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IBAA Convention, Cybercrime, Gore Mutual Conference, BMS-Insurer Technology, Demise of the Broker, Flood Conference

Posted By Thom Young, June 21, 2017
As we get closer to our ever-brief summer, I seem to be busier than ever. If you’ve missed seeing my blogs, please be assured that I’m doing my best to catch up with the schedule.

IBAA Convention 2017

If you didn’t attend the IBAA convention in May, then you’ve shortchanged yourself on an easy commitment to keep yourself apprised of the changes going on in your industry and who is leading us in the process of adapting to them. In all the years I’ve been trying to figure out how to remain aware and responsive to the challenges we all face in this business, I think this year’s convention was the most helpful to me. The seminars were interesting and informative (especially my little presentation), and the new people in attendance this year brought with them refreshing perspectives to deal with old issues. I strongly recommend you attend the convention next year. I enjoyed the ability to meet new people as much as see old friends, but convention is not just all about partying and having a good time; it’s about remaining competitive and informed so that you can lead yourself and your business through the challenges that change brings.

Cybercrime Is Real Crime!

One of the interesting presentations at this year’s convention was a cybercrime panel that was stewarded by very knowledgeable insurance and security experts. Of interest was the large show of hands when the audience was asked who had been a victim of a cyberattack. The response was larger than I expected given that a significant number of people in the room would likely not be inclined to admit to the event. Clearly, this issue continues to grow beyond a mere annoyance to a significant risk of financial loss for us individually, for our businesses, and for our customers.

I was one of the people who raised my hand. I’ve had my credit and debit cards scammed several times. Once in Mexico, I received a call from the bank security people asking me if I’d just purchased a TV in Cancun. I was surprised: I was in Mazatlan at the time. Another time, my U.S. dollar credit card was scammed at a merchant location in Sandpoint, Idaho. By the time I’d gotten home, over $14,000 in bogus charges were accrued against my account. The charges were all reversed, but fixing the problem was still a heck of an aggravation. Throughout all of these scams, no one in law enforcement would accept a complaint. The Federal Police in Mazatlan and Cancun, the Sherriff in Sandpoint, and the police in Calgary and Tel Aviv where the fraudulent charges occurred showed no interest in initiating an investigation to charge the perpetrators involved. All claimed that the jurisdiction of the events made them of no concern to the individual agency. In reality, they all had no knowledge of the process or interest in the outcome of this criminal theft. Credit card scams are less likely to occur now that most cards are equipped with a chip, but the process of obtaining the pin number through criminal entrapment and observation continues. One of my business interests was recently subjected to a ransomware attack that enabled a criminal to get a worm into our computer systems that encrypted our files. Attempts to open programs directed us to call an 800 number that would provide us the encryption code for the nominal fee of 35 bitcoin. Fortunately in our case, our backup protocols allowed us to restore our system and avoid paying the ransom, but we lost half a day of inputting and spent a whole day and night restoring our systems. With bitcoin’s trading at around $3,500 USD, the solution was a lot of work but each a cheaper solution than paying the ransom.

Imagine a scenario where someone broke into your home, found your safe or filing cabinet where you keep all your personal information and financial records, changed the combination to it and the alarm codes into your house, left a note tacked to your front door with instructions to call the people who had broken into your home for the new codes and combination, and were very helpful when you called them in getting you back into your home so long as you paid them $5,000 for their assistance. Ransomware on a business or personal computer has the same effect. Wouldn’t you define the perpetrator as a criminal who should be punished severely?

In order to remain secure from criminal attacks on your computers whether at home or in your business, you need get up to speed on the security processes that you need in place on your systems. You have to defend them with proper procedures and security software that will keep your data safe. In today’s day and age, you can’t run your business without computer systems that are connected to the world wide web. Accounts are settled online, products are sold online, payroll is processed online, and client data exists in the clouds. If you’re not taking actions to secure your systems and your clients’ data, you may well be in violation of several privacy statutes and subject to fines and penalties in the event of data breaches that release clients’ personal information. Beyond the business costs of such a security failure, you’re looking at regulatory penalties for allowing it. If you don’t have the expertise in house to install security, then you have to get yourself some professional help, have someone in your office attend the training classes needed to ensure your compliance, and review your internal security protocols to ensure your people are following them. In almost every case that malware enters into a computer system, it arrives with an unsuspecting employee innocently processing a transaction outside of the firewalls you’re using to secure your systems. Phishing attacks in emails; piggybacked malware on flash drives, telephones, cameras, Sony Readers, Kobos, and Kindles; and naïve trusting employees opening the door to the criminals are all things that knowledge through training can prevent.

The last word of advice that I have on cybersecurity for all of my colleagues in this business is that coverage for this peril continues to evolve. Several really good packages are available at increasingly lower costs. Our industry responsibility is to get ourselves informed about them and to offer the protection provided by them to our clients. Don’t get caught in the situation where a cyber breach of computer systems causes your clients a substantial loss that could have been mitigated by a policy you could have offered them. While some businesses need this coverage more than others, no businesses operate in today’s business environment without the risk of a data/computer system failure impacting their operations. While considering this coverage for your clients, ensure that your brokerage has the proper protection in place to keep your doors open should a cyber breach occur on your watch.

Looking Fast Forward

I had the opportunity to attend Gore Mutual’s Fast Forward conference in North York, Ontario, last week. Gore Mutual brought together a select group of brokers to talk about the future of our business from the perspective of the changes we all face and will have to adapt to. The morning began with presentations by David Suzuki, followed by Commander Chris Hadfield, and wound up with futurist Jim Carroll. Each focused on his area of interest. Dr. Suzuki gave a fairly bleak summary of the environmental prospects for our species and the planet unless we change our ways. Commander Hadfield focused on the process of solving problems, declaring that anticipating and preparing for problems was more productive than worrying about them. Mr. Carroll talked about the pace of technological change outstripping predictions by over a hundred years. Much to think about and much to talk about.

The afternoon session was a structured interactive panel discussion on several topics. A panel of selected industry representatives was on stage, and moderated topical discussions were driven by Gore representatives. Interaction with the audience was facilitated by a meeting program called “Go Connect,” which allowed the audience to comment and question the topics in real time. At the end of each moderated discussion, the panel members selected questions they addressed. The focus of the three panels were the challenges facing the distribution network, evolving opportunities for synchronizing the technology platforms in use by our industry, and the increasing risks of damage to the industry and the public through cyber malice.

I must admit that at one point in these discussions I was feeling kind of jaded. I’ve reached the point in my evolution through this business where I’m now hearing new people discussing old issues like they are new and proposing solutions that have been attempted several times before with less than stellar results. Perhaps because I’ve been speaking out for the past 35 years about the lack of cooperation on communication issues in the insurance industry, I’m once again dismayed to find the same entities entering the discussions once again as if they are new. IBAC, IBC, CSIO, and IBAO all had representatives in the panel discussions, and all were politely nodding during discussion of the “technology crisis.” The issue is only of concern to them now because disrupters are just now starting to exploit the opportunities of our industry’s failure to unite on a functional common platform in technology. Only one spoke up about the opportunity this situation presents to fix the technology rapidly and without too much dissention because the technology is readily available at reasonable costs and the limited number of players both on the Broker Management Systems side and the company side of our industry makes the change feasible. The point was valid, but not one taken up by the panel’s other representatives. At this point, I just sighed in recollection of the failed SEMCI projects I had been involved in and even as far back as the ICEnet CSIO undertakings that I had been active in development and promotion of—all failed to be taken up by the very people funding the research.

