Group insurance: the value of broker-managers will skyrocket

Long considered too cumbersome and unprofitable, the “broker-manager” model, i.e., brokers also acting as third-party administrators or third-party payers, has been abandoned by consolidators in favor of more agile and profitable models.

However, this paradigm is now reversing. With the rise of artificial intelligence (AI), what was once an expense is now becoming a driver of growth. Thanks to technological advances, broker-managers may well be favored by consolidators. 

View from Europe: the trend is reversing  

In France, a broker-manager is a firm that sells insurance contracts and administers them (memberships, premiums, claims, etc.), which corresponds to the Canadian model of third-party administrator (TPA) or third-party payer (TPP), coupled with the title of insurance broker.

The third-party administrator manages group insurance contracts on behalf of insurers: it does not handle payments, but manages all administrative aspects (claims management, membership tracking, file updates).

The third-party payer goes further: in addition to administrative tasks, it also manages payments, completely freeing the insurer from this responsibility. These are therefore players capable of taking charge of the entire process, from administration to financial management of contracts.

In either case, hence the relevance of using an umbrella term such as broker-managers, this management involves more interactions, more data to process and therefore naturally more staff to handle customer files and other claims than is required by a brokerage firm alone. This weighs on the company's payroll, increases complexity, and logically impacts profitability. 

In Europe, this model has long been perceived as too costly and difficult to make profitable, making it unattractive to investors. But over the past two years, the data has been changing.

According to our observations, valuation multiples for broker-managers who have invested in technology have already increased by 20 to 30% in France and Germany. And this trend is beginning to be felt in Canada.

What explains this change?

Agentic AI is a game changer  

The main reason for this shift is the rapid rise of artificial intelligence and the availability of easy-to-use tools. After transforming the banking industry and customer service, AI is now making a big splash in the world of insurance.

Among the major advances, agentic AI (or intelligent agents) represents a key step in this revolution.

Unlike a simple dialogue agent (chatbot), agentic AI is capable of acting autonomously: it performs complex tasks, learns, adapts, and coordinates multiple actions to achieve a goal. Coupled with business automation, it orchestrates complex processes with considerable time savings.

Applied to a brokerage-management firm, agentic AI makes it possible to automate a large part of day-to-day operations. 

• Membership management: reading forms, verifying supporting documents, direct integration into internal systems.
• Refund processing: detection of duplicates or fraud, automatic triggering of payments. 
• Proactive communication: intelligent reminders, notifications, automatic responses to frequently asked questions. 

What used to take several days of human labor can now be accomplished in a matter of hours, with an error rate close to zero.

From cost centre to growth engine  

In a traditional broker-manager model, each new customer requires more staff. With agentic AI and automation, the paradigm is changing: costs are concentrated upstream, during the initial implementation of the system.

Once this infrastructure is deployed, each additional customer can be served at a marginal cost of almost zero. The structure no longer becomes more cumbersome as the business grows; it becomes automated.

In other words, brokerage-management firms are transforming into platforms with significant potential for scalability. This is exactly what attracts investors: a model where growth no longer means skyrocketing costs.

In Europe, several consolidators have already repositioned their acquisition strategies, prioritizing players capable of demonstrating this technological leverage.

The trend is clear: managers who have adopted a strategy of automation and AI agents are gaining a head start. Conversely, those who are slow to invest in technological modernization will see their valuation stagnate or even decline. All of this could well play out over the next 24 months.

Transformation underway  

AI is not replacing broker-managers. It is reinventing them.

In a context of accelerated consolidation, market dynamics are reversing. Brokers focused solely on sales are gradually losing their advantage. Their dependence on third parties for management, combined with a weak technological differentiator, is increasingly weighing on their resale value, which is tending to decline.

Conversely, broker-managers who modernize their infrastructure with AI and automation are seeing their appeal skyrocket. They control the entire value chain, generate higher margins, offer a far superior customer experience... and will now capture the highest multiples on the market. 

This trend is only just beginning.