“REASONABLE RATE INCREASES SUPPORTED”

IBAO AGM and mid-year conference:

Following recent discussions with senior management of leading insurance companies operating in Ontario, the IBAO has agreed to support the introduction of “reasonable and explainable” premium rate increases, says current association president Dan Danyluk at the annual general meeting held in Hamilton. Danyluk also announced that this is the last year the IBAO will hold its mid-year conference, which traditionally took place in conjunction with the annual meeting.

The most recent 2000 financial year results of insurers clearly indicate that combined ratios within the industry are “very high” and there is a need to bring in more “reasonable pricing” in order to avoid future rate instability, Danyluk comments. “As an industry we know that rates have been unrealistically low. We have met with the CEO’s of major insurers, and we have said that Ontario brokers will support rate increases that are reasonable and make common sense…If our insurers begin a process of restoring rate adequacy by affordable and explainable increases, we can and will sell those increases to our clients.”

Danyluk emphasizes, however, that the prime mandate of brokers remains to ensure the best value for their clients. “What we’ve asked for [in implementing rate increases] is fair treatment of our clients”. The value for both insurers and brokers in bringing in moderate rate adjustments is “to mitigate the impact from unpleasant surprises”, he adds.

Technology position

The past six months have witnessed the “implosion of e-businesses” and it has become clear that the immediate value of the Internet lies in business-to-business communication, Danyluk observes. As such, the IBAO regards the work underway by the Centre for Study of Insurance Operations (CSIO) on the development of a company-to-broker real-time Internet portal to be of critical importance to Ontario’s brokers. “For those insurers who are ‘web enabled’, we will be able to access their own rating engines. The possibility of guaranteed quotes in real-time is exciting,” he remarks.

The IBAO’s president-elect, Danny Craig, currently sits on the CSIO board to ensure that developments made on the portal remain in the best interests of the brokerage community, Danyluk notes. The IBAO has also created a special sub-committee to monitor developments regarding the Internet portal. But, Danyluk point out, “this portal will not be a ‘slam-dunk'”. Concerns exist over the availability of “broad-band Internet access” in rural areas, as well as challenges over the integration of brokerage internal computer networks with the proposed portal.

Political lobbying

The IBAO has launched a “political network” campaign in conjunction with the Insurance Brokers Association of Canada (IBAC) to identify and establish relations with political representatives, Danyluk says. The project is to be headed by the IBAO’s current chairman Ken Orr, who also sits as a director on the IBAC board. Danyluk and IBAO executive director Bob Carter “kick-started” the program into gear by attending a “federal lobby day” on May 1, which was organized by IBAC.

Having recently attended the Michigan (U.S.) Agents Convention, Danyluk says he learnt a valuable lesson: “…effective lobbying is not just getting to know our elected representatives on a first name basis, we want them to know us on a first name basis.” As such, he adds, “the work that Ken [Orr] is doing this year to establish the brokers’ political network is the crucial foundation for our future communications, both provincially and federally”.

Danyluk notes that the federal financial services legislation under Bill-38 has been changed to Bill-8, which has since received two readings before the House of Commons and the Senate. At this point, it seems that the legislation will be passed without complications, Danyluk predicts. On a provincial level, however, he expresses concern over the proposed merger of the Financial Services Commission of Ontario (FSCO) and the Ontario Securities Commission (OSC), which could leave brokers being “a very small fish in a very large regulatory sea”.

Education launch

The IBAO will shortly be holding the “first test” on its recently launched “law & ethics course” which applies to three areas of “personal lines”, “commercial lines”, and “broker management”. The success of the course has attracted the attention of IBAC, Danyluk says, which could result in it being added to the profession’s national education program. “Our association is working closely with IBAC to make this goal a reality.”