I’ll say it again, if the insurance companies had been charged with the development of telephone technology, we’d have a telephone in our office for each company we deal with. (The last time I said this, the president of a large Canadian insurance company lectured me on how much more complicated computer systems were—duh?) Communication systems are very complicated, and they’re much more complicated to work with when the point of sale for products (the broker) has to follow completely different protocols to enter the data on every company portal and requires yet again different hardware platforms to unite the data. Maybe the broker’s inability to capitalize on this information (the metadata) in the incapable Broker Management Systems has finally been the eye opener.

The financial industry has actually been able to get their systems doing some of the things that would improve our industry’s service, marketing, and actuarial prognostications. Meanwhile, I’m trying to explain to a customer that I don’t know why he can’t make an email payment to the insurer we placed his business. Go figure.

70 to 90 Brokerages Left in All of Canada in 8 Years???

One of those dumbfounded looks from the crowd at Gore’s Fast Forward conference came when one of the panelists made this response to a question about the future for brokerages:

“‘In my view there’s probably going to be 70, 90 brokers across Canada seven or eight years from now,’ Aly Kanji, President and Chief Executive Officer at InsureLine said. ‘I just don’t think small, independent brokers can survive. I don’t think you can compete in the face of the consolidation that’s going on and the super brokers that are forming.’”

If I had a nickel for each time I’ve heard someone predict the demise of the broker distribution network, I’d have a whole lot of nickels! We’ve survived direct writers, banks, telephone sales, and internet marketing; various forms of franchising, nesting, and strategic alliances; and no end of unfair treatment by insurers limiting our markets and interfering with our operations. Still, we hear young people who have no idea how resilient our business is making these outlandish statements. We might be facing some hurdles that we will need to adapt to, but we will be here in 8 or 80 years. That’s how I see it anyway.

In Conclusion

I continue my journey around Southern Ontario and will attend a Flood Risk conference on June 12th. This should be interesting as we’re finally seeing the claims results of a serious flooding season after the implementation of flood coverage by the industry. I will do my best to have another issue out by the end of the week. In the meantime, I’m hoping you’re having a good summer. Other than the severe weather and thunderstorms, it’s sure better than the winter we had.

Keep those emails coming!

 

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below (you need to be logged on for the link to appear) or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  broker channel  broker management system  cybercrime  flood  Gore Mutual conference  IBAA convention  insurance technology 

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Flood Coverage, Broker-Direct Balance, Stampede Breakfast, IBAC (CAIB) Volunteers, Orlando Massacre

Posted By Thom Young, June 21, 2016

Flood Coverage

In my discussion of federal political advocacy last issue, I mentioned that the politicians all seem to be very aware of and interested in our industry’s response to the need for flood coverage. I’m always quick to mention the terms “overland water” and “sewer backup” in the discussion because people need to know that the changing dynamics of these coverages seem to be merging them into one. In order to drive flood coverage towards premium adequacy, you can’t have one without the other in some markets. It’s a saleable perspective: if you are in an area where you should be concerned about a sewer backup, you should be also concerned about overland water. Most people will agree that the proximate cause of most sewer backup is actually overland water. Combining the two coverages eliminates “the chicken and the egg” claims discussion that generates public confusion and protest when one side of the street is covered. This random coverage is an ongoing issue because many companies are still not providing any coverage for “overland water” perils and are offering only the old “sewer backup” endorsement. This competing coverage is now both a public issue and a broker E&O nightmare.

The failure of the insurers to develop a standard of coverage that is set out in common wording and is used by all companies referencing this protection will likely be a major issue for our business. No company or insurance adviser is immune from the confusion that will arise with the next catastrophic loss in a major urban centre. If we as brokers are advising clients to take coverage with one company or another but are confused by the variances in the wording and the special limits for “overland water” or “flood” coverage, we will not be able to describe the differences sufficiently for the client to understand the coverage and make an informed choice. Consequently, we will be held responsible for any shortfall in the coverage that causes the client an uninsured loss. Of course, the insurers will suffer the same challenges and may even be found liable to the public for failure to set a standard of coverage, but any liability charges would be years after the headlines sullying our reputations have long passed.

The political perspective on disaster relief programs may further jeopardize public good will. Some provincial and federal politicians have suggested that the programs in place for uninsured losses from flood can now be reviewed and the budgets for them limited so that these funds can be freed up for other needed programs. Well, the reduction may not be that simple. As most brokers will tell you, “overland water” coverage is excluded for those living within 300 meters of running water and the new forms won’t likely even cover “sewer backup” for these folks. When these exclusions become apparent after the next weird weather event, don’t be surprised if you’re asked to explain what happened. I can’t help but note that, as I write, the community of Dawson Creek is suffering from just this kind of thing. I know everyone’s tired of hearing me quip that we are just three days of rain away from a repeat of the 2013 flooding that devastated Calgary and High River. I recently toured some of the work underway to mitigate the Highwood River’s potential to create havoc again. While mitigation is happening, we’re far from prepared to deal with the kind of flood we saw just three years ago.

Nature Abhors a Vacuum—Eventually Everything Finds a Balance

The issue of “broker” companies entering into the direct-writing business is always foremost in discussions between brokers. Of particular concern is the manner in which the competition takes place and the use of the data accumulated from the customers for further sales and marketing by both the brokers and the company. The other main concern remains the name by which the competition takes place. It should be clear to anyone that competing with your brokers by using the same name as that used to write the business the broker sends the company is seen as a breach of trust, a violation of the exclusivity anticipated in the contract between the broker and the company and just downright wrong! To further belabour the point, the public is also very confused when they see the same name on the insurance contract that is on the broker’s wall and advertising. They expect to receive service and advice from the broker. Well, this confusion will of course sort itself out, eventually. If a “broker” company wants to be a “direct writer” under the same name as it is a “broker” company, then it will damage the relationship. Their support from brokers may wane to their detriment. All things being equal, I believe they will either have to commit fully to participating in the marketplace one way or the other.

With more competition in the direct-writing market, the direct writers may well be gearing up to hold their market share by offering their products at the same price through the brokerage market. According to Canadian Underwriter, “CAA Insurance Company announced on Thursday (June 16, 2016) that it has appointed 17 ‘well-known and experienced brokerage firms across Ontario’ to provide its customers with more choice.”

This is quite a move for an affinity-group insurance company. Would a membership in the Automobile Association come as part and parcel with an insurance application? I wonder as well if the agent will get a fee for this part of the transaction. Auto clubs have affected the insurance industry before. The roadside assistance endorsement SEF 35 was created to provide a direct competitive response by the insurance industry to the entry of automobile clubs into the automobile insurance markets. An actual Auto Club package that provided some of the auto club services such as mapping and hotel planning used to be sold by brokers for one market. Now most that has gone by the wayside—no need to spend an hour talking about a road trip with someone when you can simply Google a route (complete with turning directions) and immediately get a whole bunch of information on all the amenities you might need on your trip. As in most of the travel industry, technology has taken over the heavy lifting, leaving little money for the service providers, but the affinity group of auto-club members continues to survive. In Alberta, their operations seem quite healthy, and they compete actively in the insurance and travel marketplace. I wonder if they will be appointing Alberta brokers to represent them. If not, I’m pretty sure they’ll be watching the success of the Ontario efforts closely. I know I will be.

Stampede Breakfast in Calgary, Wednesday, July 13, 7:00–11:00 a.m.

