The Ball in IBAC’s Court

Property & casualty insurance brokers are breathing a collective sigh of relief as the federal government’s discussion paper on the future of financial institutions in Canada effectively put a moratorium on the banks’ entry into the retail insurance market. Despite the Insurance Brokers Association of Canada (IBAC) lobbying efforts, which demonstrated the profession has clout among federal policymakers, IBAC’s Jim Ball warns brokers should not become complacent. New challenges along with old foes still face the industry, he warns.

Jim Ball, incoming president of the Insurance Brokers Association of Canada (IBAC), delivers a frank assessment of the future ahead of the Canadian independent broker. He believes that the insurance broker distribution channel is as much a threat to itself as are outside competitors.

Direct writers and banks are lining up to wrestle away marketshare, he observes, and many of the initiatives undertaken by the profession to combat these threats are working to erode broker independence. He says brokers with insurer ownership — or carrier cash infusions — as well as brokers who have not carefully planned succession, could adversely change how the broker deals with or presents himself to the consumer.

Ball, whose brokerage operates from Vancouver, likens the current professional environment to that of the British Columbia salmon fishing industry where over-fishing, environmental degradation and the effects of changing weather patterns have resulted in a decline. “West Coast salmon runs have reduced over time because of a variety of contributing factors, many of which seemed unrelated and unsubstantial at the time. I don’t want to see the broker channel follow the same trend.”

Ball’s plan is to strengthen the channel from within by impressing upon brokers that carefully considered succession planning and unity under the bipper logo will ensure independence and an even stronger customer service effort. The goal, he says, is to keep the distribution channel from eroding its prosperous and influential base. Brokers under IBAC have developed strong clout among government policy makers. “When insurers and consolidators buy brokers, and brokers switch portfolios for commission overrides or financing commitments…all of this takes away from the independence of the broker to some extent. A culmination of all of these things and one day when we go to Ottawa, we won’t have the same political clout we enjoy today.”

Banks’ ambitions not dead

Ball says brokers must acknowledge both the positive and negative implications from the discussion paper released by the federal government in late June. “We’re pleased with what the government has done but we don’t think the battle is over. The banks are definitely not going to give up trying to get into the business,” he says. Lost in much of the excitement surrounding the paper, he contests, is the carefully worded portions that infer banks might gain entry into p&c retailing if adequate regulation is formulated to combat and enforce against the tied and coercive selling practices that have drawn consumer ire. Ball explains, “we understand Ottawa told the banks that until they have the consumers on their side, they can forget about getting into retailing insurance. So until they can iron out their customer service problems, the debate will not re-open.”

Which is all the more reason for brokers nationwide to step up customer service efforts, Ball insists. If the service bar is raised, the banks will have more ground to make up. Conversely, if brokers become complacent in the face of this latest victory, they will be helping the banks to bridge the consumer satisfaction gap.

IBAC will continue its effort to raise the profile of brokers nationwide by continuing its bipper campaign in the coming year, Ball says. “Supporting the bipper campaign will not increase traffic to a broker’s office. It does, however, tell consumers that their broker is a part of a large network that extends across the country. That they are part of a strong system that is just as big and strong as the banks.”

Among the biggest positive emerging from the recent battle was the respect shown by government towards IBAC and Canadian brokers during the lobbying leading up to the publication’s release, says Ball. IBAC’s involvement was high profile and demonstrated significant political clout, a turn-of-events the organization does not plan to waste. “We’ve gained a lot of respect and credibility in Ottawa throughout the process and we are now going to take part in lobbying on other important matters for the profession including taxes, electronic commerce and privacy issues. We are going to take the respect and clout from Ottawa and use it to influence other issues important to brokers and consumers.”

Keep the independence high

To ensure continued clout — and consumer confidence — Ball says brokers should be wary of any agreements or transactions they enter into that reduce their independence and community-based decision making. “What we have over direct writers is the ability to offer consumers choice and advocacy. When we compromise our independence we threaten these benefits.”

However, Ball does not blame those brokers selling their operations to insurer-backed consolidators and carriers. He says the profession has not properly emphasized succession planning which leads to brokers selling their operations to the first approaching buyer. The entire insurance industry should initiate discussion regarding succession, he adds. “Insurance companies should prioritize discussing and helping brokers to plan their succession. From a business standpoint, what are these companies going to do when another carrier buys the broker and converts their existing book of business? Insurers should be more careful in developing their existing business and ensuring their broker partners do not lose their independence.”

As such, Ball hopes IBAC can impart this message upon the industry in the year ahead. IBAC will also take a more proactive stance in the technology debate in the coming year, he says. The association will look at existing technology to see if there is an existing product or solution that would merit endorsement. “Our view is that for strategic planning purposes, we have to look at the technology out there. We have to look at all of the emerging technologies and identify one or more to reduce channel costs and improve customer service.”

Running the gamut

A 34-year veteran of the insurance industry, Ball is proud to have taken part in all elements of the profession. After travelling to Ohio to attend Wooster College, he began his career in 1966 as a claims adjuster for CNA Insurance in Cleveland. The company transferred him to Citadel General Insurance Company in Toronto in 1972 where he became a senior claims examiner, then travelled through the ranks as a reinsurance underwriter and marketing representative. Work took him to Vancouver where he became Citadel’s western regional manager before joining fledgling insurer AXA Pacific Insurance Company in 1979.

The “entrepreneurial spirit” of the brokerage profession soon engulfed him, “the independence attracted me to brokerage market ,” he says. In 1983, Ball purchased Reliance Insurance Agencies Ltd., specializing in commercial insurance. His involvement in IBAC began at the grassroots level, he started his association career participating in the Greater Vancouver Insurance Brokers Association and worked his way to leadership roles within the local and provincial brokerage associations.

Ball’s appreciation of small business and entrepreneurial spirit has launched his current career, he says, but his experience in all areas of the insurance profession has benefited him greatly in his advocacy on behalf of his customers and other brokers across Canada. His concerns of internal and external influences damaging the broker chain emerge from a personal belief the channel is not just a career, a business or a union of small business operators. “The independent broker channel is a living breathing ent ity. But it can’t take too many punches. We’re all in it together — but independently. And it is up to all of us to make sure it thrives.”