IBAO, pulling together

Like an army planning a battle campaign, Ontario’s brokers rallied together for the Insurance Brokers Association of Ontario’s (IBAO) 80th annual convention, which was recently held in Toronto. The battle mood clearly indicated that the profession was ready to take on the government, insurers and the market to get their message across – that the independent brokerage community remains, and will continue to be, the “number-one” distribution channel for property and casualty insurance in Canada.

The past year was a victorious occasion for brokers on several fronts, with the removal of the auto insurance tax by the Ontario government, and the federal government’s expressed intention to keep the banks from retailing insurance through their branches with Bill C-38. But, commentators observe, there are many more battles ahead. The IBAO has stated its opposition to changes to sole occupation and ownership restrictions proposed by the Financial Service Commission of Ontario (FSCO). Reworking the definitions of what constitutes a “group” and a “fleet” are also high on the IBAO’s legislative agenda in the coming year. And with the recent announcement of a federal election this fall, the future of Bill C-38 is uncertain. As incoming IBAO president Dan Danyluk notes, “In the next 12 months we [as an association] will face a federal election, major changes in the regulation of financial services in Ontario, and most likely the continuation of this incredibly soft market.” As Danyluk points out, now more than ever the association needs strong communication among members and executive to advocate on behalf of the profession.

Election call

What had been seen as the brokers’ big win over the banks, Bill C-38, is in a precarious state with the announcement that the federal Liberals have called an election for November 27. Passage of the bill, which is currently at the committee stage, was to have happened before the end of the year. Now, broker associations are looking for assurances that the bill won’t be scrapped before it is passed into legislation. With the bill being “in limbo”, brokers have cause to be nervous, admits Danyluk. “They [the federal government] have worked hard to get everybody on board…we’re definitely concerned…it’s scary season again.”

The bill is particularly important given its scope, and the time taken to “get everybody on board”, he adds. The association is also encouraging its members to mobilize for the coming election, regardless of the party they support. As Danyluk explains, brokers need to ensure they are known by their local candidates, “if later we’re going to want to go to those folks and make our case to them” on a variety of issues.

At the provincial level, regulatory change is in the works. FSCO has said it will look at removing the sole occupation and ownership restrictions on brokers, as well as market conduct guidelines. One area the IBAO is particularly concerned about are the definitions of “group” and “fleet” within the regulations, and the effect those definitions have not only on brokers, but on consumers. Current definitions are not clear enough, and leave room for the classification of these types of policies on bases that just don’t make sense, says Danyluk. It’s “an incredibly unfair situation” in which group policies allow collateral benefits for some people and not others. And the formation of “artificial fleets”, formed “for no good reason that we [as an association] can see”, are further clouding the picture. The underwriting process that allows for these formations needs to be addressed, he says, to provide protection to the consumer.

Membership blues

“To be effective in our advocacy, we must ensure that our percentage of brokers in Ontario continues to grow,” says Ken Orr, IBAO past president. Unfortunately, from a high of 8,736 in 1999, membership numbers dropped to 8,407 this year. More significantly, however, the number of member offices has declined steadily over the past decade as a result of mergers and acquisitions. In its long-range plan, the IBAO has set new aggressive goals to build its membership base, hoping to take in 75% of the province’s brokers by 2002.

Another area the association will be paying attention to is its involvement with the national Broker Identity Program (Bip). At the recent Insurance Brokers Association of Canada (IBAC) annual general meeting, concern was raised about the future of the BIP in the light of the heavy advertising now being done within the insurance industry. “When we started things in 1990, there wasn’t a ton of advertising being done,” Danyluk notes. Now, the Bip’s budget, which is just over $3 million, pales in comparison to many single company budgets. But Danyluk is confident that with some changes, the Bip will survive. “You won’t see brokers walking away from the Bip, it’s just too valuable.” One of the proposed changes would see Bip marketing concepts focussed at the provincial level, an idea Danyluk says could “make our whole marketing more robust”.

Senior designation

A further key to promoting the broker profession is IBAO’s development of a senior designation program, slated for rollout in spring, 2001. “It’s very much in the developmental stage,” notes Doug Grahlman, chair of the IBAO’s education committee. But, he adds, the association is excited by the possibility of offering brokers continuing education beyond the CAIB designation, with “broker specific and relevant courses”.

IBAO is also seeing success with its off-site education programs, Grahlman says. Last year, 1,300 brokers took part in off-site programming, sponsored by four insurance companies. Those companies are continuing their support in the coming year, as well as two more being added to the roster. Grahlman encourages brokers to view education as “more than just RIBO credits” but as a way to add value to their role as a distribution force, particularly in the light of new technology and new forms of distribution. “Anyone can buy insurance from a 1-800 number or the Internet,” he notes, but brokers have a key advantage through their knowledge and expertise.

Online opportunities

How brokers will fare in the face of new distribution, particularly the Internet, remains to be seen. However, Ben Salzmann, keynote speaker to the IBAO convention, says that brokers should view this “time of blinding change” as an opportunity rather than a threat. As president and CEO of Heritage Mutual Insurance, Salzmann says his company is a living example of how technology can create value, rather than being an expense issue. This is all the more true for brokers, he adds, as they have a core value that transcends the technology. “You rebuild shattered lives,” he stresses, a role which is a perfect fit for the Internet and other technology-driven solutions which can be seen as impersonal. Brokers “have too much service, too much knowledge and, I would add, too much security” to be beaten by the big Internet insurance sellers. “You are positioned for success,” he reassures brokers.