A recent Insurance Business round table asked those in the industry where the new agents, actuaries and underwriters are coming from. Has the dynamic changed? Are the traditional ‘ma-and-pa’ brokerages changing the way they grow their business?
Michael Paisley, president of The Paisley-Manor Insurance Group in Toronto, Ont., shared his views on how he has seen the business change in the last three decades – and where it is headed.
“We call ourselves a Tier 2 broker because we’ve elevated to that level from being a ‘ma-and-pa’ type operation. Traditionally, the insurance industry has been defined by the independent brokers, the ma-and-pa types and the large corporate structures, which have morphed into the national brokers. There used to be 50 of them; now there’s only eight or 10.
“For the independents, traditionally, it would be a relationship-type sale, and it would be very common to see multi-generational (succession) where the family gets into the business. It becomes a certain size that can support the family or families, and that was your traditional brokerage force in Ontario.
“In the 1980s we started to see the minimum premium. Insurance companies started raising the bar, and it became a term of measurement of the ability to sustain your business model. Under the threshold of that arbitrary number, you couldn’t get contracts or preferred underwriting from the carriers – and you’ve seen a consolidation of the number of brokers that’s needed to get to a certain viable size. (continued.)
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“The independents, like myself, moved away from chasing the consolidators, saying ‘We’re going to go our own way and attract people to the best of our ability.’ Buying books of business is one way of doing it because you get the cash flow, and you have the support staff to manage it.
“The question is finding salespeople to generate new business or finding people coming into the industry to work, and there’s a big difference between the personalities.
“Traditionally, we have relied on relationship-style business. If someone has a network, they develop contacts, and within that field of influence, they would develop their book of business.
“Some brokerages have focused on specific categories, and you will specialize in that with your network. In our own firm, we’ve more or less gone across the board on relationships. It doesn’t really matter what the client does. If the client happens to buy a nuclear medical facility, then we will provide the insurance for it. If he happens to be building a billion-dollar condominium or Canada’s Wonderland, we will provide the insurance for it. That’s traditionally where the average broker has gone.
“If business comes, we’ll find a home. The salesperson has a relationship with the client. There are an unbelievably diverse amount of industries, and the independent brokers will generally have many windows based on the network of relationships.”
Look for the entire Round Table discussion in the July issue of Insurance Business magazine.