9705 Horton Rd. SW, CGY, Southland parking lotCome and join around 1500 of our closest friends for a regular old-fashioned western whoop up. There’ll be lots to eat, world famous chuck-wagon drivers, line dancers, and a live band. It’s our 23rd time, and I think we’re starting to get it right. This has turned into an “all industry” event that you don’t want to miss. It starts early enough that even the 15 people in Calgary who do any work that week can get in on the fun before they get to the office.  

IBAC Volunteer Work—CAIB Review

I’m working my way through the chapters of CAIB 2 covering business interruption and crime coverage and reviewing their content for relevancy and accuracy in our ever-changing marketplace. Reacquainting myself with the material is interesting: I find I learn more by teaching than I ever did by studying. As I’m plodding along with this project, the thought crossed my mind that those of you far more in tune with the current market than I am might have helpful contributions to these topics. If you, do I’d be happy to include them in my overview of the suggested changes to the instruction program. For example, we’ve come a long way from the old 3D wording as the basics for crime coverage, but all the new package stuff just builds on the old foundation. I wonder if tossing out the basics might hinder comprehension of the reasons the new package works the way it does. Many of you are far wiser on this topic than I, so I’d welcome your ideas. The email address below is my personal one. Feel free to drop me a note.

In Closing

Real life is stranger than fiction—watching the news these days sure hammers that saying home. The events unfolding to the south of us make me pause and reflect. The aberration that occurred in Orlando leaves me simply overwhelmed with grief for the people killed and injured and their families. I can make no comment that makes any sense of this. It is just so sad. Something has to be done. While I can hope for change, the lack of it after the massacre at Sandy Hook leaves me with a fatalistic view, believing that it will continue to get worse before it gets better. Pray I’m wrong!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  broker channel  CAA  CAIB  competition  direct writer channel  disaster relief  Hill Day  insurance industry reputation  mitigation  Orlando massacre  overland flood insurance  sewer backup insurance  Stampede breakfast 

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Cyber Security, Direct-Line Changes in the Industry, Optical-Recognition Vehicle Registration

Posted By Thom Young, February 2, 2016

The Evolution of Cyber Security

Logging into a work station hasn’t really changed much in the last 20 years. Some IT managers have tried to improve the locks at the gate but, no matter their efforts, people still seem to find a way to defeat the safeguards put in place. If you’re like me, you likely keep a file somewhere with all the passwords for the various places you need to access on your computer. While the practice isn’t recommended, it’s sort of necessary, isn’t it? My file is four pages long. I have a good memory, but not that good. Most of my passwords also contain minor deviances from each other. The similarity helps me remember them without needing to go look in this file. That practice too is not recommended, but I’ve been using that system to manage my passwords since I studied cryptology as a young soldier nearly 45 years ago. Back then, we learned that any password could be cracked with enough time. The effectiveness of a password then as now is determined by the time necessary to crack it. No matter how complicated a password you use for any application, the improvement in computing power and speed are constantly reducing the time needed to break the code. Recently, I’ve been using a password-management program to remember a number of my logins. This program claims to use an algorithm to store my password, and this filter changes routinely to provide a very secure storage site. I’ll stick with the story I’m telling though: all passwords can be cracked with enough time and effort, no matter how you calculate them.

The amount of effort invested in trying to access a password has to be valuable relative to what you get out of it. I’m quite sure that no one is going to invest much time trying to access my account with the American Philatelic Society, but maybe they’d be willing to put supercomputer power to work on my banking or business logins. I’m flattering myself with my own importance here, but I think you’ll understand my point.

I’ve been following a number of articles on cyber security recently and noted one in Canadian Broker magazine citing the most common passwords in use today. Despite all the warnings, few of us seem to take heed or even care. Here’s the latest list of the top 20 most-used passwords:

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Password
123456
password
12345678
qwerty
12345
123456789
football
1234
1234567
baseball
welcome
1234567890
abc123
111111
1qaz2wsx
dragon
master
monkey
letmein
login
princess
qwertyuiop
solo
passw0rd
starwars
Change from 2014
Unchanged
Unchanged
Up 1
Up 1
Down 2
Unchanged
Up 3
Down 1
Up 2
Down 2
New
New
Up 1
Up 1
New
Down 7
Up 2
Down 6
Down 6
New
New
New
New
New
New

A programmer friend of mine advises me that he has a simple little application on a thumb drive that will try all of these (and some not listed) on any login in less than 10 seconds. Apparently, you can download this app off the internet. If you’re using these passwords for any application login, I think you should immediately consider changing them to something more secure.

A strong password needs to be at least eight characters long and should contain both upper and lowercase letters, at least one number, and at least one non-numeric or alphabetical character. It should be a random group and not contain a complete name in letters. The longer the password following the same principles, the more secure it is. As I stated at the outset of this discussion, all passwords are breakable, but the stronger it is, the longer it takes to break it and, therefore, the better protected the data past the password becomes. Microsoft has some good advice on this subject.

Recently, much talk has circulated on the future use of biometrics as the new standard for a secure login. Essentially, some indicator unique to you, such as your fingerprints, retinal scans, heartbeat, palm print, voice analysis, or facial features, can’t be easily duplicated by a computer hacker or thief. This biometric identifier can be read by your computer, often without the need to install a special piece of hardware. Almost all laptops and notepads now come with a built-in camera. All that is needed is the correct facial-recognition software to provide only you with access without having to input anything on the keyboard. Likewise, audio filters and touch pads determine fingerprints and such.

Facial-recognition software is advancing at such a tremendous pace that retail establishments commonly use it to track customers in their stores. A computer program tags their images with data on when they come, what they purchase, and what their preferences are. The information is available for analysis and target marketing later.  I’ve seen this kind of software demonstrated in conjunction with an office data-management system similar to that used by many brokers in their offices now. When clients walk in the door, the program notifies reception with their names and CSR. Depending on the program’s configuration, the CSR can be automatically advised that the clients are in the waiting area, and either a computerized reception station informs the clients that the CSR will be out to meet them momentarily or the receptionist is prompted to say the same thing. All this information is integrated on the CRS’s workstation or tablet with the production records in the clients’ records and files. This is quite an efficient process compared to that just a few years ago. A number of American banks are also using this technology to increase safety and security for their customers and the business.

I wonder what new developments we’ll see in the future. I also wonder what inroads will be made into personal privacy when customers’ movements are tracked by facial-recognition software and the retailers share the information among themselves. Will we walk into the grocery store to find a basket already containing all our usual items and a few special ones being promoted by the store? I don’t know how I’d feel about that marketing. I also don’t know if a negative view would make any difference because the change seems to be inevitable.


Direct-Line Changes in the Industry

Last week, we were all a little surprised to learn that the Royal Bank of Canada decided that its general-insurance returns weren’t adequate to its needs and reached an agreement with Aviva Insurance for RBC’s P&C purchase. This acquisition initially sounded to me like a good deal for our industry—another major bank admitted it had been unable to compete on a level playing field and was vacating the business. In fact, the reality seems to be that Aviva has purchased RBC General Insurance Company’s general-insurance book of business and appointed the company to represent its products in the same manner as any other broker. While I’m now not so sure anymore that this transaction is a win for our business, I am sure that it’s not a loss.

