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Supplier Loyalty, Airline Customer Service, AIC Stakeholder Meetings

Posted By Thom Young, April 19, 2017

How Happy Are You with the Loyalty of Your Suppliers?

While our suppliers have been competing with us for a long time, the issue has been of considerable concern to all independent brokers. Insurance contracts have not always been easy for brokers to obtain. When I first got into this business, finding a sponsor to back you was almost impossible. The insurers had field men and local managers who operated in a manner that would make King John and the Sherriff of Nottingham proud. The regional managers had nearly absolute control on who they allowed into the business, and the field men enforced their own pride and prejudice in the treatment of the brokers contracted to those companies.

Getting a contract wasn’t a sure thing even after all the leg work of putting together a bang-up business plan and amassing enough capital to get a general insurance brokerage going. Regardless of how good your business plan was, how much capital you had to ensure your start up, or what you promised the company in business volume or profitability, getting a contract was all about whether or not the good old boys running the territory you were trying to establish yourself in liked you. Even buying an existing brokerage was no sure deal if the field man and managers didn’t approve of the sale to you. I know of more than one offer to purchase an existing brokerage that was usurped by an insurer who didn’t like the buyer and directed a different broker to better the offer to the vendor. I can hear people gasping while reading this, but I can assure you that business was done this way when I started in this business in the 1970s.

In this kind of environment, our product suppliers demanded and enforced total loyalty. Taking issue with their people, policies, or procedures could result in severe consequences for you and your business. Companies could impose market restrictions on you through underwriting and special regulations. They could limit your ability to grow, restrict the territory you wished to compete in, and even direct who you could associate with or hire. Being a small broker often wasn’t easy, and sometimes even large brokers found themselves faced with hard decisions in a perceived ultimatum in their business relationship with a company. Rewriting a multi-million dollar book of business is never good for your bottom line. The harder the marketplace, the more difficult these relationships were. Even in a healthy competitive marketplace, it is hard to remain competitive if those you place your business with don’t play fair.

Imagine the morality in the business and social relationships of the TV series Madmen, and you’ll have an idea of how cliquey the general insurance business was just 30 years ago! Even the local chapter of a prominent insurance club wouldn’t allow women to join. The number of women in middle and senior management positions was so small that not even a tiny whimper of complaint would arise back then. No one spoke up against this abomination due to fear of the negative consequences applied equally to both men and women who took issue with the status quo. Their careers depended on their compliance. Such conduct wasn’t limited to just the insurance industry. Ethnicity, social orientation, religion, and other restrictions were even more of an issue in some places. For the most part, our industry has thankfully made great strides in overcoming these travesties, but we were not leading these advances and can still do more to advance our industry and people. Atonement for the past is unnecessary, but we need to ensure we don’t forget it or repeat it.

I started this trip down memory lane looking for the reason why we join associations but got lost on the way in exposing some of our dark history. To get back on track and summarize the musings above, our suppliers fail to take into account our interests when acting in what they see as their best interests. One of us cannot do much to influence them, but all of us together can force change in the manner that those we count on to support us in our businesses deal with us. For the most part, our interests are the same as those of our suppliers, so when we are treated fairly everyone wins. Some people have a different perspective on what’s fair though, and that can make dealing with the people you rely on difficult. Common interests draw us to groups like IBAA and IBAC and ally us with other groups representing consumers and governments. Some common interests ally us with the associations representing our suppliers too, like when we’re arguing against banks competing with us from their branches or restrictive regulation that stifles our ability to serve our customers. The dynamics of these relationships become readily apparent at association meetings as they fill the discussion time in one way or another.

