years, starting with why she founded the firm in the first place.
Before starting Insight, she explained, “I was with an international insurance brokerage group for just short of 25 years. I had started there as a customer services rep, and in my last 11 years with them, I was on the Canadian executive committee. The training that I received from that firm was very solid, [but] during the last five years, it was about doing less with more – meaning less value-added services to the clients to increase revenues for the bottom line … We thought that this model was fraught with issues.”
As a result, the goal when starting Insight was to turn the clock back 10 years, and go back to a time when the brokerage team could look clients in the eye, shake their hands, and regain their trust by providing them with excellent client service. “We could demonstrate to them that we could earn our money, despite often not being the lowest priced option for them,” said Harke.
The Insight CEO’s experiences at her previous firm gave her a leg up into certain industries of focus at the new brokerage. For instance, one of the previous firm’s main practices was construction, so Harke gained knowledge in that industry, and she was also tasked with launching the sport and hospitality practice for Canada. Being engaged in both of these spaces later opened doors for Insight.
“One of the opportunities [we had] was when the Edmonton Oilers’ ownership group was looking to partner with the City of Edmonton to build a new arena and what they called the downtown Ice District,” said Harke. “While we were not the broker for the City of Edmonton, we had in the past looked after a large sports entity that owned the existing arena that the team played in. They were also involved in horse racing, IndyCar racing, and large summer festival events.”
It turns out that the city’s risk managers had been watching the Insight team at work for years, and when the time came to approve a broker partner for the new build, the brokerage’s name was at the top of the list. “When I was asked about responding to the RFP for the new arena, I said ‘yes’ and they and the Oilers ownership group accepted us as the chosen broker,” said Harke, adding that Insight then went on to craft a one-of-a-kind insurance placement that looked after the approximate $2.5 billion construction build, “and the rest is history.”
There were, nonetheless, challenges in looking after the insurance needs of a professional sports team. One of the main hurdles was that most professional sports entities have a lot of complex exposures. The casualty programs are very complex for this industry, as entities deal with reputational, cyber, terrorism, and D&O-related risks, which all have to be addressed in their insurance programs. At the same time, the Insight team had a large, multi-year construction build to cover as well.
“Combining the two was challenging, but [the ownership group was] very open-minded and the market responded,” noted Harke.
Then, three years ago, another opportunity came around, this time from Gallagher, which was looking to have a larger presence in Edmonton and wanted to partner with Insight to gain a foothold into the market. An ongoing conversation between Gallagher and Harke over an acquisition continued over the next two years.
“When the market started to harden about 24 months ago, we were doing well. We were holding our own – we were growing, our clients were happy, retentions were still in the 90th percentile, but it was becoming more difficult for our staff to maintain all of the things that we were doing for our clients,” said Harke.
In the summer of 2019, Gallagher’s focus on family and its clients started to resound with Harke and Insight’s senior leadership. The next three months involved more serious discussions around a deal – and then COVID-19 hit. The partners agreed to put further conversations on the backburner until May, which is when Gallagher reached back around to Insight.
“Living through COVID, seeing the changes in the market, knowing that the reality was insurance broking was likely going to change in significant ways … we would survive, but we thought we would thrive at Gallagher,” said Harke. “The decision was the right [one] based on what Gallagher offers for their partner brokers – security for the future of our 20 team members and their families, and the opportunity to serve our clients over the next four or five years, which I suspect are going to be very different and difficult.”
Already, hurdles like reduced capacity in the property and the casualty sector have defined the marketplace, which only continues to harden and, in turn, has translated into dramatic premium increases. Meanwhile, insurer and broker M&A is occurring at a rapid pace, which means that insureds’ options for competitive products and pricing is falling, according to Harke.
“All of this combined with the continued decline of economic conditions in the west, especially in Alberta, makes it a pretty difficult environment,” she said, adding that the pandemic has added even more challenges. As a result, she continued, “This is going to be a fantastic time for superior brokers and brokerages to shine, and Gallagher is uniquely positioned to be one of those brokerages.”