Terri Goveia
Intact-AXA deal means market shifts for brokers | Canadian Insurance

Intact-AXA deal means market shifts for brokers

Acquisition expected to have the biggest impact in Quebec.

The industry’s latest acquisition will mean a larger market share for Intact, but one less market for the country’s independent broker force.

The $2.6 billion deal between Intact Financial Corp. and AXA Canada will create a major player in the market, boosting Intact’s share from 11% to an estimated 16.5%. Once the agreement has regulatory approval, Intact stands to gain more than the $2 billion hike in direct written premiums forecast yesterday: AXA’s strong mid-sized commercial lines business, earnings stability and a heightened presence in the British Columbia, Ontario, and Quebec markets meet several strategic objectives, the company said in a presentation to analysts.

It also emphasized the deal’s benefits for its sales strategy, noting that it would strengthen multi-channel distribution efforts: Intact has 1,800 brokers across the country, and AXA has 1,300 insurance brokers and another 2,700 independent insurance advisors.

Although the deal may affect representation in some broker books, the market is sill competitive, says Steve Masnyk, spokesman for the Insurance Brokers Association of Canada (IBAC).

“There are over 300 insurers in Canada. Does this give them a monopoly? Absolutely not,” he says. “From a consumer perspective and a broker perspective, the industry is competitive, and that’s good news for brokers.”

The eventual transition will likely have the most impact on market share in Quebec, where Intact and AXA are the top insurers in the province. “There will a lot of changes to how brokers do business in Quebec,” Masnyk predicts.

For brokers in Ontario, the deal has its positives and negatives, according to Randy Carroll, CEO of the Insurance Brokers Association of Ontario (IBAO).

“It’s never a good thing when you lose market share. You have one less option to offer the client.”

However, the concentration of business that follows the acquisition could prompt other insurers to seek representation, he says. “We may see some insurers be more aggressive to be represented in a broker’s office. Companies may open their doors.”

Investment in brokers

The deal gives Intact “the opportunity to make the most significant investment in our broker relationship to brokers”–offering more resources to regional offices, expanded commercial lines offerings and improved claims and technology services, Intact president and CEO Charles Brindamour said in a May 31 letter to brokers.

Once the acquisition gains regulatory approval, brokers face the transition of moving AXA business over to Intact. With that shift, they’ll face questions of whether the move matches client needs.

Product lines will simply transfer over, but “the bigger concern is where the shift fits,” says Carroll. “Is it a good fit coverage wise and price wise? There’s still a price differential that exists.”

And it may prompt brokers to review their own books–“to see if they’re comfortable with the scale [of business represented by one company],” Carroll points out. “They may be looking for more market.”

Post-approval challenges

Intact may face marketing and branding challenges as they move forward, according to Carroll. But he notes that the commercial expertise and profitability record AXA brings to the table can only be pluses to a company that’s always has a good relationship with brokers. “It will be interesting to see how it plays out.”

And overall, an all-Canadian deal is something to be celebrated, says Masnyk.

“It’s great to have a foreign-owned company repatriated as a Canadian company,” he says. “Canadian companies are very focused on the Canadian market, as opposed to being an arm–that’s good news.”

For more coverage of the Intact-AXA deal, click here.