Recently two of our sister associations have taken extreme issue with Aviva and the manner in which its direct marketing arm is competing with the brokers who represent Aviva (Insurance Business). Both IBAO and IBANB have refused to allow Aviva to participate as sponsors in their annual conventions, alleging that Aviva’s new affinity program does not play fair with brokers. Aviva has spent much time attempting to justify this program, but for many, including this writer, a supplier that sells essentially the same product that brokers sell, under the same name and at a price less than what brokers can sell it for, puts brokers at a considerable disadvantage and particularly strains the business relationship. Beyond the issue of fairness, explaining to clients who want to partake in Aviva’s affinity program why they can’t have the services of a broker who has the Aviva shield hanging on the wall in the reception area is difficult, to say the least!

The idea of being contracted to sell a company’s products under all kinds of rules, regulations, and stipulations, only to have that company begin direct advertising of the same product at a lower price to your potential and existing clients is absurd. Imagine how many of us would sign up to represent a company doing business like that. I’m sure the line would not be very long. MacDonald’s has franchise stores and company-owned stores, but the price of the burgers are the same in each location. Not many would be very willing to invest the millions of dollars to obtain that franchise if they weren’t. MacDonald’s guarantees this equivalence in its franchise contract. Perhaps we should be reviewing our contracts for similar assurances.

I wonder if this topic will arise at the IBAA AGM or at the IBAA convention. The convention has a broker Town Hall. The AGM is in April, prior to the convention in May. Make sure you’ve got yourself registered to attend!


IBAA Annual General Meeting 2017

Via Webinar
Wednesday, April 26, Starting at 9:00 a.m
.

Register


It All Boils Down to Customer Service, Doesn’t It?

Way back in the day when I was on the board for a prominent insurer, I had to fly from Calgary to Toronto on short notice because the insurer had made some major decisions that needed to be ratified immediately. My return airline ticket in coach cost $2,700 because of the short booking time. The young lady in the seat next to me was flying return but had booked her flight two weeks earlier at the competitive price of $500. We did not pay a surcharge just to get a seat. Such a charge was unsupportable by the marketing dynamics in place at the time and the likely half a dozen empty seats on most flights. This was the way things worked in those days and you just put up with it.

When I was a kid, my father moved around a lot. We seemed to be always on a plane to somewhere or from somewhere to Winnipeg where my mom’s family lived. I had to wear church clothes whenever we flew, and the accommodations and the service were beyond the norm of anything we were ever used to. Stewardesses and stewards were always in formal attire, and pilots were never without a tie and jacket. They all looked like officers and carried themselves with a deportment that commanded admiration and respect. Customers were treated like royalty. Little things like toys for the young kids and attentive service for the adults were routine and not just reserved for the people in first class. Taking an airplane trip was a special event. Today, not so much, and anyone born beyond 1980 has no idea what I’m talking about.

The new airplane cabins cram as many human beings as possible into them. Even in first class, the seats are smaller and the service less than special. About the only advantage of paying the extra couple hundred dollars is getting on and off the plane with less inconvenience. Flight crews are half the size they used to be. Commonly, only four or five people are charged with the task of getting some form of service to 300 or more passengers. A cart rolls the aisles with a frazzled attendant doling out soft drinks and a bag of seven pretzels or a biscuit that could double as a door stop. If you want an adult beverage or a sandwich, you need a credit card on some airlines but cash on others. Some may not have anything left to sell you if you’re sitting any further back than the wings. Young people look at you as if you’re silly when you tell them that hot meals were included with your plane ticket and the norm was that adult beverages were just as free as the soft drinks were. Go figure. For people like me who find themselves on an airplane about twice a month on average, the advantage to flying is it gets you to where you’re going in the shortest possible time with no extra comfort than a public bus. Strangely enough, you chalk it up as a win if the plane actually leaves on time.

