Insurance sector mergers can leave clients’ needs in the dustReprints
CHICAGO — Competition among insurers and brokers in the soft commercial property/casualty market is driving more merger and acquisition activity, but the larger entities that result from the mergers need to focus on their clients’ needs and retain and attract the right people to meet those needs, a panel of experts said.
The recent surge in mergers among brokers is set to continue, said Richard A. Gulliver, president of mergers and acquisitions at Hub International Ltd. in Chicago.
Technology is going to make a vast difference to broker customer services over the next several years, and brokerage firms need to be large enough to invest in that technology, and that need is a big driver of M&As, he said at the Insurance Executive Forum, sponsored by Illinois State University’s Katie School of Insurance and Financial Services, in Chicago on Wednesday.
Consolidation will continue, but there are risks involved with M&As, said Mike Brennan, president of the brokerage division at CRC Insurance Services Inc. in Chicago.
“A lot of times there’s a mandate to achieve a certain result with mergers, and the company has to have the discipline to realize that there’s a bunch of clients out there who don’t really care about you achieving the next level of rollout success … their priority is their business and how you treat it,” he said.
For risk managers, the M&As among insurers and brokers can raise concerns, said Julie Pemberton, director of enterprise risk and insurance management at Outerwall Inc. and president of the Risk & Insurance Management Society Inc.
When insurers merge, “oftentimes it isn’t always a true equal merger so a lot of the policy forms and endorsements and practices of one insurer will trump the other … so it can be problematic,” she said.
In addition, M&As often lead to changes in personnel, which can be disruptive for policyholders and brokerage clients, Ms. Pemberton said.
In general, maintaining talented staff and attracting new talent is crucial for insurers and brokers, said Sabrina Hart, regional executive for the Midwest at Zurich North America.
“Most of our products and services can be replicated in about 24 hours or so; what really can’t be replicated are the people and the relationships and how we serve the customers and how we deliver those products,” she said.