Now more than ever, the notions of change and transformation are topics of current concern. All observers agree that if they want to survive, brokers must accept change and be adaptable. But saying it is one thing; doing something about it is another thing! Hence the importance of this workshop, which was presented at the RCCAQ's recent convention.

Before the three experts spoke, the workshop opened with a discussion on how major movements are transforming the economy, society and our personal lives.

It is difficult to keep up with these changes. New movements typically take shape slowly and then begin to develop more quickly, making them hard to track. Individuals and companies attempt to absorb what they can during this transitional stage and adapt as best they can. Then the pace of change begins to slow, corresponding to a saturation period for those who have had to deal with these changes. This saturation period provides an opportunity to fully integrate the changes and to embrace a new reality.

This is exactly what is happening in the brokerage industry today. Quebec's population continues to age, leading to a shortage of future brokers and firm owners. At the same time, technology is evolving and the market continues to be transformed, leading to financing questions for brokerage firms and increasingly demanding consumers.

Here's what our experts had to say!

Adapting to the infinite possibilities of technology

Technology offers infinite possibilities. Alexandre Vallières, vice-president of Aiworx, provided us with a very clear illustration of this fact. Insurtech companies are currently setting the pace for the insurance sector. In 2016, $1.7 billion was invested in this emerging area, including new products and services and improved product distribution and insurance operations.

The latter aspect of process improvements is of particular interest. There are four types of applications:

1. Artificial intelligence: Used to create systems that behave as if they were human beings.
2. Chatbots: Stand-alone software that interacts with human beings. 
3. Internet of things: This term refers to objects that are Web-connected for various uses, e.g. in the e-health field or domotics (home automation).
4. Drones: These aircraft have no human beings on board and are usually remote-controlled.

Here are a few concrete examples for the brokerage sector: automatic risk assessment, use of third-party data to refine risk models, chatbots to interact with clients, fraud detection, damage prevention, "augmented" brokers, etc.

Next generation of brokers and financing

We often talk about the next generation in connection with hiring new brokers. But finding qualified brokerage managers is equally important! The presentations by Maxime Poulin, executive vice-president and partner at Groupe Ostiguy Gendron, and Éric Bergeron, assurance partner at Raymond Chabot Grant Thornton, were particularly relevant in this regard.

When the time comes to sell your firm or bring in new shareholders, Éric Bergeron noted that one of the most important things is to establish the value of your firm. Various factors come into play:
- Profitability.
- Type of clientele (individuals vs. companies and type of insurance clientele).
- Value-added services.
- Importance (or unimportance) of relations with business leaders (corporate clientele).
- Policy renewal rate/client histories.

The criteria used to establish value also depend on a firm's size. These criteria are usually based on:
 Recurring commissions.
 Net earnings before interest, taxes, depreciation and amortization (EBITDA).

Financing is based on the ability to repay and usually does not exceed two-thirds of the transaction amount.

Drawing on his personal experience, Maxime Poulin addressed the workshop participants. With three partners, he acquired Groupe Ostiguy Gendron in 2015. He recalled that the negotiations took place over several months and that the key to successful negotiations was the commitment of each party to complete the transaction. That may appear banal, but selling a company that has taken years and years to build is a very emotional process. It is important for the potential buyers to be aware of that fact and to understand the business owners' position during the discussions.

According to Mr. Poulin, another important factor is that all too often, we tend to see a purchase transaction as the end of a process, whereas it's actually the beginning of an adventure—and we have to be properly prepared! You must start thinking about your business plan upstream, i.e. long before the transaction is concluded.

To deal with the transformations currently upending the brokerage industry, the guest speakers emphasized the fact that technology, business succession planning and choosing the right financing models are issues that brokerage firms must take into consideration straight away. We hope that the workshop convinced the attendees (if they weren't already) of the importance of taking time to ask the right questions about strategies for business success.

Each of the three themes could have been the subject of an individual workshop. Over the coming year, the RCCAQ will be arranging opportunities to continue this process of reflection.