By Howard Pepper
Managing Director, Momentum Broker Solutions
Despite the broader challenges the insurance broking sector faces, there appears to be more corporate activity than ever. Indeed, according to a recent IMAS report consolidators are running out of targets. In recent times we have seen a plethora of acquisitions, with consolidators more active than ever including: –
- Networks acquiring brokers
- Consolidators buying networks
- Acquired network brokers acquiring brokers
- PE-backed acquisitions
- Major corporate brokers making acquisitions
- Large and small brokers merging
This is of course a natural business cycle and there can be positive outcomes for all. Clients can get better deals and wider resources, employees get different career opportunities, investors achieve larger returns. But there can be downsides. We often hear trumpeted a great news story for everyone when the reality for some may be nothing like. Employees may lose their jobs, be asked to work differently or behave in ways they didn’t sign up for. Clients may lose the relationships they have built, be asked to change the insurer relationship they have enjoyed, and some may be moved to centralised desk service. In any event, there is a different dynamic, the investment decisions and return requirements are no longer driven by the previous owners. Indeed, in some cases, the new owners have no affinity to the client and are solely motivated by the entity’s short-term returns.
Amidst what seems to be an unprecedented level of acquisitions the value of independence shouldn’t be overlooked. Experienced, client-focused people value the ability to provide the service their client needs – they recognise that putting the client first will drive success. That may mean providing service in a bespoke way and working with insurers outside of a rigid placement strategy. Being in control of your agenda, backing yourself and your judgment, operating within a swifter more flexible structure can be rewarding for both individuals and their clients.
Fortunately, thanks to our sector’s entrepreneurial nature and the opportunities that exist for those wanting to start brokerage, independence will continue to thrive.