IBAO president on what's on top of brokers' minds

There’s 'concerned trepidation', she says

IBAO president on what's on top of brokers' minds

Insurance News

By Gia Snape

Mergers and acquisitions (M&A) across Canada are showing no signs of slowing despite the current economic environment, and brokers have “concerned trepidation” over the rate of consolidation, according to Suzanne Pountney (pictured).

For the president of the Insurance Brokers Association of Ontario (IBAO), the bustling M&A environment in Canada is a positive sign for the industry, despite those concerns.

“What seems to be most top of mind this year for brokerages has been M&A activity,” she said. “When everyone is trying to buy into the business, it pushes the price up, and that could be detrimental to family brokerages. I can see there being trepidation on that score.”

Likewise, there are also worries that brokers snapped up by larger firms will lose their small-town touch. But Pountney explained that the nature of M&As has changed, as buyers are recognizing the inherent value of community brokers.

“There are concerns there won’t be any small-town brokers left. But there are still lots of small-town brokers,” she said. “Some of them have been acquired by big brokerages, but they’re still operating. They have a storefront on Main Street, and I think that speaks to a difference in today’s M&A environment.

“To me, [M&A activity] is a positive. It means that we are a healthy industry. It means that we are doing a lot of things right, otherwise people wouldn’t want to invest their money with us.”

How has Canada’s M&A market changed?

Global dealmaking slowed in 2022 following record-breaking M&A figures in 2021, according to a Gallagher study, after political and economic events forced investors to reassess their strategies.

But Pountney is confident M&As will rebound this year, particularly those led by private equity and venture capital firms.

“Many financial institutions have a lot of excess capital right now. They’re looking to invest in businesses, and brokerages are safe investments,” she told Insurance Business. “They’re profitable and a great place to put your money. So, financial institutions wanting to buy into brokerages is probably going to keep happening.”

The biggest change in the M&A market is that acquirers aren’t just looking to buy a book of business anymore, Pountney observed.

“The main difference I see in the activity we’re seeing now is that the buyers seem to have a better understanding that they’re purchasing people and their relationships,” she told Insurance Business. “So, they’re much more interested in maintaining and retaining the people and the relationships as opposed to just acquiring books of business.”

But Pountney also acknowledged that the next generation of broker families could be pushed out of the market due to rising prices.

“My dad wants to retire, and I want to buy his insurance broking business. He can sell to one of the other financial institutions for a certain amount, but I can’t get a bank to give me that kind of money to buy my dad’s brokerage,” she said.

“That’s where we can see there might be issues. Hopefully, it isn’t the case that [M&A activity] pushes some of the next generation of brokers out of businesses.”

‘Challenges on the horizon’ for Ontario’s brokerages

Increased M&A activity is just one of many challenges on the horizon for Ontario’s brokers, according to Pountney, who took the top job at the broking association just last month.

She is the first new president at IBAO since 2020, after the pandemic halted its regular cycle of one-year leadership terms.

Speaking to Insurance Business, Pountney named auto reform, talent acquisition and retention, regulatory changes, and new ownership structures as some of the significant issues IBAO’s 16,000 members are facing today.

Despite these challenges, she is grateful for the opportunity to steer the association and advocate for brokers.

“I’m proud of the association that I represent,” said Pountney, who is the commercial lines manager at Ontario West Insurance Brokers in London.

“I’m super grateful for it and excited to have a good year and do some really great things.”

Prior to becoming president, Pountney served on the IBAO board of directors for nearly four years. She also served on the London Insurance Brokers Association’s board of directors for 12 years, including three terms as president.

Within IBAO, Pountney has been a key figure on the diversity, equity, and inclusion (DEI) committee, having served as chair since its establishment in 2020.

Do you agree with Pountney’s outlook on broker M&A and the challenges brokers are facing today? Sound off in the comments below.

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