Canadian insurance firm’s plans include layoffs and a halt to mergers and acquisitions at brokerages in the United States

While mergers and acquisitions (M&A) are commonplace in Canada’s brokerage industry, the chief operating officer (COO) of one firm is concerned about the “deafening silence” surrounding the growing Americanization of local companies and has forecasted that a halt in M&A could lead to layoffs at Canadian firms controlled by Americans.

“No one’s talked about how the Americans have swooped in and bought up basically all of the big brokerages except for the two that are owned by insurance companies. Which brings a whole other set of challenges about potential conflicts of interest,” said Bruce Rabik (pictured), chief operating officer at Acera Insurance Services. “Now, important decisions are being made elsewhere, or Canadians are having to answer to Chicago bosses.”

Following Acera’s recent acquisition of KRS, Rabik, who has previously criticized the lack of “culture” in Canadian insurance broking, spoke with Insurance Business on merger and acquisition patterns.

“M&A slowdown” and “big brokerage layoffs” are in Rabik’s near future.
According to Rabik, the sector as a whole will be drastically affected, particularly in terms of talent, if merger and acquisition activity in the Canadian market slows down.

In addition to employees, Rabik predicted that there would be a large exodus of producers to other companies. The major American players will start to question their presence in a foreign country as soon as merger and acquisition activity in Canada slows down. This could lead to the layoff of staff at these larger corporations.

This year, the big brokers will be under a lot more pressure than usual.

“There is a lot of opportunity to hire staff and producers who have been disrupted with all the M&A activity,” Rabik told Insurance Business of the potential job placements.

“Our focus in 2024 is getting out there and attracting talent with our model of employee ownership,” the COO declared. “All it takes is spreading the word and establishing relationships with people.”

The corporation is targeting a number of mergers and acquisitions in 2024, although Rabik cautioned that the strategy will not be haphazard.

“We’re not planning to blindly participate in every auction and spend top dollar. Ideally, we’d like to hear from owners who are interested in selling or, even better, forming a partnership, he added.

Acera is pleased to announce the addition of KRS Insurance Brokers, a specialty supplier for the Canadian pet care and beauty industries, to its brokerage roster. KRS is situated in Newmarket.

“With [KRS’ PROfur and PROtique] programs and definitely with that expertise, we see lots of opportunity for geographic expansion across the country,” Rabik stated. “We can offer these products to consumers directly, and we can see a lot of potential to upsell to those business owners across all of their lines, from personal to commercial.”

Complexity of the subject matter: insurance companies are “extremely picky these days.”
While Rabik did highlight several market subtleties, such as carrier appetite, that specialist brokers are keeping an eye on, it is clear that specialty knowledge has been an invaluable relationship and development driver in the modern insurance sector.

The insurance firms these days are extremely picky, according to Rabik. “You need to be extremely careful with your loss ratios because it’s easy for someone to lose market share and capacity, and competition is fierce everywhere.”

The role of technology in the specialty brokerage package is also growing in importance.

“Utilizing technology to be hyper-efficient is another challenge,” the CEO stated. Maximizing efficiency is crucial for specialty businesses with several smaller clients. This includes internal paper processing as well as the use of technology for customer interfaces like quotation, binding, and self-service.”Things like that are accumulating in significance.”