United Airlines has been getting quite a bit of media attention in the past two weeks. In the first fracas, a couple of teenaged girls were denied passage on a flight because they were inappropriately dressed. Initially, the story was spun with the slant that they were just innocuous young girls boarding a flight and were turned away on account of them wearing “leggings.” Social media immediately erupted with cries of a sexism and anger at the thought of it. Later, we found out that these young ladies were travelling on employee passes for free and that, as with all employee airline passes, the user is required to dress in appropriate business attire. While these rules are often applied selectively and young children are usually not held to as high a standard as an adult, the rule was the rule and the kids’ parents were well aware of it. The airline got a pass on this one in March, but not the next in April. In the absolute dumbest display of callous actions in today’s “everyone has a video camera” environment, United called security agents onto a plane to eject a passenger because the company had oversold the flight and he was protesting his removal from the seat he had bought and paid for. The short clip of them beating the hell out of the poor man and dragging him off the plane bleeding about the face and in a semi-conscious state has now been viewed by several million people online and millions more on the news channels. If ever there was an example of poor public relations management, this was it. As a consequence, the stock value of the airline has dropped by half and its already poor reputation for service has been forever ruined.

What were they thinking? The pundits being interviewed on TV are all lamenting the action but stating that the airline was within its rights to do what it did. Sure, the contract legalities of the carrier’s right to refuse passage can be debated in the corporate arena, but no waiver in any North American corporate contract can give anyone the right to physically assault another. We make laws to protect us from physical abuse. As anyone can see in the video, those laws were clearly broken. One thing for certain is that public awareness that the airlines are able to eject a paying customers at their whim is increasing demand upon our lawmakers to protect them from such unfair practices. Much discussion has arisen in the USA about bumping passengers and the compensation necessary to do so. In Canada, we’re talking about banning it altogether with a passenger bill of rights. How customers are treated is the essence of competition. I’d like to make a shameless plug for WestJet who makes it a rule not to double book people and just doesn’t bump passengers for any reason. WestJet is not perfect, but you won’t be asked to leave the plane after you’ve sat down in your seat, which, in my opinion, is how it should be for all airlines.

Alberta Insurance Council Stakeholders meetings Edmonton and Calgary

If you hold an insurance licence and are checking the email you have on file with the AIC, you will have received this notice:

The Alberta Insurance Council would like to invite you to attend our Stakeholder Information Sessions to be held in Edmonton the morning of May 18, 2017 or in Calgary the morning of May 25, 2017.

These sessions will begin at 10:00 AM and will last approximately 2.0 hours. New for this year, a live renewal demo will be included.

Edmonton session:
When: Thursday, May 18, 2017 starting at 10:00 AM
Where: Holiday Inn Conference Centre Edmonton South located at 4485 Gateway Blvd.

Calgary session:
When: Thursday, May 25, 2017 starting at 10:00 AM
Where: Hotel Blackfoot located at 5940 Blackfoot Trail SE

For further information or to register for either of these events please visit this link.

Please RSVP no later than May 11, 2017 to indicate if you will be attending and which session you would like to attend.

Follow us on TWITTER @AbCouncil for ongoing updates at https://twitter.com/AbCouncil.
Alberta Insurance Council


I hear many complaints about the AIC, but I often find on investigating them that most of those complaining the loudest are not at all familiar with the AIC, its role, its purpose, and its function. Besides the responsibility for market conduct of all licence holders, AIC is responsible for the structure and the standards of the licence examinations, as well as for awarding certificates for the class and types of business. I also hear arguments about the AIC rules and the definitions of what they mean. This is the place to air your concerns, get your explanations, and demand change for things that aren’t right, so register and go if you can. You get the bonus of receiving CE credits as well. Be prepared to listen to people complain about Life Insurance and Accident and Sickness issues too as all licence holders are represented in this process. Still, if you have concerns about the way our industry is regulated and licensed, here’s the forum where you can make those concerns known. I know I have some concerns about many things, the CE-credit process for one and the Level 3 licensing boondoggle in Alberta for another. When I ask about these things in my role on the Council, it would be nice to have the support of the many people who share my views (many of which have been expressed in this forum) to reinforce the industry’s concerns!

