A Stronger Voice

We’re planning on being more proactive than reactive,” comments Robert Jones who took over the role of president of the Toronto Insurance Conference (TIC) in March of this year. Although the TIC’s membership is restricted to commercial brokers operating within the greater Toronto area, Jones notes that in many respects the organization is “national” due to the fact that many of its 21 members operate across the provinces. In fact, there is no focused commercial broker representation body in Canada other than the TIC.

In this respect, Jones believes the TIC needs to adopt a “stronger voice” in representing the specific needs of commercial brokers. In the past, the TIC’s main focus was on providing “network functions” for its members such as its annual “Black Tie” dinner, he explains. Over the years, the TIC’s role in advocacy and lobbying on issues applying uniquely to commercial brokers faded to the background, with the organization mostly relying on its representation through other general insurance broker bodies such as the Insurance Brokers Association of Canada (IBAC) and the various provincial associations, he notes. While the TIC will continue to work with and through these broker associations, there is now a need to address the specific needs and concerns of commercial brokers, he adds. “From a lobbying perspective, we have a seat on IBAC. What we are now doing in terms of our [the TIC’s] members is asking what issues we need to address [from a lobbying standpoint]. We want to make sure the communication lines are open, and that we [commercial brokers] have a bit of a stronger voice.”

Notably, Jones points to the “debacle over insurers’ earnings” that followed when the Insurance Bureau of Canada (IBC) released the industry’s 2003 financial results which attracted significant negative media attention due to the large net profit shown. This is typically something that we need to be prepared for, and know how to deal with such situations, Jones says. Since the release of the industry results by the IBC, the TIC has formed a committee to investigate what advice or role the organization can play in getting the right message across to the media and the business community. “We [the TIC] have a lot of good people [among our members] who have the knowledge to provide input and be spokespeople for commercial brokers.”

As a result, last year the TIC drew up a new strategic plan for its future. The plan places significance on the organization’s role of advocacy, Jones observes. “The TIC’s main focus is on advocacy – we want to stress this. We’re trying to get back to why the TIC was formed [to begin with]. We have different issues to other brokers,” he adds.

CHANGING MARKETPLACE

Why the need to take action now? Jones points out that the commercial insurance marketplace has become increasingly sophisticated and diversified, with many new regulations and disclosure requirements placed on brokers operating in this field. For instance, the tough pricing and tight coverage capacity of the most recent hard market forced many brokers to look a field to secure cover for their clients. This saw an increased amount of business going to insurers not licensed in Canada, which introduces a host of legal complications and disclosure complexities for commercial brokers, he says.

Other distinguishing factors affecting commercial brokerages to personal lines brokers are slightly different licensing requirements, the earning of fees and commission, and the structure of remuneration packages of principals of firms, Jones says. Commercial brokers also have different IT requirements to personal lines brokerages, he notes, and it is in these areas that the TIC can play a more prominent role in serving its members, he adds. “We [commercial brokers] have specific IT requirements, which is something we’re now addressing. Also, there is the issue of remuneration packages, and then there is the regulatory side with RIBO [Registered Insurance Brokers of Ontario].”

The change facing commercial brokers is not only being driven from within the insurance industry but as well by the buyers of insurance, Jones says. As the function of risk management has evolved within corporations, the skills and knowledge demanded of brokers by their corporate clients has risen substantially, he notes. To survive, brokers have had to broaden their skill set and become knowledgeable of the operational processes of clients, he adds.

Notably, the hard market saw the two-tier brokerage segment (firms handling more than $25 million in annual premiums) grow substantially, Jones says. “Corporations are beginning to realize that there is a lot more choice in the commercial broker market [than just the international first-tier firms]. And this has increased the skills set [among two-tier brokerages].”

KNOWLEDGE ROLE

Although the TIC stopped running its own professional educational programs several years ago and allowed the Insurance Brokers Association of Ontario (IBAO) to fulfill this need, Jones says the organization is now looking at providing a limited number of high-level educational offerings. This will likely be in the form of seminars dealing specifically with commercial coverage issues, most likely to be held in the early summer and then in the fall, he adds.

While the subject matter of the seminars planned for 2004 have not been finalized, Jones says a seminar held last year on the financial strength ratings of insurers was well received. And, as part of this education drive, the TIC is also looking at how it can establish a one-on-one forum with risk managers, he adds.

MARKET CONDITIONS

The commercial insurance marketplace has definitely changed this year, Jones says. “I think the marketplace is currently in a state of transition. Before, we were in a super hard market and there wasn’t any competition. Everyone [brokers] was just trying to protect their renewals last year. Now, there is competition – I think the price [of insurance] is finding its point.”

However, Jones is quick to stress that the marketplace is a long way off from being “soft”. While there have been some rate reductions on property cover renewals this year, Jones says that pricing on casualty business remains tough. The main benefit of today’s marketplace is that capacity is returning, he notes, which based on his firm’s own experience, the number of insurers interested in taking on business has increased four-fold.

Insurers are also no longer trying to be “everything to everyone”, Jones observes. This year has seen companies focusing on market segments where they have a strong standing and knowledge in underwriting, he adds. “They [insurers] are getting segmentation of the market better. The companies have cleaned up their houses [books of business] a bit.”

LONG STANDING

Jones, who is a senior partner at Jones DesLauriers & Firman Insurance Brokers Ltd., describes his brokerage as a “medium sized shop”. The brokerage was co-founded by his father in 1950, and Jones took over the reins of the firm in 1990. Prior to 1990, the brokerage handled about $2 million in annual premiums – today it employs 52 people and handles about $50 million in annual premiums.

In total, Jones has approximately 25 years of experience working in the p&c insurance industry. He attained a B.A. degree from the University of Toronto and a C.I.P. from George Brown College. He also holds the Canadian Certified Insurance Broker (CCIB) designation.