Professional Development: STAYING THE COURSE

Regulatory harmonization, multi-licensing, mergers and consolidations. In a world of rapid change, ongoing education has become a key survival tool of the new insurance landscape. Whether driven by consumers, regulators or employers, the trend is moving toward increasingly higher levels of education and lifelong learning. Efforts are being made industry-wide to provide the kind of education that will equip everyone from brokers to company presidents with the tools to face the new economy.

The image of “the guy in plaid pants sitting around the kitchen table selling insurance” is a long way off from the reality of modern insurance. But that image is one educators are trying to combat in order to encourage students to choose insurance as a career path, says Norma Nielson, professor and chairholder at the University of Calgary, Alberta, insurance and risk management program. “There are many misperceptions and myths” about insurance as a career, says Nielson, including the idea “that the only jobs are in sales”.

Peter Hohman, president and CEO of the Insurance Institute of Canada (IIC), agrees. “Historically, the insurance industry has had some pretty tough competition attracting qualified candidates to come into the business.” Too often, students were being lured away by other financial sectors such as banking and accounting, a situation the institute is hoping to rectify.

New blood

Institute graduates have been going out to high schools, promoting insurance as an educational and career path, and the IIC has produced films and educational resources for teachers to introduce students to the business. “When you question whether you’re having an impact, it really has come to the fore lately that insurance is being pre-selected as a viable career option,” says Hohman. Several Canadian colleges and universities have or are developing insurance programs, a process the institute has been working on since the 1960s. And three universities, including Calgary, have chairs in insurance, with two more considering the idea. “These programs are being fuelled by a demand from high school students looking to choose insurance as a career.”

Nielson admits the U of C program, which has steadily averaged 15 students per year, has been only “moderately successful” in terms of enrollment. “Insurance hasn’t been a traditional career path to go through university for,” she says. But the program has been successful in other areas, most significantly in terms of graduate placement. Across the board, post-secondary insurance programs have 100% graduate placement rates, Hohman reports.

U of C students head into a variety of careers, including underwriting, risk analysis and management trainee positions. In fact, Nielson notes, most graduates are able to remain in the west, rather than heading east to find jobs, because they are in such demand. It’s a situation which benefits western companies, but not corporate head offices in Toronto, she says. But the university hopes to see its graduates feeding the industry throughout the country, returning the investment corporations have made in the program. Industry support has been a key to the program since it was launched by “a couple of enthusiastic people who made their livelihoods in the industry” in 1993. Financial support from the industry has been excellent, including the development of scholarships which Nielson says are often the first thing to attract students’ interest in the program.

Paul Hancock, president of the Canadian Independent Adjusters Association (CIAA), says it is important for the industry to support the educational structures that feed it. 2000 marks the first year CIAA will select recipients for its benevolent fund scholarships. Whether through co-op programs or one-on-one interviews with students, Hancock says it is important to sell students on adjusting as a career. “We went through a long stretch where that [recruitment] didn’t happen, and the industry has suffered as a result.” Adjusting has become a difficult sell in some respects, because of the current trend to in-house adjusting by insurers. “The industry doesn’t seem to be getting the smaller, “learning” claims for young adjusters to work on.”

Confidence is high, however, that by marketing insurance as a career and stressing its professional nature, more and more students will be drawn to the business. It is a career that now demands higher levels of education, and employers are actively seeking out the most educated job candidates. “Historically, people got into insurance by accident…many people joined the industry straight out of high school,” says Hohman. But this is no longer the case. “With the growth in post-secondary programs, companies really are reaching into that new graduate pool.” It is this new reality of the highly trained insurance professional that educators are using to recruit the next generation of employees to the business.

Keeping up

For those already in the insurance industry, the move to higher levels of education is also having an impact. Regulatory changes have resulted in the institution of mandatory continuing education requirements in most provinces, and deregulation is allowing brokers to obtain licenses to sell a variety of financial products. Despite this opening up of the market, Jeff Bear, general manager at the Registered Insurance Brokers of Ontario (RIBO), estimates that only 10 to 15% of that province’s brokers hold licenses to sell products other than insurance. In fact, Insurance Brokers of Ontario president Ken Orr says the trend for brokers to sell multiple products has been overestimated. “I see it going the other way. There are lots of people with multiple licenses, but the trend seems to be toward specialization as opposed to one person doing everything.”

Orr predicts that, rather than one broker being asked to hold multiple licenses, and therefore meet multiple educational standards, brokerages will have specific staff members to handle different products.

But the number of multi-licensed brokers rises to between 40 and 50% in terms of property and casualty brokers who also hold life licenses. Multi-licensing is “a trend that has grown more quickly outside of Canada”, says Hohman, but the IIC may be gearing up for a response to the growing number of brokers selling both p&c and life insurance. “Our strength is educating people about insurance…I don’t see us, in the short term, getting into financial planning and those sorts of things, but recognizing that many of our members do straddle p&c and life insurance, it’s important that we respond to the needs of our customers.”

And for those in other financial services sectors who are moving into the insurance business, Hohman says the institute “will respond to that need” for education. A responsibility exists, he says, to keep up with changes in the business. As companies expand their reach through new product lines, and taking operations to national, even global levels, the nature of education must change to reflect this. One of the strengths of the institute’s CIP and Fellowship (FCIP) designations is their acceptance across the country and throughout the world, making them “highly portable in an increasingly global business where companies are moving around and borders have virtually no meaning anymore”. Another is their recognition across the industry. Last year’s class represented a mosaic of careers, 30% brokers, 10% adjusters, 50% insurers and reinsurers, and others such as risk managers making up the remaining 10%.