These meetings are public, and I don’t believe you need a licence to attend them. At past meetings, industry representatives have attended and lobbied for changes to allow the sale of their products and challenge regulations, so if you’re not licensed but concerned about our industry feel free to attend.


In Closing

The days are getting longer and warmer and those of us who like to play outside when it’s not cold and white are getting outdoors once again. Biking and hiking, family outings to parks, and other outdoor attractions are increasing as we approach our ever-brief summer. Remember to drive carefully through those school and playground zones. Be aware of people out and about, and watch for the little and big people playing with their toys. Spring is my favourite time of the year, with new life springing up all around us and new opportunities to reset your goals and make new objectives for your life! I’m looking forward to convention in May (all the tech-savvy, fun, and informative stuff) and hope to see many of you there.

 

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  Alberta Insurance Council Stakeholder Meetings  customer service  insurance company  supplier loyalty 

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Fort McMurray: How Can We Help?

Posted By Thom Young, May 10, 2016

Fort McMurray: How Can We Help?

Despite a host of issues to discuss, my focus in this column is on the Fort McMurray catastrophe. The scale of the tragedy and scope of the disruption is just becoming known. As I write, the current estimates are that over 1600 “structures” have been lost to date and several hundred more are in imminent risk saved only by the whim of the winds and the valiant efforts of the fire fighters and volunteers doing all they can. By the time you read this column, our industry response to this historical disruption to the people that we serve will be well underway. The media has conveyed the confusion and the concern in this mass scramble to evacuate a community of more than 80,000 people and the reality of people navigating their vehicles with their families and whatever possessions they could grab through the conflagration of a forest engulfed in flames. One client of ours reported that the windows of his car were, at one point in his journey to escape, too hot to touch on the inside. Another told the story of his family seeing the flames lapping at the back of their home as they were going out the front door. By some form of providence, no lives were lost directly from the fire, the sad tragedy of a traffic accident taking two young lives notwithstanding. I cannot recall such a successful movement of that many people in so short a period of time and over geographical distances of such proportions. Floods cause evacuations with a much lesser sense of urgency than feeling the heat of a fire on your back while running away. This truly amazing story has only just begun.

Our insurers have sent many notices about the systems in place to deal with the clients who are out of their homes with little or no documentation and very confused about what to do now. While they can find help in many places, getting the information out to these people is the problem. The magazine Canadian Insurance Broker has put out a guide for brokers that is very comprehensive and is being updated regularly.

If people don’t know who they are insured with, they can be referred to the Insurance Bureau of Canada, whose coordinated name and address searches with their members can identify claimants’ policy information to get the claimants in touch with their company’s claims centres. The process is tedious though and the frustration level high, so be patient with these people if you are trying to help them.

I had an interesting discussion with a broker the other day who was of the opinion that assisting an insured who is not a client with the claims process on behalf of the insurer is somehow an infraction under the Insurance Act. Nothing could be further from the truth, and you’re adding to the frustration these people are experiencing if you tell them that you can’t help them. Pushing them back on their broker is futile as well. I know of one brokerage firm an office of three agents that has 3500 clients in Fort McMurray. The office has been evacuated, and no one can get in to restore operations until the evacuation orders are lifted. The three brokers working there have all lost their homes and will be dealing with their personal priorities for a while. If you get a call from people looking for help with their claim, please provide them with information and advice.

  • Get them in front of the right people to initiate their claim.
  • Tell them to keep good records of their expenses.
  • Advise them as you would your own clients on beginning to prepare the lists of belongings lost.
  • Advise them on the time they have to get their claim started.
  • Most importantly, comfort them with assurances that you would give your own clients.

Of course, you will need to qualify the advice because you haven’t seen their policy, but you can provide general advise. You know what’s covered under a homeowners policy, and the statutes are absolute no matter who the insurer is. These people are desperate for words of comfort, and we can give it to them without creating an estoppel. Do what you can to help!

