United Voice

Availability, affordability, understandability, and choice.” These four tenets form the basis of broker Keith Wilson’s view of what insurance should be about. And, as he assumes the president’s role of the Insurance Brokers Association of Canada (IBAC) at its annual convention in Regina this September, Wilson says this message will underline what IBAC does in the year ahead.

IBAC, observes Wilson, is a forum for brokers to discuss issues and come up with a united voice on issues. Coming off a very turbulent 2003, the association has a lot on its plate for the 2004/5 term for Wilson and the IBAC executive as they tackle an insurance market that is still very much in transition.

PASSIONATE FORCE

IBAC has always been at the forefront of the political lobby scene, both in Ottawa and at the grassroots level. Provincially, brokers continue to face pressure from credit unions wanting increased entrance into p&c insurance distribution, including buying brokerages. “I don’t like to say that we’re lobbying against anyone. We’re more concerned about the consumer.” Brokers fear that if banks and credit unions are allowed to sell insurance at their branches, this will create an uneven playing-field compared to brokers, and reduce consumers’ choice of product.

Thus far, brokers have been successful in their lobby efforts, quite a feat given that most brokers are small to mid-size businesses, “David” to the “Goliath” of the big banks. “We’re fortunate that brokers always step up to the plate,” notes Wilson. Part of the reason for the success of the broker lobby is its grassroots nature. “They [brokers] are an integral part of their communities,” he adds. Often brokers know their local politicians personally, a situation outgoing IBAC president Ken Orr has publicly encouraged with respect to the most recent federal election.

In situations where brokers are holding a position in opposition to that of big business, like the banks and credit unions, the biggest advantage they have are these local connections, and their ability to come face-to-face with legislators, says Wilson. “That’s where we’re most effective in terms of lobbying.” Another advantage, he adds, is the “aggressive and passionate” nature of brokers when it comes to protecting their profession and ensuring a level playing-field in the marketplace.

More recently, brokers have been a strong voice in the debate over auto reform taking place in every private market province in the country. Specifically in the past year, governments in Alberta and Atlantic Canada have devised significantly different systems for what was once considered a relatively standard product. In Alberta, this takes the form of a “premium grid”, and in New Brunswick, a “no frills” product is being planned, while legislative changes introduced by Nova Scotia and Newfoundland have sparked the withdrawal of several insurers from the region.

Wilson says IBAC’s role has been to promote a consistent message, coming from discussions with brokers themselves. “The product has to be affordable. The product has to be available. The product has to be understandable. And there has to be choice.” Brokers have an integral role in ensuring legislators understand the role of insurance and of the independent broker distribution system.

This message is also being touted with respect to the proposal for cross-pillar mergers up for discussion at the federal level. Early in the year, IBAC made a submission to the Ministry of Finance voicing its concerns over the idea of banks merging with demutualized life insurance companies. The submission included concerns that the mergers could lead to banks selling life insurance through their branches, and the precedent it might set for the distribution of property and casualty insurance products. “We want to make sure they [legislators] understand our position, which is about the consolidation of power,” Wilson explains. “We don’t believe it’s best for consumers – it doesn’t create more choice, it creates less choice, and choice is what we are about.”

SHIFTING MARKETS

Just as the public outcry against rising auto insurance rates was precipitating legislative reform, brokers were seeing signs of availability and price concerns in other lines – notably in homeowners and commercial liability. In fact, the government in Newfoundland called for investigation into these areas of coverage.

Much of the frustration in terms of non-auto lines of business comes not simply from rate increases, but from a change in insurers’ underwriting practices, Wilson believes. Carriers have become much stricter and are viewing submissions with a critical eye. For example, he notes, “in personal lines [homeowners] a lot of it seems to have to do with oil tanks. Some companies are giving you one year to get the oil tank changed, others are saying ‘we won’t write it at all’.” In commercial lines, he adds, brokers face a “hit and miss” market where some lines are quite hard in terms of price and others are less so.

The overall market shows signs of softening after what analysts say was a very hard, but very short market turn. Wilson says brokers walk a tight line as the market softens, with fears the industry will fall back into the inadequate pricing which precipitated the steep rate increases and market turbulence of the early part of this decade. “Our main focus is to provide for consumers,” he says, which means brokers must present them with a choice of products, and thus a choice of prices. But brokers also want to work with insurers to avoid a repeat of the problems of the past market cycle. “We must make sure we let them [insurers] know that they need to make products that don’t have a loss to them.” Products which consistently lose money create market instability, and lead to the kinds of affordability and availability issues that brokers say need to be avoided, he adds. “We need to ensure companies remember where we’ve been [in the past few years] and that we don’t want to go back there.”

MEMBERSHIP VALUES

In the year ahead, IBAC will also be focused on the programs which create value for its membership, which has been on the rise thanks primarily to its lobby efforts. However, membership interest has also been boosted by the association’s gains in educational initiatives, the broker-insurer Intranet portal project, as well as growing success with the “broker identity program” (BIP) advertising awareness drive.

A new advertising campaign based on last year’s well-received BIP “blanket” theme is currently in production. Wilson notes brokers were pleased with the message conveyed by the “blanket” ads, which promote the security and protection offered to the public by independent brokers.

This year will also see the completion of the final stream of the Canadian Professional Insurance Broker (CPIB) educational designation, and re-launching the full program will be a focus for Wilson during his term as president. The coming year will also see the continuing rollout of the Centre for Study of Insurance Operations’ (CSIO) portal to connect insurers and brokers, begun in Ontario and slated to hit Quebec next. While rollout through Ontario has been paced, Wilson says the CSIO is taking the right approach to ensure a smooth launch across the country. “What the CSIO is doing is building a great broker infrastructure.” Every broker has different requirements – different hardware, different software, he explains. “As they go through this rollout, the CSIO is building a great database on how to deal with these different situations. With the rollout to other provinces, it will just get easier.”

Wilson, who owns a brokerage in Florida, as well as Pineland Insurance Agencies in Hudson Bay, Saskatchewan, says his experience in the U.S. highlights the importance of the portal, particularly the single sign-on feature in phase two of the project. In the competitive Florida market, Wilson says his office must connect with each insurer individually through proprietary websites. “It takes forever.” Canadian brokers have the opportunity to deal with their carriers through one portal, a distinct advantage for the distribution system. “To have companies agree to this extent [to cooperate in the portal] is phenomenal.”

SECOND GENERATION

Wilson’s father started the family brokerage from his farm house in Prairie River, Saskatchewan in the 1960s, moving into the town of Hudson Bay in the mid-1970s. “His hard work got us here today,” says Wilson, who joined the family business in 1989 and two years later bought his father out. Although he went to business administration school at Saskatchewan Institute of Applied Science and Technology (SIAST) in Moose Jaw, with an eye to a career in banking, ironically, he was drawn into the brokerage business and his ambition to expand his horizons culminated in 2002 with the purchase of the Florida brokerage.

Wilson says the Florida experience offers “the 180 degree change” he was looking for, moving from the government auto insurance environment in Saskatchewan to the competitive U.S. market. “And the warm weather doesn’t hurt,” he adds with a laugh.

Wilson’s thirst for new experiences also led him to join the Insurance Brokers of Saskatchewan, where he became president in 1999-2000. This led to a stint as an IBAC director in 2001, and the progression to his current role as incoming president.