We compete in a competitive marketplace. As brokers, we have better choices for our customers than most of our competitors. Direct writers, whether they be offshoots of company players on the broker side of the game or agents for a stand-alone business, cannot effectively compete with the brokerage channel on price or product. This difference has always been the case and continues to be the reality of the insurance marketplace in North America. Aviva partnering with RBC Insurance isn’t going to change that reality. Neither will Intact expanding its direct channels in the marketplace nor, as I read today, Economical introducing a direct channel, affect that difference. These efforts by any insurers are doomed to lack-luster returns and short-lived efforts just so long as we as brokers get out there and compete for our market share. We excel at giving the best service to our customers and finding the best insurance solutions for them in price and product, so we don’t need to fear anyone in our market. Time will tell if this new venture between Aviva and RBC will be a success.  However, as brokers, we should all continue with excellent customer service so that we continue to beat RBC in competition.

Manitoba Gets Rid of License-Plate Stickers

When talking about technological advances, the simple process of eliminating license-plate stickers for registration renewal, as Manitoba has done, doesn’t at first seem like much of a big deal. So what if, in Alberta, it would eliminate the annual ritual of obtaining a new expiration sticker and putting it on your license? However, the reason these stickers have become redundant is just a small sample of how the technical advancements of optical recognition have progressed. The dash camera that is becoming standard on all police cars is connected to the provincial database through the computer in the police car and can read any license plate from quite extraordinary distances and instantly determine the registration status. The sticker, on the other hand, relies on the human eye’s limited vision and can determine only its validity. Wired cars are the new norm. Soon the digital repository of information relative to the owner and operators of the car will become part of the digital record available to law enforcement. Tracking stolen vehicles and citing drivers for infractions will become an automated process. Photo-radar tickets will contain the identity of the drivers, an automatic adjustment to their driving records, and a link to the insurer’s databases. Immediate adjustments in premium can be determined and the real function of UBI will come into play. Customers will be charged for the true underwriting risk immediately. Talk about an incentive to change behaviour! The duties of traffic police will be not much different than those of the parking authority—digitally recording infractions and violators. The world is going to continue to change.

In Closing

I’m hoping the take up of people following my column continues to increase. The new format allows IBAA members to make comments directly on the blog and share thoughts not only with me but also with other readers. If you prefer, you can email me instead with any comments you’d like to make. Just remember to subscribe to the blog (under Your Network in www.ibaa.ca) so you receive notice of its publication. Looking forward to hearing from you!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  Aviva  banks  biometrics  broker channel  cyber security  direct writer channel  IT  license plate  optical recognition  passwords  RBC  telematics  UBI  vehicle registration  Young's Stuff subscription 

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Flood Coverage Confusion, Demise of the Broker, Driverless Cars, AIC Online License Application

Posted By Thom Young, October 7, 2015
Well, the frost is certainly on the pumpkin in Southern Alberta. As a rather large flock of Canada geese heading directly south flew right over my place, the last one looked back at me as if to ask “What are you waiting for?”  Our fall departure for the southern climes has been delayed since our usual date coincides with the birthday of our middle grandchild. We’re not allowed to be away until after that. Besides, I’ve still got much to get done here this fall, so my Canadian perspective on things remains pure at the moment.

Flood Coverage Confusion

In addition to the usual number of interesting things to talk about at the couple of industry gatherings I’ve attended in the past few weeks, “flood” coverage and its limitations seems to have generated quite a bit of confusion. Many people are concerned about the new limitations on sewer backup endorsements that insurance companies are slipping into customer renewals. The implications for E&O exposure on the broker side are staggering. Clients may think they have coverage but don’t if the proximate cause is “overland water.” If a nearby creek over flowed its banks 72 hours before or after the sewer backup, then the proximate cause is “overland water.” In the past, many of us wondered why sewer backup would respond when the proximate cause was flood, an uninsured peril. Questions of this nature used to be answered with a blank stare, but now an actual wording limits the cover. Do clients still have good coverage? Try explaining the coverage and all the limits and exclusions when, as a broker, you’re not sure about the benefits yourself. The real kick on this will come with the next major flood event, which could be next year or not for five. The interpretation and, more importantly, limitations and exclusions of these coverages will not be firmly established until we meet up with a catastrophic loss. I worry about my customers and the way these changes impact my responsibilities to them.

Advice on the “overland water” coverage provided by various companies is even more difficult. The only wording I’ve been able to secure is the one from Aviva. I’m told that The Co-operators has one on the market and that Wawanesa and Intact are soon to enter into the competitive fray, but I’ve no idea how one product compares with another. Explaining the differences must be very confusing for a personal-lines CSR. A jaded person might suggest that the new coverage isn’t sufficient enough to move forward with a competitive response in any great urgency. We are back to the original conundrum with flood coverage. The coverage needs to provide adequate distribution of risk and sufficient premium to deal with claims. These are interesting times for insurance brokers and even more confusing for the buying public. Oh well, who needs brokers? I’m sure an internet link will eventually provide all the correct answers.

The Demise of the Broker

Once again the industry press is predicting that insurance sales intermediaries (the fancy legal term for sales people) are on the road to redundancy. According to those who claim that you can find online information to purchase just about anything without any assistance, sales people are irrelevant, an unnecessary distraction, and perhaps an annoyance. Online information sites are becoming better, they claim, and giving intelligent choices with proper information prompts to allow the consumer to purchase increasingly complicated things without the need for a company representative. These statements are all true but, and it’s a big BUT, one of the most important parts of arranging a contract that promises to do something in the future is the meeting of minds when the deal is struck. When only one mind is in play, the value of the contract is uncertain because of potential misinterpretations. The legality of the contract may be suspect as well.

Look, I’m not one of those anti-tech people. I’m all for using any available distribution method to get our products and services out to the public, but at the end of the process a real person must negotiate the interests of all parties to the transaction to ensure that their real needs are met and the legal process of the contract is respected. I support the notion that the value added of a properly trained insurance adviser will continue to be an important part of the distribution process for all insurance products. Any suppliers (insurance companies) that fail to understand the support they get from such an individual risks their business success. All of the technical simplifiers, online applications and quotes, information algorithms, coverage prompts, and flashy digital pictures used by the insurance companies serve only to drive to the finished transaction between two people, the insured and the broker/agent. The manner of this meeting could be changed by technology, but the importance of it and the value to all parties won’t be.

Speaking of Human Redundancy, What about Driverless Cars?

As the technology continues to advance in this field, we are very close to the tipping point where these vehicles become a reality in the norm. No longer just a strange thing, they will be reliable and cheap enough to become a common sight in many jurisdictions. Getting to this stage won’t be easy. Many hurdles will need to be jumped before the legislation becomes uniform enough to operate these vehicles in different jurisdictions. Further, the reliability of these vehicles in operation will need much demonstration, documentation, and proof. Who is going to insure these vehicles? Who is the insured? Current legislation in Alberta would likely see the vehicle insured in the facility market. The insured would be the owner of the vehicle as per the statute wording of the SPF 1, which defines who is insured. The owner would include the driver whether that be a computer with AI capability or your brother-in-law who borrowed the vehicle while visiting town. The driver will need to be more properly defined, but such definition is not an insurmountable obstacle as the usual operator (normally the owner) would be produced for the application record. In my view, the functional manner in which that person operates the vehicle or delegates its operation would be irrelevant (I repeat, in my view—legal disclaimers abound—this is my opinion). Definition of the driver may have some grey areas that may challenge the regulators, but let’s hope they’re looking at it now and have some kind of contingency in place to deal with it when it happens. Our Alberta regulatory response to changes in our business has tended to follow the leaders instead of making good changes for our market by being the leaders (again, IMHO)!

