The limits of leadership: CU broker poll results

For all the potential of a new insurance company executive to influence a broker’s business, do leadership changes at an insurer really matter?

Or, as one broker put it in a recent poll by Canadian Underwriter, “who cares about big wigs?”

Brokers care, but maybe not as much as you might think, according to the results of a recent Canadian Underwriter poll.

Canadian Underwriter asked brokers last week about the impact of leadership changes announced recently at both Intact Insurance and Aviva Canada, the country’s top two P&C carriers based on direct premiums written. As part of the poll, 401 brokers, roughly split between producers and principals, indicated their level of agreement with the statement: “Executive-level changes at any insurer have a noticeable impact on my broker business.”

The majority, about 51%, agreed somewhat with the statement, while another 15% agreed strongly. About 34% disagreed with the statement, with about 29% disagreeing somewhat.

“With executive-level changes, we usually see a change in the direction the company will take going forward,” one broker veteran wrote in the survey. “In 35 years, I have seen a lot of change in leadership, some good, some just awful. Every manager has their own agenda to where they wish to see the company grow.”

How would a CEO change affect the broker’s business?

Brokers saw executive leadership at a company influencing their business through subtle changes in business appetite, pricing, underwriting rules, cleaning up lines of business, contingent profit commissions, premium volume expectations, marketing strategies, and in their philosophies towards the various distribution channels.

But executive-level power has its limits, brokers noted.

“Typically, strategic plans are set by the executive team as a whole,” said one broker. “If an entire executive team is replaced, you can expect new strategic goals to be established and change to occur. But for a few executives to [roll] around, they will be establishing their new roles and trying to accomplish the already-set strategic plans.”

If leadership change at the company affects a brokerage, it usually takes a long time for that change to occur, several brokers observed.

“Executive-level changes typically take time to trickle-down to the front lines,” said one. “This is especially true in slow-moving industry like Insurance. While I personally have a limited time in the industry, it would be surprising to see an executive make a sweeping and immediate decision to the brokerage business. They could, of course, guide the company in different directions over time.”

A few brokers in the survey said company changes at the underwriter level, or through a merger or acquisition, were more likely to affect the day-to-day operations of a brokerage.

The only way a change in CEO would be noticed at the brokerage level would be if the CEO markedly departed from a company’s previous strategy, one said. And that seems unlikely to happen, based on the fact that company board structures have more impact than any single individual.

“Most large insurance companies have so many layers of management and there is usually a long-term momentum,” one broker said. “Changes at the executive level usually don’t impact the day to day.”

So, can a new leader really make a difference in the insurance industry? “Have no idea,” said one broker. “One man can’t do much …just ask Trump!”