Replacing Alberta Official Documents

People who have been evacuated from Ft. McMurray and are in need of replacement documents—from auto registrations to driver’s licenses and birth certificates—can obtain these at most registry agents offices free of charge. The government has waived the fees for these people and most registry offices have waived them as well. People who are starting to rebuild their lives can be directed to a registry office to get this task underway.

In Closing

I am busy with a number of things focusing on the Ft. McMurray event and am cutting my essay short for this issue. Much more is to come on this story. After the tragedy of Slave Lake, much dialogue surrounded what could and should have been done to prevent what occurred there from happening again. All of our communities situated in the boreal forests of Canada must take note and begin to implement mitigation and suppression efforts to protect against wildfires. That discussion is for another day. Today, we focus on helping our fellow Albertans get through this.

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:  catastrophic risk  customer service  evacuation  Fort McMurray  IBC  Insurance Bureau of Canada  mitigation  wildfire 

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Claims Regulation Needed, UBI Technology

Posted By Thom Young (Full first name: Thomas Clifford John), March 15, 2016

Ethical Regulation Needed for Adjusters

Diamonds and gold are valuable, but reputation is priceless. We invest much time and effort into promoting our business. We stand on the ethical values of professionalism and proclaim that the manner in which we honour the promises made to our customers, along with our attention to their legal obligations, uphold the principles of justice and fairness. With those proclamations comes the legal truth that those who provide insurance contracts are held to a higher standard than the norm in their dealings with the public and that those who sell them are expected to represent customers’ interests ahead of their own. All the good work that is done 99.9% of the time can be set aside by the actions of one representative of our business who takes a tact in the process that is found to be unfair. Even worse than the personal shame of being found unfair due to an error, the perception that preconceived maleficence led to unfair practices leaves us all standing accused in public eye.

I’ve ranted before about the need to license adjusters who adjudicate the claims process just like we license the insurance agents and brokers who arrange the contracts. Such a license could subject adjusters to a code of conduct and ensure the regulatory oversight that would enforce accountability to the public and the industry. No directive of an irresponsible corporation could override that accountability or excuse the failing of it. Accountability to peers accompanied by the need to accept personal responsibility for our actions sets us apart from the warranty claim manager at the auto dealership or the customer-service manager at the bank. The public gains a degree of confidence that exceeds the norm when this process is demonstrated to be in action as customer complaints arise. While our business holds itself to high ideals, human nature doesn’t always meet the bar we’ve set for fairness in our actions.

Recently, the actions of ICBC (the B.C. government insurer) failed on all the points of fairness in its dealings with an insured. According to Insurance Business, the court found ICBC culpable in the groundless malicious prosecution of a 69-year-old immigrant woman. In her decision, Justice Susan Griffin wrote, “Mr. Gould’s handling of the file reveals that, rather than operate from a presumption of innocence, Mr. Gould operated from a presumption of guilt in respect of Mrs. Arsenovski.” The court was so appalled by the manner in which this person was treated that the unusual award of punitive damages were assessed against the insurer.

Our industry press was quick to report on this event. Some have criticized that this legal decision will make it harder to deter fraudulent claims and that the costs of insurance will continue to sky rocket on account of it. While the case may affect the industry’s attempts to limit fraud in claims settlement, the evidence presented in the case was unchallenged. The individual was subjected to a serious disservice by the insurer. The fraud here was the adjuster representing himself as a fair player in our business. Others may take a different perspective, but I see this judgement as a fair outcome against unfair actions by the insurer.

Technology Marches On

UBI continues to evolve. The original intent of a simple device that measures a couple of significant factors against the driving habits of insureds to allow better underwriting selection of better drivers continues to be dwarfed by the technological advancements in the equipment used to do the monitoring.