If anyone thinks we’re talking about something way off future, think again. On last report, 48 vehicles are being operated in a California Google study. These vehicles operate in a highly dense urban environment and function extremely well all on their own, with no human intervention in the completion of their assignments. Yes, some minor accidents have involved these vehicles, but none of them can be defined as at fault—so long as you don’t use the other drivers’ distraction at a driverless vehicle as an excuse. The tests incurred some minor injuries in accidents but, again, they were due to the manual operation of the vehicle by technicians. No reports have been made of any traffic violations in the operation of these vehicles. While only four states have made provisions for autonomous vehicle operation, their use will doubtless soon be expanded to new jurisdictions in short order.

The concept of a self-driving automobile lets the mind wander into some interesting possibilities. For example, in a Top Broker editorial, Jeff Pearce discusses flying cars.

Certainly, driverless cars have a huge number of benefits. All of the advantages of having a chauffeur come to mind.

That $26 a day you pay in parking won’t be much of an issue. Just send your vehicle away to wait for you to tell it to come pick you up. Where you send it might be an issue, but I’m sure you could program around that hitch.

Auto theft would become an issue of the past. Imagine trying to steal a car that’s driving you to the police station, emitting an alarm, and has already sent the police a picture it has taken of the crook trying to steal it. Following that logic, your vehicle can become part of your home security system, keeping an eye on things around the house and reporting suspicious activity to you.

What about the kids needing to get to the rink or to dance? No more juggling schedules or negotiating with other parents to get them there and back—just send the car (or the other parent’s car).

Studies claim that the average person who lives and works in a high density urban environment spends as much as four months of their adult life looking for a parking place. Imagine how many more clients you could see if your car just dropped you off and came back to get you when you were done. Your productivity would increase substantially.

The technology has huge implications for the insurance industry, most of them very positive. Loss ratios on automobile insurance are composed substantially by administration and adjudication costs. Imagine the elimination of arguments regarding fault by the ability to review 360° digital recordings of the accident scene prior to the accident, during the accident, and after the accident? Much less discussion will be needed to determine who did what and who should have done what. The mind boggles. In some insurance markets, recording technology is already making a difference with the mandatory use of GoPro technology in commercial automobiles. We’re moving that way here too as the price of this technology declines. The price won’t be an issue when it comes built into your next automobile.

The mind can wander into the future. We can embrace new technology and work with it, or not. Based on my own musings here, the positives far outweigh the drawbacks. We certainly won’t be talking about distracted driving anymore, and underage drivers will be in a different class than they are now. The future is ours!

New Technical Frontiers

Speaking on the issue of technology advancement ….

As one of your representatives on the General Insurance Council, I’ve been working to resolve an amendment to the cumbersome regulations surrounding the DR’s role in recommending an individual for a license. As it now stands, only the DR is able to sign the application to sponsor an individual for a license. The DR is not able to delegate this authority to any other individual in the office. While this duty likely isn’t much of a burden for those operating a smaller shop with only one office and a few employees, the larger the brokerage, the more cumbersome this requirement becomes. New hires in branch offices are often stuck in an unproductive limbo waiting for the paperwork to get completed to give them the proper authority to act as an agent. If the DR is away on holidays or sick leave, further unnecessary delays can occur. In the logical flow of things, particularly in a multiple-office brokerage, the branch or office managers are responsible for the all functions of their location. They recruit, hire, and train new staff and are entrusted with all the duties of a self-directed senior manager except the submission to the regulator to transfer or change the license of one their employees. The DR in head office needs to sign the paperwork physically. I’ve maintained for years that this requirement is inefficient, impractical, and unnecessary. I know many other DRs share my perspective.

Recently, the AIC sent out an email advising of new online provisions for Levels 1, 2, and Probationary New License Applications. If you have not done so already, I strongly suggest that you familiarize yourself with the contents. Transfers and Level 3 General applications are still being handled in the old manner, but I’m told these procedures will also be updated. DRs can now delegate supervision of these online application preparations. DRs still need to endorse the submission to the AIC, but, now that it’s online, DRs can review and digitally endorse the transaction from wherever they are. This provision should provide greater efficiency and speed up the process.

I wonder what the take up is and will be on this processing ability and if it will in fact reduce the amount of paperwork. I will be asking questions about the new process at the upcoming GIC meeting and encourage your feedback on this topic. While I’m supportive of these changes, I still feel the process can be adjusted to provide for the complete delegation of the DR’s authority within larger organizations. I can’t seem to get the point across that the delegation of authority doesn’t negate the responsibility. Please let me know what you think.

In Closing

It’s hard to remain focused and unbiased given the political climate at the moment. It’s hard to be complacent with so many issues before us and so many different points of view! Still, as I voice my opinions in this column, I want simply to remind everyone to exercise the right to express your opinion at the ballot box. I cannot stress enough that this ability is your ultimate right to self-determination. Your vote can help change the things that are bad in the world and make a difference for everything that needs to be supported. This right has been fought for through many generations. The equality demonstrated by the line ups at the voting booths is one not shared by many other people in our world. Tyrants and brutal cultural influences that mute the voices of the people don’t belong in a modern society. Many young people in our new technological society don’t see the need to use this franchise or don’t believe their actions make any difference. They see the “trending” perspective instantly on issues and can’t understand how slow the process of a functioning democracy is to change. That slow process becomes even slower when people don’t vote. Politicians won’t think about to your concerns if they know that listening to your problems won’t get them a vote. Make a difference and get involved. Get out and vote. If you don’t care enough to get out and vote, you can’t later complain about what the government is doing!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  Alberta Insurance Council  Aviva  Aviva overland flood policy  broker channel  competition  customer service  DR authority  driverless cars  Google  GoPro  Intact  online insurance  overland flood insurance  sewer backup insurance  The Co-operators  Wawanesa 

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Using Both Direct-Online and Broker-Channel Distribution Impacts Consumers and Industry

Posted By Thom Young, July 2, 2015

How about the Weather?

Typical for an Alberta summer, the weather this week has been stiflingly hot and dry up to Canada Day—difficult to endure in an RV without power—and then the predicted thunderstorms created a general turn to semi-constant rain and much cooler temperatures. Huddling around the propane campfire in the Ponoka Legion parking lot last night was a much different experience from what we’d expected according to the weather reports. There’s a profession for those who like a challenge—no credit for whatever good happens but all the blame for whatever unexpected turns out. Even better, try being a climatologist who attempts to make sense of the overall picture based on the weather details extrapolated from archaeological records. Are they, like us, looking to the past to predict the future?

“We’ve seen the enemy and it is us”

Variations of this comment have been used to describe the process whereby in many endeavours we seem to be the authors of our own misfortune. If I had to give direct credit for it to anyone from memory, I would attribute it to the character named Pogo in and old newspaper comic called Alley Oop. In the historical cycle of a changing insurance marketplace, we’ve seen this process operating more than once and seem to be about to go through it again in Canada.

A decade ago in England, insurance companies rushed to offer their automobile insurance products over the telephone, and the brokerage ranks suffered tremendously from lost market share. Insurers that traditionally had been great supporters of the brokerage distribution model indirectly undermined brokers with telephone solicitation schemes that allowed the consumer to deal directly with the insurers. The presumption of doom came down upon the English insurance brokers who feared greatly for their future.

