Do you want to see the future of insurance in Canada? Just look at Newfoundland, suggests one east coast broker.
“You are going to see large megabrokers who will each have offices in roughly the same spot, all across Canada,” says Michael Stack, vice president of Archway Insurance. “I like to use Newfoundland as an example. You have about five main brokerages that are supported on the personal lines side by one market; they’ve gobbled up the small guys. That same thing is happening nationwide: you are going to end up with 10 or a dozen large regional brokerages in Canada.”
That prediction comes just as
Intact Insurance Insurance has announced that it has signed a definitive share purchase agreement to acquire Newfoundland and Labrador-based Metro General Insurance Corporation Limited.
Stack, who is spearheading Archway’s acquisitions in Nova Scotia and New Brunswick, sees the recent moves by
Desjardins and
Travelers as just the beginning of a growing merger and acquisition trend.
“That was a big deal; buying State Farm makes Desjardins the number two writer in Canada, so they’ve really come a long way through acquisition,” he told Insurance Business. “They are making a play for sure; Travelers too, when they acquired The Dominion last year.”
The move to a dozen large regional brokerages won’t come immediately, says Stack, but it will come faster than most might expect. (continued.)
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“You are going to see rapid consolidation of brokerages Canada-wide, and in every region,” says Stack. “It will happen beyond the existing generation of brokerages, but when they sell, they are going to sell to these same dozen players. And you are going to see what is going on right now in Newfoundland.”
The Newfoundland example is that you have an insurer like a Travelers or an Intact teamed up with one brokerage, offering their products on the side with a presence in each region, says Stack.
And already that push for acquisition is moving ahead full steam in 2014.
“It’s February, and we’ve already done three deals this year,” says Stack. “HUB has bought two or three;
BrokerLink bought Macdonald Chisholm Trask (MCT) Insurance – they are just becoming active in M&As in the Maritimes. I predict you are going to see them buying more out here.”
