Gazing into the future

Looking into the crystal ball, Ted Belton sees a bright future for the Canadian property and casualty insurance industry – and a busy future for himself. Although officially retired from his post as director of research for RBC Underwriting Management Services this past summer, there is no stopping the man who has been a strong voice in the insurance industry since 1949. At this year’s Insurance Marketing and Communications Association (IMCA) annual meeting, where Belton was honored with the Golden Torch Award, it was noted, “Ted Belton has explored, pondered and dissected the intricacies and peculiarities of the general insurance industry, and shared his conclusions and opinions (whether they’d be popular or not) with a wide Canadian audience.”

And lest anyone imagine Belton will rest on his laurels, he says he will not only continue to speak at industry functions, and produce the Belton Report, he also plans to sit on two industry boards, including the provincial Architects Indemnity Plan and one insurance company board. “Just those two will be enough if I want to get some golf in,” he jokes.

In fact, Belton’s plans to work on his golf game in his retirement have gone by the wayside, he admits, given the “full-time job” of publishing his report and his other industry commitments. Why does he continue to devote so much time to the business of insurance? “Because I love it,” he says, “and because I have to have something to do, or I’d go nuts.”

The information age

As the Belton Report moves into a new era, its author is finding himself coming to grips with the information age, with plans to capitalize on technology. While Belton does not see value in producing the entire Report online for the time being, he does intend to establish a website with highlights in order to encourage subscriptions. He is also excited by the possibility of increased access to statistical information through StatsCanada. “As each quarter goes along, we’ll get more data,” he notes, as the government agency has now reinitiated its collection of reports from insurers, including reinsurers. “The biggest bugaboo is that the companies don’t report on time to meet the StatsCan deadline”, so results, especially early in the year, take in only a small sample of the industry. This is a situation Belton says is “not acceptable in an industry that relies on data”, and one which he hopes will improve in the future.

While the new data should make analysis more insightful, Belton sees no other radical changes ahead for the Report. “The format seems to be what people like.” As to its success, he says, “as much as anything it was because I didn’t hesitate to speak my mind. I’ve been told people value the editorial [content] as much as the statistics.”

Accuracy counts

Although Belton’s opinions may not always have been popular, he takes great pride in his track record of accurate predictions. Once asked what his success rate was, he did a little statistical analysis of his own and discovered his accuracy was about 96% in forecasting future trends in the industry. The reason, he says, goes beyond pure statistics. His long history in insurance, which dates back to his first job as a mapping clerk for Halifax insurance, is one reason he is able to see the future so clearly. “I’m able to make reference to past trends simply because I’ve been in the industry for so long,” he notes.

Another factor is his attention to data collection. When a particular incident strikes his interest, he begins compiling a file of press clippings. Those files now take up four full drawers in his home office near Palgrave, Ontario, where he and wife Kathleen Delahunty publish the Report. As a retirement gift, RBC presented him with the rights to the Report, as well as the necessary computer equipment to produce it. And while learning the requisite software programs has been a challenge, Belton finds the bulk of his time is spent reading, up to 50 publications a month. But, reflecting back on earlier predictions, including his assertion that the financial pillars would be torn down by government legislation, he says research is always time well spent. In that particular case, he had “amassed a file dating back to the early 1980s…what happened was fairly predictable because I had the background information.”

One of his latest suggestions, that brokers should look at forming alliances with banks in the face of competition from consolidators, may be “heresy”, but Belton is not afraid to go out on a limb. “If I were afraid to make forecasts for fear of being wrong, that would take the fun out of it.”

The bank threat

So what does the guru of the insurance industry predict for the future? The top issue will be “the same thing that’s been on the top for five years now – distribution”. The advent of broker consolidators, direct call centres and e-commerce has made what might have once been classified as a conservative industry, anything but. “The way [distribution] is evolving is so radically different to the way it has been…it’s fascinating,” he says. “The thing I’ll be watching for is the impact the Internet is going to have…it’s looming there around the corner.”

The other issue that just will not go away, he predicts, is the battle between the insurance and banking industries over legislation. “In the next round, the banks are going to step up the pressure,” he asserts. And with the future of Bill C-38, which would continue the ban on banks selling insurance through their branches, up in the air since the fall election, a new war on what was seen as a settled issue may be in the works.

Despite this, Belton sees insurers in a strong position currently, and that banks may be less of a threat than previously thought. “I sense the fear the industry has had is abating”, especially in the wake of bank insurance schemes failing to produce stellar results. The sale of CIBC’s insurance operations is just one example, he notes. “The industry feels less concerned than in the 1980s.”

In fact, Belton thinks the banks may have something to fear from insurers. “Insurers may well beat the banks to the punch on primary, one-stop shopping,” he predicts. Using the example of broker consolidators such as Equisure, he notes, “If they can implement effectively, they’ll be miles ahead of the banks. I’ll be watching carefully.”

No end in sight

Belton has had his careful watch focussed on the industry since his days as president of IAO, where he and chief actuary Herb Phillips began working on a model to predict turns in the insurance cycle. Use of IAO’s services was declining due to a soft market, and the two men discovered that supply and demand relationships, as well as the overabundance of capital in the industry were key factors in this. When Belton boldly told IAO’s board of directors that the market would harden in the near future, he was asked to publish his theories, and the statistics to back them up.

What turned into The Quarterly Report for IAO members went into broad-based circulation in 1987. Later, when Belton left IAO to become a consultant he took the report with him and changed its name. The Belton Report followed him as he joined Towers Perrin and later RBC.

Now, Belton is prepared to take the publication to an even wider audience, and has no plans to deviate from his “tell it like it is” approach. And while he admits to having his eye on a few potential successors, readers can rest assured he has no plans for a full retirement anytime soon. “The one thought that troubles me is reaching the point where I can’t do this anymore, or don’t want to…although I can’t see that happening because I love it.”

After 50 years in the insurance business, Ted Belton is doing anything but looking back. Following his retirement from RBC Underwriting Management Services earlier this year, Belton has gained independent ownership of “The Belton Report” which for over 20 years has been regarded as one of the most insightful analysis reports on the financial performance of the Canadian property and casualty insurance industry.