Opportunity Knocks

Some may take a “doom and gloom” view of existing and emerging challenges facing brokers across the country.

But not Ken Myers.

The president-elect of the Insurance Brokers Association of Canada (IBAC), and past president of the Insurance Brokers Association of Nova Scotia, sees opportunities in those challenges.

Among the developments currently causing some unease are demographics: brokers are getting older and need to draw up game plans for who will take over their businesses, says Myers, president of Gateway Insurance Brokers Ltd., a 100% locally owned brokerage in Halifax.

These conditions, though, are causing some brokers to see the bogeyman, Myers suggests. They are concerned that if they do not sell now, that either the multiple they receive in “a year, two years, five years” will be lower – or worse – that their businesses will be bought out by enormous organizations, he says. “Frankly, I don’t think either one of those things is true,” Myers adds.

“There’s a reason why large organizations – insurers, venture capital companies – want to buy into brokers. It’s a good business to be in,” Myers says. Whether banks or direct writers, these competitors “are very much trying to present themselves as feet-on-the-ground, local organizations,” he says, but points out that in such large organizations, “organic growth is difficult because people aren’t engaged like small business owners (such as brokers) are.”

CALL TO ACTION

That said, there is unlikely a broker in the country who does not understand more can be done. “That’s the call to action. As engaged as you are now, get more engaged with your clients,” Myers emphasizes.

The current environment also offers a call to action to insurers, he suggests. When Myers got started in 1988, much was done through the mail, requiring a whole set of infrastructure to be in place that was expensive to maintain.

In 2013, much of the work is done online, he says. “There’s a lot of insurers out there whose costs to actually transact that business has to be a lot less than it used to be.”

Suggesting there is “money on the table,” Myers contends there is no reason “the price for a broker/insurer can’t be as competitive or lower than it is for a direct insurer.” This, in turn, offers a chance to inform people “that you don’t have to give anything up in terms of price to deal with a broker.”

Sometimes, however it is necessary to “rally the troops and get them to recognize that there’s a huge opportunity,” says Myers. “Technology has the ability, as far as I’m concerned, to level the playing field to some degree, give us some of the tools that some of those competitors use very effectively and then add in that extra component that we can add that they simply cannot.”

Technology-related costs can contribute to doom and gloom feelings, he says, but emphasizes those concerns can be allayed through planning and investing back into the business. “The reality is you can afford (to invest),” he argues.

Set aside some money so that when the time comes to make a major investment, there are funds available and there is no need to rely entirely on the earnings of the current year, Myers advises. “Be ready to keep everything you’ve got up to date and fight the fight when it comes,” he adds.

Brokers must ready themselves to address conditions that are already well under way: the customer’s fast- and ever-changing expectations of what good service is.

But even in this, Myers sees opportunity. He cites the hypothetical 21-year-old who purchased auto insurance online and whose needs have changed a few years later.

“It’s fine to buy that policy online, but at the end of the day, if you have to deal with somebody, call them back more than once, hold someone accountable for what they told you, that’s when they want to start to deal with us. Then they quickly realize they haven’t given up anything in terms of price. That is happening more and more,” Myers reports.

COLLECTIVE VIEW

As IBAC president, Myers is not looking to impose a new way of doing things, saying he has no grand vision. “If something happens this year that is outstanding, it won’t be because of me. It will be because I was part of the team that made that happen,” he says.

Myers says someone who did have a grand vision for IBAC was Dale Rempel, former IBAC president and a dear friend who passed away in October 2012. “I think Dale did have a grand vision and, frankly, I think we’re continuing that on.”

That vision revolves around the notion of broker perpetuation. Calling it an abstract thought, the objective is to now turn “that into reality to give brokers some tools to change the direction of what’s been happening,” Myers says.

“There’s a lot of good work that IBAC has been doing on behalf of brokers,” he says.

As one example, Myers cites eDocs. This was put forth with the help of insurers, with the help of the Centre for Study of Insurance Operations “and, in large part, by the technology committee at IBAC,” he says. Now, it is “actually making a difference in the way that brokers can transact their business.”

meeting the challenge

IBAC’s educational efforts will also be among the ways to help chart a change of direction.

For example, Elite Force: Best Practices Producer Academy is a specialized sales training program that inspires brokers who exhibit particular promise, and represents life-long learning in key business building areas. The idea is to take these individuals (they may be good candidates to become brokerage owners) and “give them that lift up through exposing them to some of the things that are going on across the country,” says Myers.

A current challenge is that as brokers get bigger, it becomes more and more difficult for owners who reach retirement age to pass along the business to, say, their children. Because the sums are so large, buyers may not want to be exposed to that perceived risk, Myers says.

“It goes back to the perpetuation point. What can we do to try and bridge that gap to help move people along and help them recognize this is not an insurmountable problem, that there is a way around it?” he asks.

Myers started his insurance career in 1988 in the family business, Myers Insurance Brokers Ltd., which he bought when his father retired in 1992. In 1998, the brokerage joined with Stanhope Insurance Ltd. and Simpson-Hurst Ltd.

to form Stanhope Simpson Insurance Ltd., where Myers remained for 14 years. In 2012, he withdrew Myers Insurance Brokers from the cluster organization and re-established his business as Gateway Insurance Brokers.

“I’ve seen small to large to small through different lenses,” Myers says. Those views have offered a real appreciation of how a national association such as IBAC can help, he adds.

“A lot of the relationships that various associations across the country have with their regulators, with their legislators, with members of parliament – that takes a long time to build,” Myers says. “It doesn’t happen with any one broker on their own. It’s collectively that that voice is really where it comes to bear.”