All Eyes on M&A
If I told you I’m not at all surprised about how well the commercial insurance brokerage industry fared coming out of the COVID-19 pandemic, I’d only be half lying.
For years I’ve been singing the praises of our global membership and each firm’s ability to adapt and be nimble, to find ways to add value during times of change and uncertainty, and to remain a trusted partner for insurers and clients alike. My beliefs have not wavered.
But I cannot lie. COVID-19 made me nervous.
How could brokers, who make a living on face-to-face relationships, survive in an all-remote environment? How would our carrier partners be affected by mounting losses and lawsuits? Organic growth would be a pipe dream in the middle of a pandemic, wouldn’t it?
As it turns out, my doubts were simply just that. The industry showed its resilience, remaining not only a steadfast foundation for business but also a valuable investment. At the end of the day, more than 750 total brokerage deals were logged globally in 2020, up about 4% from 2019, according to market analysts.
In fact, some analysts believe the sector may have unearthed a new, more efficient way of deal-making for the future. I have a hard time believing virtual handshakes and elbow bumps will be the way forward, but that’s for another day.
Certainly, the P&C market caution tape remains intact. Carriers continue to face a great deal of uncertainty as they await their final balance sheets coming out of the pandemic (let’s not forget cat losses, winter storm losses, and other exposures that will pile on top of COVID-19), and the pricing and underwriting landscape in which brokers and carriers will operate going forward will no doubt be different.
But with big deals and a hardening market on the brokerage horizon, there is much to be intrigued about. How might the talent pool be redistributed among other brokerages with so much consolidation at the top? What does this mean for independent brokerages and how they might think differently about competing and servicing their customers in the future? How will technology continue to drive and address client expectations?
At the end of the day, some may gain, others may lose, and the result is bound to change the marketplace.
As you’ll read in the following pages, there is much opportunity for everyone in the insurance value chain. Deal activity is expected to continue at an accelerated pace in 2021 and likely beyond. What a ride it should be.