The effect of this change in market approach caused severe market disruption in England. While some brokers didn’t survive, most did. The real losers in the process were as usual the consumers. The average price of an automobile policy didn’t really change that much, but the price differential sure did. Straightforward accounts that were easy to deal with received the most benefit in price discounts, leaving the more complicated ones to pay increased premiums into the pools. Slicing up the pie into smaller pieces doesn’t create any more pie as anyone who’s had unexpected guests arrive for dinner well know. Consumers were eventually treated to the reality of discounted service and the loss of an advocate to add value to the claims process. Pricing realities in a competitive market also led consumers to seek assistance from a broker or “agent” who could make sense of the complicated product they were buying. Ultimately, the purchase of reliable insurance (any kind of insurance) is not a do-it-yourself project accomplished by pressing numbers on a telephone in response to robot-generated questions, nor is it any easier to accomplish by clicking boxes on an internet website. Doubtless, the process of obtaining the quote can be done in this manner, but understanding and analyzing the risk is a much different story.

The universal capital marketplace continues to believe that the builders of better mousetraps can arrange for the world to beat a path to their door. While the newest “door” is the internet, what we’ve seen so far is a landscape filled with much communication but little in the way of service. Insurers in Europe, the U.S.A. and Canada, as we know, have been flirting with attempts to improve their market share through this new communication device, yet those who are making the best use of it and having the most success with it are using it, not to change the process, but to streamline and improve it. Much like the call centres that now seem to add to the client’s experience and reinforce the broker’s or agents’ efforts, the internet markets that seem most successful are those that integrate the adviser process. Agents or brokers remain the key contact point, while routine service issues are dealt with by service centres. Rating and quoting is subject to the broker’s or agent’s review of the client’s interaction and the underwriting issues that always seem to arise in the process. This is the experience of Progressive in the U.S., and other U.S. companies who have tried the direct approach are losing ground to them in the market. Safeco, as an example, had a direct-writing internet arm and ended up assigning the client-service issues by zip code to its agents. Safeco could neither provide the proper expertise in the market nor give timely, effective service to its clients using the direct approach. Further evidence suggests that using brokers in this manner is much more cost effective than the direct approach, but some companies believe they will have different results. I don’t think they will.

Insurance company executives have much to juggle. They are surrounded with all kinds of advice givers and people extolling the benefits of every new gizmo or gadget that is said to improve the company’s competitive position and to preserve it from others who might effectively use the gadget. The newer the technology, the harder it is to decide. The digital marketplace is exploding companies, and brokers are actively using it to compete with each other, get the customers, and give the service. Digital technology will improve the process, but it won’t change the manner in which the product is sold or delivered. Any insurance executive who believes it will, is losing sight of the process and will, ultimately, pay the price in lost market share. Insurance executives who betray the loyalty of their business partners, be they brokers or employees, by competing directly with them in the marketplace will suffer a worse fate than having to regroup and respond to the market changes. They will be bypassed by those who have taken the time to understand the dynamics of this new communication device called the internet and who have effectively changed their communication strategy to enhance the process of customer service. Their “new” direct approach will fail horribly, and the impact on the clients will put our industry in disrepute again.

All of us are well aware that one of our major markets in Canada has determined to go down this path of competitive realignment in the Canadian market. Of particular concern is the branding. Any business would find difficulty explaining to its customers the difference in price and service of the products sold out of its shop versus those sold directly by its suppliers. A client who walks into a broker’s office with a quote bearing the name of this market will be very confused as to why the broker can’t match that quote when that company’s plaque is on the broker’s wall. Once again, our industry will be confusing our market and doing a real disservice. This company may well find itself bumping up against regulatory obligations in several provincial jurisdictions and will certainly see itself under regulatory review. If a company provides a quote to a consumer, it had better stand behind it at whichever location bears its name. It’s only logical.

One might hope that the company involved will have another look at its business plan. If the company is determined to compete directly with its broker representatives, then fine, but at least it should brand its product differently so that brokers are not confusing the public. The superior service that I, for example, provide my clients under its name needs to be distinguished from the slip-shod, second-rate direct internet approach the company is going to give them. Additionally, when that company’s clients come back to me disappointed with the company’s direct internet service, they won’t be looking for a quote from that company. Caveat emptor!

wagon wheel

Stampede Me

Lundgren & Young is holding its annual stampede breakfast on July 8th, 7:00–10:00 a.m., 9705 Horton Road SW in Calgary. Come on out to this all-industry event, enjoy a good pancake and sausage breakfast, and listen to live country music. While reveling in the stampede show, mingle with the insurance industry folks in the know. If you know the right people, you can get a glass of the good orange juice.

While on the topic, don’t be afraid to stampede me with emails sharing your thoughts. They provide good fodder for future articles.

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.



Tags:  branding  broker channel  consumer confidence  direct writer channel  insurance industry reputation  online channel 

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Political Changes, Online Crime Increases, Overland Flooding Competition, AIC Update

Posted By Thom Young, June 2, 2015

To Quote Shrek, “Change is good, donkey”


When it comes to change, I’ve always sat with the optimists. Change of any sort can be disruptive and difficult for some, but it always brings with it new perspectives and new opportunities. Analyzing the effect of change in your marketplace gives you a competitive advantage, particularly if your competitors are slow to react or quick to react in the wrong manner. Being the first one with a positive message will always win you more credibility than harping about the difficulties the change will bring. Change is inevitable in all things; dealing with it is your only option. How you deal with it will determine how it affects you.

The political front is certainly a different landscape before us in Alberta. Doubtless, people had more than enough of the ruling regime and demanded change. You can debate whether or not the change they have effected is the kind of change they wanted, but that won’t change the outcome. The popular vote certainly did not go to the new ruling party but, with the right of centre divided and the left of centre united, the first past-the-post outcome in this three-horse race was assured almost from the get go. In a democracy, the will of the people cannot be denied, and we will have to deal with whatever changes are produced on that account.

The insurance industry will experience a number of years of trepidation. The NDP perspective on auto insurance is a threat to our businesses, and a hard market (should it arise even for a short period of time) would bring the political forces to bear upon this issue. Unfortunately, auto insurance wasn’t part of the discussion in this past election, and one would believe this topic presents no immediate threat. Our industry in Alberta has never faced this kind of threat before, so it would be wise to begin to prepare and strategize for possibility of the discussion. Interesting times?

One might observe though that the previous government wasn’t as kind to us as we all thought it should be. Premium roll backs on auto insurance were somewhat disruptive, not to mention financially difficult for us. Brokers in particular had to suffer commission charge backs, often arriving in a different fiscal period. The return of money spent because of a misguided belief that the public had been mistreated by rates was more than a minor inconvenience to many brokerages. That, followed by the introduction of auto insurance reforms that continue to interfere in the natural competitive market for auto insurance in Alberta, doesn’t support the notion that a right-of-centre government is better for our circumstances than the new incoming one.

Those of us who have registry offices have direct experience with the ineptitude of the previous government. A succession of nearly a dozen different ministers has proven a lack in the simple understanding of the challenges of running a business where your revenues are limited by regulations while your expenses increase unchecked. Registry agents have been doing their best to convince the government that fees charged the public should be adjusted through a fee model taking into account the factors that affect revenues and expenses. While the model is logical from a business perspective, for over 10 years the service fee received by registry agents has remained the same even while the government has increased its fees substantially over the same period. Considering just the increases in rents and salaries in Alberta over this 10-year period, it impossible to understand why requests for fee increases to account for these fell on deaf ears, particularly from a government that is supposed to be cognizant and supportive of business issues. I don’t believe you’d find too many registry agents who felt that the previous government was their “friend.” Who knows what’s in store for these businesses under the new government? The success of the registry agent service-delivery system in Alberta is the idol of governments everywhere. Will the government follow the principle that, if it isn’t broke, don’t fix it? We will have to wait and see.

