Recipe for success

If you’re ever looking for a humbling experience, try this: Gather together a dozen people who are mad at you. Then stand before them and urge them to tell you all the reasons why they’re mad at you. If that’s not daunting enough, ask them how you could make them happier.

That’s essentially what I did – along with a handful of other insurance industry representatives – when the Insurance Bureau of Canada created the Atlantic Task Force on Insurance Availability and Affordability back in February 2005.

Auto insurance received the bulk of the attention during the last hard market, but commercial lines of insurance also experienced premium increases and reduced availability. Media coverage increased with every cancelled parade and legion-closing. The task force was formed to develop market-based solutions to these challenges. It included insurance customers from commercial and not-for-profit organizations across the region, two provincial consumer advocates and, as observers, the four Atlantic superintendents of insurance. Insurance industry representatives included brokers, agents and company representatives.

BRAINSTORMING

Our first meeting was an anything-goes session. Task force members were encouraged to describe insurance problems they’d experienced and propose any possible solution they could think of. As you can imagine, it was an intense session. The members representing insurance buyers were angry about the hard market. As they saw it, there were no obvious reasons why their rates had gone up and why it was difficult to find coverage in some cases.

There was also skepticism about the motives of the insurance industry. They wanted to know what we were really up to with this task force. What was the hidden agenda?

Like I said, it was a humbling experience.

The turning point came at the end of the meeting. Once everyone had vented and thrown everything at the wall, we asked: “Okay, now what?”

This surprised them. They hadn’t really expected to be an active part of the process. They were waiting for the insurance guys in the room to tell them what was going to happen.

We told them we had ideas, but we didn’t necessarily have the answers; this was intended to be a truly collaborative effort. No single group or individual was in charge of this task force.

With that, their interest grew. If they were to be an active part of the solution, they said, the first step was a lesson in the fundamentals of insurance.

INSURANCE 101

So the second meeting was just that – an Insurance 101 class. We brought in industry employees from all areas of the business and explained the basics: how the product is priced, the importance of risk assessment and selection, the process of paying a claim, etc.

In subsequent meetings, the learning went back and forth. The insurance representatives had a great deal to learn about the other members’ various operations.

During the task force discussions, it became clear there is no single solution. All affected groups – the insurance industry, insurance customers and government – would have a shared responsibility in implementing possible recommendations. One of our priorities was to implement solutions that would be sustainable through future market cycles.

* The final report of the task force was released November 2005. It contains 27 recommendations. Very broadly, the recommendations cover:

* The implementation of risk management by insurance customers;

* Improving the existing Code of Consumer Rights and Responsibilities;

* Greater awareness of other insurance options, such as specialty markets;

* Better education by the insurance industry; and

* A reduced tax burden on insurance consumers.

One highlight of the task force’s work is the creation of a risk management tool that provides organizations with concrete information on how they can manage their risks. The tool is categorized by types of risk, such as slip and fall, liquor liability and special events. The tool is available on the IBC website at www.ibc.ca.

The task force also acknowledged the unique role the voluntary sector plays in our society, and the unique challenges it faces in securing affordable insurance coverage. Therefore, a consultant was commissioned to identify ways to improve the insurance and public policy environment for non-profit and voluntary organizations in Atlantic Canada. Many of the recommendations from this study are included in the task force report. While there are some creative ways the voluntary sector can help themselves, there are no easy solutions.

I believe the report is an important document, reflecting a new and unique problem-solving approach for our industry. If you have not already done so, I encourage you to go to read the complete report at www.ibc.ca/atlantic-taskforce.asp.

NEW OPTIMISM

The report is already yielding extremely positive results on several fronts.

For example, the Recreation Nova Scotia board, one of the task force members, recently passed a motion concerning the report. The motion stated: “That the recommendations outlined in the report are achievable and the potential rewards are well worth the effort; and by implementing these recommendations, we will create a more stable insurance environment, which will ensure businesses and voluntary organizations can continue to grow and prosper throughout Atlantic Canada.”

Also, a recent political action alert from the Canadian Federation of Independent Business (CFIB) calls on the Newfoundland and Labrador government to phase out its 15% tax on insurance premiums in the 2006-07 budget. This move is clearly the result of CFIB’s involvement in the task force. The report calls on Atlantic provincial governments, particularly Newfoundland and Labrador, to reduce or eliminate taxes on insurance premiums to make commercial insurance more affordable.

The process of developing the report was excellent for building relationships. For example, I received a very encouraging e-mail from one task force member, who wrote: “Thank you for your excellent efforts on this initiative and for demonstrating the courage to take a leap of faith in what we could do by working together.” The e-mail went on to express optimism about where things will go from here.

ROLLING UP OUR SLEEVES

In many ways, the real work begins now. We have set for ourselves the goal of implementing the 27 recommendations over a 12- to 18-month period. The industry has recommendations for which it is responsible; the other members of the task force have their own areas on which to focus. To ensure progress is made, we will issue a report card within 18 months to show how everyone is doing.

Specific tasks for the industry include:

* The development of education programs for affected groups;

* The promotion of risk management tools at the company level;

* Quarterly meetings to discuss progress with brokers associations and the superintendents of insurance;

* Promotion of specialty markets to consumers; and

* Making the Code of Consumer Rights and Responsibilities more responsive to commercial customers.

Getting to this point was not easy. It was a volatile situation. Members of the task force were frustrated; some of them hoped all of their insurance challenges would be solved. The insurance representatives had to manage those expectations, making no promises about future prices and availability. At the same time, the insurance representatives had to assure the other task force members that the process was still worth it; that the risk management tools that would emerge from the task force work would position their or ganizations to find the best possible insurance rate.

Early results and feedback suggest there is reason for optimism. It’s exciting the solutions were developed as part of a collaborative approach that included insurance customers. Of course no one knows insurance like the insurance industry. Most people don’t understand or care to understand how our business works. The result is that we have grown accustomed to telling stakeholders what must happen to fix insurance challenges. Often, this is the best way.

But my experience with the Atlantic Task Force on Insurance Availability and Affordability taught me that it’s not the only way. Sometimes our customers do want to understand our business better, and they want to be active participants in developing solutions. I am proud to have been a part of this groundbreaking initiative and I applaud the groups who took the leap of faith and participated. This was the first time our industry took this difficult but valuable approach. I hope it won’t be the last.