Hands Across Borders

Faced with a rapidly evolving marketplace driven by new technology advancements, independent brokers and agents across North America have realised the need to step forward with cooperative initiatives to ensure that their profession remains relevant and effective in the new electronic century. The Insurance Brokers Association of Canada (IBAC) and the Independent Insurance Agents of America (IIAA) have entered into a partnership to research and develop a common electronic solution to carry the independent broker/agent profession forward.

Our association’s incoming president for the 2000/1 term, Kevin Umlah, recently observed, “[Today, our] competitors are a moving target. In the past we were able to strategically identify and plan for the competition. Now, it’s not that simple, and one of the biggest threats (and opportunities) is technology”.

IBAC, as the industry trade association representing 28,400 independent insurance brokers through eleven member associations, must continually identify key result areas that are critical to their members’ success and survival. During IBAC’s strategic planning session in 1999, board members voted to add technology as a core activity of the association. As a founding member of the Canadian property and casualty insurance industry’s technology research body, the Centre for the Study of Insurance Operations (CSIO), we have taken a leading role in brokers’ utilization of technology and supported industry initiatives. However, it was felt that this role needed to not only be expanded but also given a more prominent place at board meetings and more direction provided to the IBAC representatives on the CSIO board.

Currently, there are five “active” brokers who represent IBAC and vote on behalf of the association at the CSIO. Their “hands on” experience is critical as discussion evolves around the key issues facing the industry today.

Additionally, it comes as no surprise that e-commerce and new technologies are high on the list of broker concerns. This is particularly evident in the U.S. where the Independent Insurance Agents of America (IIAA) members continue to raise important questions about “new” technology, its impact on the agency/company relationship, and its role in building agency value and marketshare. In Australia this is fourth highest concern when brokers are surveyed, and interestingly enough is given the same ranking by insurers.

For more than 20 years, the evolving role of technology and broker automation has been among the most prominent concerns for brokers and the industry in Canada. However, when IBAC looked outside Canada to survey what other associations were doing for their members, they did not have to look far for support. The IIAA shared similar concerns and had taken a unique approach to support their members.

U.S. initiatives

In 1999, the IIAA established “ACT”, or the Agents Council for Technology. This is a cooperation of independent insurance agents, vendors and insurance companies. ACT serves as a catalyst for research and practical implementation of technology and as a monitor of legislative and regulatory issues involving technology. ACT’s two tiered advisory board includes many vendor user groups, vendors and many leading insurance companies. In addition to their initial mandate, the members of the cooperative effort went on to develop the “Blueprint for E-Commerce” in response to many questions raised by agents.

Since then, the IIAA has taken a proactive step to focus industry resources and intelligence on providing an ongoing source of information and guidance to independent agents. There is no doubt that ACT has, and will continue, to provide answers to the many questions raised by their members.

Going a step further

The Blueprint for e-commerce addresses more than the traditional communication methods that have been in effect for many years between brokers and insurance companies. While we were busy developing our varied methods of electronic communication, interactive technology continued to evolve outside the insurance industry. This external communication tool became known as the Internet — a global network of computers originally designed for scientific, educational and military communication, and now being used for a wide variety of applications.

The growth of the Internet has paralleled the history of broker automation, but while agents struggled to use technology to improve internal operations, the developers of the Internet focused on external interaction. Most Internet development went unnoticed and was virtually ignored until the early 1990s when a graphics-based service known as the World Wide Web (WWW) virtually exploded on the scene.

From a few thousand non-commercial users in the 1970s, the Internet has grown to more than 92 million users in North America alone, according to CommerceNet/Nielsen Media Research, a media research and measurement company.

Today, two aspects of the Internet, one focusing on the insurance consumer, the other focusing on business-to-business communication between “electronic trading partners”, affect independent brokers. The scope and depth of this report to IIAA members impressed the IBAC board of directors. After discussion at the January 2000 association board meeting, a decision was made to join ACT. One of the key reasons was the blueprint for e-commerce, which would provide every member broker in Canada with a clear explanation of the current state of technology and allow them a framework to plan for the future.

Working closely with IIAA has allowed this document to be sent via IBAC and members’ websites to every member broker in Canada. If brokers are not members of the provincial associations, then they are missing out on utilising a valuable tool that will help them plan for the future.

Keeping track

Internet development and possible uses was not the only concern of ACT. In fact, working together with all stakeholder groups will provide the IIAA with an ongoing overview of the status of communication between their agents and insurers. Quick, cost effective, efficient, on-line, real-time communication is critical to the success of the agents and brokers in both countries. New computer language, such as XML, needs to be utilised quickly to accomplish this goal. All stakeholders are committed to standards that will ensure success. In Canada, we have been fortunate to have the CSIO, which established EDI standards many years ago. This joint venture between the IIAA and IBAC through ACT will not diminish IBAC’s support of CSIO, but enhance communication between all parties. As we move towards the future, IBAC is confident that joining ACT will not only provide a forum for discussion but valuable tools and resources that will ensure the continued success of Canada’s independent insurance brokers.