I for one am looking for the new opportunities that will present themselves to us in short order.

Online Crime Continues to Increase


phishingRecently, an item circulated purporting to be from the Canadian Revenue Agency asking for credit card information in order to deposit your tax refund directly to your credit card account. This followed recent notices from CRA that the office would like to do away with cheque refunds and have you initiate a direct deposit for your refunds. CRA has a great site for this—safe, secure, and easy to use. Unfortunately, the email purporting to be from CRA wasn’t from CRA. The link took you to a site that sure looked like CRA’s but, of course, was a new twist on an old internet scam called phishing. An email purporting to be from a bank or insurance company asks you to click on a link and confirm your data. Once you do so, the data you input is stolen in a form of identity theft. Every day people are caught in this scam and the thought is always the same: “It looked real.” Well, that’s the point.

Protecting Canadians from online crime, new laws are now in effect and bring new rules about data management and cooperation with investigations. Still, other than on TV, law enforcement officials who are the least bit interested in investigating this kind of crime or have any of the skills necessary to actually do so are hard to find. Focusing on the most heinous of crimes involving distribution of images and abuse of children, these new laws are the first step to bringing actual legal discipline to our new communication technology, but we are a long way from consequences.

My advice on this remains the same. Unless you initiate the contact and are on a secure website indicated by the lock symbol, put none of your information on the internet. If in doubt, call the company and verify they are who they are. The electric company won’t even talk to you about your account without verifying who you are by asking you questions. You should not have more trust in the process than they have. Verify and confirm—sensitive information should be shared only when you are certain you are sharing it with the right people.

People caught up in the so-called CRA phishing scam gave out their SIN number, name, address, birth date, and credit card data—all the information necessary to begin the process of identity theft. The consequences of this might not be discovered for years. Don’t get caught by this.

The First Competitive Response to Overland Flooding Coverage


As has been predicted, the markets’ response to the Aviva overland flood coverage has seen a new entry in Alberta with the Co-operators’ announcements last week.

The broker side has some new competition through this product from the direct writers. We are still awaiting updates from other markets on this, but this announcement is certain to put additional competitive pressure on them. If anyone has heard any current rumours, I would be interested in hearing about them.

AIC Stakeholder Sessions Have Been Completed


AIC stakeholder sessions were held in the past two weeks in both Edmonton and Calgary. I attended only the Calgary meeting but had updates on the issues raised in Edmonton. It was nice to see that the very vocal life-insurance minority who had been clamoring for relaxed entrance standards determined to let these meetings pass without making a spectacle of themselves once again. It was also nice to see the interest from the General Insurance community expressed on the examination and education issues. Updates were provided on the efforts underway to improve the pass/fail rates on the examinations without reducing the standards of education needed to both enter our business and advance within it. The process of establishing equivalencies for professional designation holders and matching education providers' courses to other jurisdictions was discussed as well. Two General Insurance sub-committees are working hard on these issues and hope to provide actionable decisions on both issues by the end of July. If you have opinions on these matters and would like to ensure that they are brought to the attention of the people working on these issues, please don’t hesitate to forward them to me. As a sitting member of the General Insurance Council, I will be happy to ensure that your thoughts on these issues are heard.

The AIC also reported on the licensing cycle, which is well under way. If you haven’t received an email from the AIC on this matter, you’re not recorded properly in the system. All license holders are personally responsible to ensure that their licenses are in good standing before they represent themselves to the public. This means your Continuing Education Credits need to be up to date, your declarations made, and your licensing fee paid by the end of June or you are not eligible to receive compensation for selling insurance. Make this process a priority, people.

I’d like also to mention that you are now required to know your CIPR number. This number identifies you across most Canadian jurisdictions and enables things like your CE credits to be followed wherever you are licensed. Your CE certificate now requires your CIPR identification, so all education providers are asking for it. Make you know what it is and have it with you when you are signing the attendance sheets.

In Closing


Summer is almost here. Time to go for a bike ride!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  Alberta Insurance Council  Aviva  broker channel  CIPR numbers  CRA  direct writer channel  insurance license renewal process  licensing courses and exams  NDP and insurance  online crime  overland flood insurance  phishing  The Co-operators 

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World Happiness, No Falling Sky on Broker Distribution Channel, Nepal Relief

Posted By Thom Young, May 19, 2015
Updated: April 28, 2015

World Happiness Report

Canadians are apparently the 5th happiest people in the world. You wouldn’t know it watching the news lately. The recently released "World Happiness Report" has rewarded us Canadians with a rather good standing in ranking our approach to life and the satisfaction that we receive from it. These kinds of “studies” and expert reports are always amusing to me, particularly when determining the source and the funding of the work that goes into “research” on such a topic. These reports and discussions, as near as I can tell, originate from the United Nations. As these things often go, a discussion may have started between a couple of bureaucrats about how happy a place our planet is and then an application was made to obtain funding to look further into the problem. Now, perhaps I’m raining on the parade here thinking about all the troubles in our world, but the United Nations could probably better use its resources to find a solution to things like getting clean drinking water to all the people who live in our world or producing a plan to promote pluralistic harmony between people shooting at each other. Still, they were given funding for measuring the temperature of happiness. Of course, the interesting talking point in these important announcements is where different countries sit in the ranking. In order to spare you the tedious task of mulling through the 176-page report referenced in the link above, I’ve listed the top 30 countries ranked by happiness below:
  1. Switzerland (7.587)
  2. Iceland (7.561)
  3. Denmark (7.527)
  4. Norway (7.522)
  5. Canada (7.427)
  6. Finland (7.406)
  7. Netherlands (7.378)
  8. Sweden (7.364)
  9. New Zealand (7.286)
  10. Australia (7.284)
  11. Israel (7.278)
  12. Costa Rica (7.226)
  13. Austria (7.200)
  14. Mexico (7.187)
  15. United States (7.119)
  16. Brazil (6.983)
  17. Luxembourg (6.946)
  18. Ireland (6.940)
  19. Belgium (6.937)
  20. United Arab Emirates (6.901)
  21. United Kingdom (6.867)
  22. Oman (6.853)
  23. Venezuela (6.810)
  24. Singapore (6.798)
  25. Panama (6.786)
  26. Germany (6.75)
  27. Chile (6.670)
  28. Qatar (6.611)
  29. France (6.575)
  30. Argentina (6.574)
While I was originally going to list only the top 10, I decided to expand that number to 30 to include a fair representation of European countries in the review. I have been fortunate to have been in 17 of the countries referenced and could give a firsthand opinion on the accuracy of the research for those. In that regard, I don’t have much argument with the results of this study. The conclusions as to the reasons why the rankings came out the way they did are for much further discussion.

One can clearly see the correlation between the standards of living and the rankings, but a few anomalies appear in the mix. Certainly, the inference of cultural differences doesn’t leap out from the report. For the most part, those who live in a country with a high standard of living and a fair political system seem to be winning the contest to be happy. You may find a different answer in your review. An interesting read. I, like most of you, already knew that Canada is one of the best places on the planet to live, and that fact makes me very happy!

The Sky Is Falling, the Sky Is Falling

insurance umbrellaFrom Walmart to Google, everyone seems to want into the General insurance business. The best method of distribution continues to be up for much debate, and our industry press likes to stir the pot with this popular topic. The headlines often begin with a dire prediction that the independent broker network is under attack again, and our imminent demise is predicted because some new and improved method of distribution will gobble up our market share. Now, far be it from me to give the impression that there are no threats to your market share in this competitive environment. We deal with the realities of it each time we quote a new piece of business or service our existing clients. Still, most of us seem to win our share of new business and hold onto our existing clients.

