Which rewards boost broker performance?

Seventy-one percent of Canadian brokers say performance-based compensation is the best motivator, according to Canadian Underwriter’s 2024 annual National Broker Survey.

That aligns closely with the range of 68% to 72% citing it as a primary driver between 2020 and 2023. 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.

The 2024 survey finds performance-based pay is particularly important to women respondents (91%) compared to men (68%). And 100% of brokerage employees who’ve been in the business for 16 or fewer years say it motivates them.

Brokers suggest year-end bonuses are becoming more generous, and are used with an eye toward retaining good workers.

One respondent at a firm with fewer than 20 employees tells the survey, “Loss ratio-based commission sharing has helped to strengthen our book of business and reward employees who are invested in their jobs.”

Other efforts lag far behind. Only 48% of brokers express affinity for employee recognition programs. Women particularly dismiss them — only 27% see them as valuable, compared to just over half of men respondents.

Profit-sharing and employee share ownership plans are even less popular, at 21% and 13% respectively. Both programs lost popularity compared to 2023’s survey in which 34% and 14% of respondents weighed them as positives.

 

More motivators

Survey comments show brokerages are listening to employees who still want hybrid work environments. One respondent says her firm is allowing “our team to determine their workdays and trusting that they will complete the work and then using metrics to verify.”

As for business changes brokerage owners have tried recently, 35% report switching up their carriers has helped strengthen their operations over the past 24 months.

That’s largely even with 37% in 2024 and a bit ahead of 31% in both 2021 and 2022. The option sits best with brokers logging between 16 and 30 years in the business (44%), and at firms with 20-99 employees (41%).

Growth through both geographic expansion and mergers and acquisitions (M&A) regained some popularity with respondents. This year, 26% of brokerage owners say they’re looking over the next horizon line for growth opportunities, up slightly from 24% last year.

Those saying an urge to merge produces benefits picked up six percentage points this year, up to 29%.

Both stats — i.e. the interest in geographic expansion and M&A — still lag behind 2020’s 34% who sang the praises of expanding into new markets as a growth strategy and 31% who agreed M&A is the way to go.

“Acquiring new carriers and geographical expansion have been the two biggest ones this year,” says a female broker with 16-plus years experience at a large firm.

Another large-firm veteran praises geographic expansion: “More markets to place coverage, more options,” he says.

 

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