How Canada’s brokers rate 2024 business outlook

When it comes to 2024 financial performance, 12% of brokerage principals and owners responding to Canadian Underwriter’s annual National Broker Survey expect things to be much better this year than last.

And a further 50% say things will be ‘somewhat better.’

That compares with 13% and 60% giving the same responses in 2023’s survey; and 12% and 45% respectively in 2022.

In this year’s survey, fielded in January and February 2024, more than 200 brokers nationwide shared views about challenges and opportunities for the broker distribution channel. The CU survey is sponsored by Sovereign Insurance.

More optimism is present in the number of brokers (37%) saying 2024’s performance will match 2023. That’s a strong gain over 27% saying the same thing last year and better than 2022’s 32%.

Further, only 2% of respondents call for 2024’s performance to be worse than last year. Most of the of the optimism (71%) sits with those in the business for 16 or fewer years, among women (70%) and at brokerages with 20 or fewer employees (66%).

In their own words

Some verbatim responses stress the difficulty of predicting future performance during uncertain economic times.

One veteran respondent at a large firm believes economic pressures will slow overall growth, but adds inflation and rising premium rates will help his firm grow.

How do brokers benefit from inflation? When insurance companies raise premiums to cover the increased claims expenses they must pay due to inflation, brokerages earn larger commissions for each policy they sell.

But brokerages don’t want to rely strictly on this theoretical bump in their income sparked by the hard market, because it’s subject to other hard market disadvantages.

As one respondent puts it, “Inflation generally benefits a brokerage, providing that they can retain their customers. We continue to focus on increasing our [policies in force] PIF per customer and our overall PIF as opposed to relying purely on inflation or premium increases to determine our success.”

This article is excerpted from one appearing in the April-May 2024 print edition of Canadian Underwriter. Feature image courtesy of iStock.com/XiXinXing