IBAC 2003 AGM: Rocky Times

In the current environment – where provincial auto insurance systems are being changed on a near-daily basis in response to political whim and consumer ire, commercial and personal lines coverage remains scarce while rates continue to climb – brokers could be forgiven for wearing negativity on their sleeves. In contrast, however, the atmosphere at this year’s Insurance Brokers Association of Canada (IBAC) annual general meeting in St. John’s, Newfoundland, was positively upbeat.

Brokers recognize that there are challenges facing their profession in the current climate, including the implementation of the long-awaited industry Internet portal, but there is also a sense that the coming year will bring some relief to the general insurance marketplace, while IBAC is set to complete several crucial projects. The association’s year ahead will include lobbying for sustainable insurance reform, implementation of the industry Internet portal and the “CostWorks Valuator” technologies, completion of the Canadian Professional Insurance Broker (CPIB) curriculum, and furthering the Broker Identity Program (BIP), notes CEO Dan Danyluk.

Incoming president Ken Orr, who has coined the coming year’s theme as “Survival”, says brokers will continue to meet with insurers to try and bring affordable and available coverage solutions to consumers. “Wouldn’t it be nice to have insurance companies telling you they want to write insurance again, instead of telling you what they don’t want to write,” he comments.

Good fight

Several of IBAC’s member associations highlight auto insurance and the need to work with provincial politicians to find sustainable solutions for consumers as the “number-one challenge” going forward. Danyluk summarizes the current environment: “Faced with scarcity of capital, unprofitable lines of business, poor returns on equity and a variety of regulatory hurdles insurers have made major changes in underwriting, product offerings and operations. It has been difficult for the insuring public to understand and accept these major changes.”

In this year’s AGM host province, Newfoundland, the personal auto insurance problem has reached critical levels. “Brokers here are fighting for their lives,” says new IBAC director Jeff LeGrow. Proposals by the province to force lower rates and limit underwriting rules, while failing to address rising claims costs, are “going to squeeze the life out of the industry”, he says. “Brokers are going to fight the battle” and campaign publicly against these proposals, he adds.

Other provinces, including Ontario and Saskatchewan, face upcoming provincial elections where auto insurance is a potential campaign tool, and in almost every other province the auto insurance system is up for review. While not all brokers across the provinces agree on the value of private versus public auto insurance, and each region faces specific hurdles, it is clear that lobbying at the provincial level will be a top priority for IBAC’s member associations over the next several months.

The national organization will also be hard on the lobby trail. Although the “battle with the banks” over retailing insurance at branches has quieted down, bank legislation is still of concern. IBAC is working on its response to a federal government discussion paper of issues surrounding bank mergers, including the impact on mergers between banks and other financial service providers, such as life insurers, notes Bill Schwandt, chair of IBAC’s public affairs and political action committee. Brokers are concerned if banks are not allowed to merge with one another, they may be inclined to pursue mergers with insurers. “Such cross-pillar mergers could have very negative consequences for the distribution of insurance.” The expectation is that the federal government will come out with a policy on financial institution mergers by June 2004, and consider proposals for merger by the fall of next year.

Portal progress

Beyond political affairs, the top item on IBAC’s mandate is getting the Centre for Study of Insurance Operations (CSIO) broker-insurer Internet portal up and running. The process has hit several snags, admits IBAC technology committee chair Bob Kimball. “The change of management at CSIO and serious financial shortfalls all created concerns as to the portal’s survival, in the present format that we had envisioned.”

However, things appear to be back on track for an initial rollout of the portal from the beginning of November this year, Kimball observes, with the choice of Bell Nexia as the vendor partner to develop future phases of the Internet service.

IBAC is also getting behind the “CostWorks Valuator”, created by the Insurance Brokers Association of Ontario (IBAO) as a response to private market residential valuation programs. In Ontario, the product has achieved 15% marketshare, and IBAC plans to help make the product available across the country. It was launched in Alberta this past summer.

New president Ken Orr says that these technological advances, along with the progress of the professional education CPIB program, which saw its first graduate this year, and continuation of the successful broker branding BIP television advertising campaign, point to a strong future for the broker distribution network. “I think we have the tools to survive and prosper,” he adds.