Lifelong learning

Regulators are addressing educational standards in an attempt to harmonize requirements both on a national basis and across the financial services sectors. Alberta’s new Insurance Act is the most recent example of the institution of mandatory continuing education requirements for brokers (although the anticipated Atlantic harmonization act is following Alberta’s lead in other respects, it is too early to speak to educational requirements, says New Brunswick Superintendent of Insurance Charles McAllister. These will be addressed through regulation, rat her than legislation, he says). Brokers are welcoming Alberta’s new requirements, according to Rob Clarke, president of that province’s broker association (IIBAA).

Orr agrees that, rather than being daunted by the prospect of having to meet mandatory education requirements throughout their careers, brokers recognize the importance of keeping up-to-date in a fast changing industry. “Part of what sets brokers apart from other distribution channels is their education.” With the influx of call centres and Internet insurance sales, brokers are using their knowledge as a marketing tool more than ever.

IBAO is encouraging brokers to further their education with the introduction of a “mid-range” course between the CAIB and CCIB designations, slated for launch at the beginning of 2001. The course is generating interest across the country despite the Insurance Brokers Association of Canada (IBAC) declining to participate in its development due to funding issues. “The Ontario board felt it was important to get the ball rolling,” says Orr, and other provinces are being consulted in the development process. “There was quite a leap of knowledge” from CAIB to CCIB, a commercial lines oriented program, which may have been holding some brokers back from pursuing a higher level of education.

Risk managers can look forward to the development of an MBA geared to that profession, says Rudy Henkel, member of the Risk and Insurance Management Society (RIMS) education committee. Discussions are on going to create programs in Calgary and Quebec. And the Canadian branch of RIMS has developed the first fellowship designation, a “unique” product that is now being used as a prototype in the U.S. But, according to Henkel, the risk management profession is suffering from a lack of educational standards. As it stands, risk managers are not licensed and not required to hold a particular designation, although education specific to that field is available. “We need to get our act together as an industry and look at what sort of education we should be requiring,” he says. Risk management is changing rapidly and heavy merger and acquisition activity means that jobs existing today may not be there tomorrow. Setting educational standards is “a question of how [risk managers] are going to stay employed”. The biggest stumbling block, he adds, is coming up with a consistent standard for a profession that is less defined than other fields of insurance. “You can have very different types of risk management.”

Hancock would also like to see educational standards entrenched for adjusters. The CIAA is proposing it become the self-regulating body for the adjusting industry, and part of this proposal focuses on the need for mandatory continuing education in particular. New types of claims, for example the growing incidence of technology claims, challenge independent adjusters to keep with the times, he says. “The way the industry is changing…if we didn’t have continuing education, we as independents couldn’t survive.”

Hohman agrees and suggests that although the cost of keeping employees in line with mandatory education requirements may be seen as an extra burden, it is really a necessary response to the new world insurance professionals face. “Our legal system is sending the message via recent jurist prudence that insurance professionals are being held to a higher standard,” he notes. “We have regulators entrenching those concepts into the qualifications, and consumers are demanding a higher level of accountability.”

In harmony

Regulators are taking the concepts of higher, lifelong education to heart. Most recently, the Canadian Council of Insurance Regulators (CCIR) endorsed a national standard for life agents. Created by the Canadian Insurance Self-Regulatory Organizations (CSIRO), the new requirements introduce a single-level license (there were previously two classes), mandatory pre-license training and tougher exams for life insurance agents. More rigorous standards “need to be raised across the board”, says Dina Palozzi, superintendent of the Financial Services Commission of Ontario (FSCO) and co-chair of CCIR.

In her opinion, the council should be looking at raising the bar for p&c brokers and agents next. “In today’s environment I don’t think you can shy away from that [raising standards].” While the provincial differences in how p&c insurance and auto insurance in particular, is delivered, make it more difficult to come up with a consistent set of educational standards, Palozzi sees this as a logical step for the CCIR to initiate in the future.

This kind of harmonization also needs to take place across financial services sectors, she adds. As chair of the Joint Forum of Financial Market Regulators (JFMR), she says preliminary steps are being taken to develop a set of professional requirements for all financial services intermediaries. “We figure it’s going to be a pretty big job,” she admits, but the subcommittee assigned the task has started with a code of conduct to be applied across sectors. This is expected to be completed for the fall, and educational requirements would be the logical next step. The concept of a common license for financial service intermediaries is not unrealistic, she adds. “If you look at the way the market is going [with the merging of financial sectors and multi-licensing], it just makes sense.

Will insurance professionals be prepared to face this ‘borderless’ world? The industry’s educators say they are prepared to offer the kind of cutting edge education that regulators, consumers and employers are demanding, and to accommodate the harmonization trend by offering these programs on a national level. The trend to higher, continuous education is viewed as less of a chore than a challenge — and perhaps a chance to dispel the myth of “the guy in plaid pants” forever. “For many years we’ve bemoaned the fact that we don’t have the greatest reputation out there,” says Hohman. “To me, this is a great evolution, to be recognized as a professional.”