No doubt, this isn’t the case for everyone—not everyone should do well in a competitive market. A well-run insurance brokerage will always be responding to competitive pressures to correct failures and reward successes. Production reports are reviewed at least monthly and comparisons are done at least quarterly. Trends are identified quickly and a market response made to correct deficiencies. This is the norm in any service business, from the corner grocery to the multinational distributor. If you’re not taking care of your business in this manner, then you are vulnerable to the next competitor who calls your customers, and you won’t know you’re not taking care of business until it’s too late to fix the problem. Often people who fail in this manner are quick to announce to the world that outside influences overtook their business unfairly. The reality is more apparent than that.

Over the years, I’ve watched many good producers make a very good living in our business. When you review how they accomplished that, it usually boils down to customer service backed by good processing systems. These producers are the ones who are in tune with their marketplace and are usually the first to identify a trend in the market that poses a threat to their business. The entry of a new player undercutting the market in rate or underwriting silliness puts pressure on your market share and makes retention of your clients difficult. Fortunately, the rules apply to these new players too. A couple of decades ago, when we were constantly being visited by new competitors such CIBC, the Bank of Nova Scotia, and Canada Trust, we saw them “cherry picking” the best customers with rate and coverage enhancements that couldn’t be matched by our markets. Many brokers were very alarmed about the business they were losing, and producers were suffering badly against this “unfair” competition. Still, the rules of the marketplace applied to these new entrants, and the discipline of competitive factors came to play on them very quickly. No doubt, the banking executives holding their insurance divisions to account for failing to obtain a sustaining market share while losing money with the product had a lot to do with these companies either leaving the marketplace entirely or increasing their rates and refining their product to match the norms in the marketplace. I know for a fact that the claims service and customer service provided by these entities had a lot to do with their failure to advance in the marketplace. I actually recall a high-value client who we had lost to the Canada Trust program telling me that the $300 Canada Trust saved him on his home insurance didn’t amount to any savings when he factored in the nonsense he had to go through just getting hold of the adjuster assigned to his claim. Every time he phoned, he went through the call centre dance and ended up at the beginning of the story with a new person. Competition works, people. When the service you’re providing fails to meet the needs of your customers, they won’t be your customers for long.

You should remember the number one rule:

If we don’t look after our customers properly, someone else will!


You have my permission to copy and paste that phrase onto a full-sized piece of paper, print it out, and put on all your CSR’s desks.

So Google is coming? Well, who cares? I will do a better job than Google of looking after my customers, and I know you can too! The broker distribution network is in good hands, and the solutions we provide for our customers are better than any direct writing influence. You just need to remind your customers continually of that truth. Contact them at renewal, stay on top of the coverages and the rates with the companies you represent, and give your clients the best choices for them. The first of those best choices is always you!

Asia Once Again Dealing with Huge Natural Disaster

On April 25th, the people of Nepal had their world turned upside down. One of the largest earthquakes in living memory shook the mountains and valleys of this small impoverished country and its neighbour Tibet. The very urban city of Katmandu had suffered a similar earthquake in the 1934, but then it was simply a small village with few structures built of any significance. The damage then, while significant, has no comparison to this current event. As in many third-world countries, the urban development has been rapid and without engineering discipline. Building codes and the logic of civic engineering intermesh with ancient customs so that many of the rules we’ve become accustomed to are bypassed and overlooked. When the earth shakes, the buildings fall down in total destruction, taking many of the residents with them.

Initial estimates of several thousand dead seemed very optimistic to those who have studied natural disasters. While the tally at this point of writing is approximately 5000, the recovery effort has only just begun. With little in the way of heavy equipment to clear away the tons of rubble, the search for survivors is now fruitless. Doubtless, the number of fatalities will soar into the tens of thousands. The small villages of several hundred or a few thousand in the steep valleys have been isolated by avalanches and, while at this juncture the news is focusing on what’s happening in Katmandu, others report that many of these communities are not just isolated but also entombed by the rock that has fallen from the mountains. Surely, this event will be on record as one of this century’s largest natural disasters.

Earthquakes can happen anywhere and are about as predictable as rain. Even the best forecasters can declare the certainty of the event but cannot provide details as to when and with what severity. While many experts will forecast probabilities, without certainty, little attention is paid to them by anyone. Nothing except the strange behaviour of animals gives any forewarning of an earthquake. Even the strange behaviour of animals gives little advance warning that can be used to initiate any action to mitigate the effects of this natural event.

The earthquake in Nepal occurred along fault lines in the earth where two tectonic plates are grinding away against each other at the rate of some 5 cm per year. This physical action over millions of years has produced the world’s highest mountains, and the tremendous pressures produced by this action are often released in sudden cataclysmic earthquakes. The fierce movement of the hard rock produces the most damaging results of any earthquakes and brings with it the largest loss of life. In such an area, you would think that buildings would be constructed to reduce the risk, but they are not. The technology exists and is known as can be evidenced by the ancient temples and palaces that are still standing after centuries of earthquake movement.

We need to do what we can to help the hundreds of thousands of people who have been displaced by this event. In the global village, the idea of brokers helping the community expands geographically. Our federal government has again initiated the matching program—matching our personal funds with government funds to help those in need. If you can spare a dollar or two, it will double in benefit. Details about the program can be found in the Nepal Earthquake Relief Fund webpage. By the time you read this column, only a few days will be left to get your money into this plan. Many companies also match employee donations to worthy charities. Our social and civic responsibility is to help where we can.

As we continue to follow the events in Nepal, we should be reminded again that natural disasters can occur anywhere at any time. Recently, a large earthquake occurred off our west coastline near Haida Gwaii, hitting a sparsely populated area without many high-rises to worry about, but it was still damaging and frightening. The Haida Gwaii earthquake was similar to that in Nepal where hard rock realigns itself in rapid violent movement, not like the slow undulating kind of earth movement usual to the Southwestern U.S. quakes. Still, either can be devastating depending on several factors. The numbers given to the event are difficult to understand as a factor 6 can be as damaging as an 8 depending on the geology of the epicenter. No matter what size, the event is terrifying to those experiencing it. The largest North American earthquake recorded occurred in 1811 at New Madrid, Missouri. Estimating the size is difficult, but the record shows that shock waves traveled through the earth raising the ground 10 to 20 metres as they emanated from the epicentre. The earth readjusted to the extent that the Mississippi River actually ran backward against itself for several days before finding a new course. Destruction from such an event today would see present-day St. Louis reduced to nothing but rubble and the loss of life unimaginable. Here in Calgary, a seismic fault runs diagonally northwest from the south east part of the city to just south of Cochrane. You can see the fault’s strata while driving on Highway 22 and then to the west on Highway 1. One can only speculate when the last realignment of this fault line took place, but certainly its results are evident in the geology. Will it move again?

We have a kit in our vehicles that gives us a 48-hour fighting chance in the event of an emergency. Are you prepared? I heard an interview with a resident of the Queen Charlotte Islands where he spoke of his ready bag by the door. I haven’t got to that point yet, but maybe I should.

In Closing

Time commitments of conventions and holidays have me writing this piece several weeks before it is due to be distributed. I apologize if the flow of the discussion isn’t as timely and topical with regard to current events as it usually is. I’ll get back on track on the next issue, I promise!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  broker channel  customer service  Google  Nepal Relief  Walmart  World Happiness Report 

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