The other day, Costco wheeled out a pallet of Cobra dash cameras to the front entrance of the electronics department. The cameras were on sale for $99 US, and I couldn’t pass up a new tech toy at that price. This unit has all the of the gadgets employed in the popular GoPro camera rig but coupled with a GPS location program and sensors that measure acceleration, deceleration, turning speeds, and distance travelled. All this is recorded on a 2.1 GB mini-card (an 8.5 GB card is available) that loops the last 2 ½ hours of driving time in the visual, audio, and data record. All I could say about it was “wow.” I took more time getting it out of the package than I did to install the unit in my SUV. Plug and play and away we go with that tingly feeling all men get with new electronic toys.

Twenty five years ago, I had a client who was instrumental in the development of GPS tracking technology and was part of a pilot program installing the company’s equipment in a number of auto and equipment fleets. At the same time, the company was testing the use of video recording in conjunction with GPS tracking. I had a great deal of difficulty finding anyone to insure this equipment. I remember it was about the size of a large piece of luggage weighing nearly 20 kilos and recorded nearly three hours’ use of the vehicles in which it was installed. The cost of this sophisticated piece of technology was around $15,000, and it didn’t really work that well. As I recall, the recordings were in black and white because of the expense and power needs of colour cameras at the time. Overall, it was pretty archaic compared to this little thing I just acquired that sits in the palm of my hand and can record up to 8 ½ hours of 1080 dpi quality video and sound.

If you’ve received any of the little automobile accident video clips that are always circulating, you’ll recognize the quality and utility of these devices. Here’s one that is current. Certainly from a claims perspective, determining who’s at fault and evaluating all the contributing and limiting factors in the liability assessment is a no-brainer when you have a real-time high-resolution digital record of the incident you are investigating. The recordings can limit fraudulent claims as well. A European insurance executive friend of mine with operations in Russia indicated that his company won’t insure any vehicles operating there that aren’t equipped with one of these units. Accidents are most often reviewed from the perspectives of those involved because both drivers have these camera. As I’ve indicated in previous comments on this topic, your new vehicle will soon come with this equipment installed. The benefits of it should be obvious to everyone, except perhaps the people whom we shouldn’t be insuring anyway.

The thought occurs to me that perhaps I ought to be getting some kind of a discount on my insurance for installing this device in my SUV. I have this vehicle insured with Progressive, which lets me be my own service representative with the help of a local agent. To clarify, that just means I do all the work on my policy changes, handle all the communication with the insurer, and he gets the commission for it. He’s a nice guy, and the price I pay is the same whether or not I deal with him, so I don’t mind that he gets a commission for my work. I chose Progressive (with this agent’s help) when I first insured a car in the U.S. because it was the only insurer that would give me credit for my Alberta driving record and didn’t care that my driver’s license wasn’t from the state in which I’m insured. While I’m looking into this discount, I should also find out about the regular UBI device that Flo goes on about all the time. We’ll see if this vehicle that sits in a hot garage for six months of the year will get a better rate than the one I use full time. We’ll see what their underwriters say. Maybe I should call Flo.

In Conclusion

I began this essay complaining about the lack of integrity in an insurer’s claims adjudication process that makes us all look bad. I also took issue with the industry’s somewhat disingenuous fear that the court ruling would impact the industry’s struggle to limit fraud. While I don’t disagree with that assessment, I would rather that the emphasis be focused on the actions of the insurer in this circumstance than upon the plaintiff who was found to be blameless.

If you want to discuss the costs of fraud in the insurance business, you need not look any further than the settlement of section B auto insurance claims. You can determine immediately who’s coaching the insureds when they produce invoices and certificates of a course of treatment that match exactly the benefits provided in the coverage. In Alberta we’ve limited the amounts somewhat with legislation, but in Ontario the no-fault provisions of the insurance provided and the prepayment allowances that came about through the auto insurance reforms over the past 10 years show where the fraud money is going. I saw a preview of an interesting show scheduled to air on CTV on March 12th. The episode of W5 called “The Claim Game” explores the rampant graft and waste that has come about through the manipulation of the claim process by care providers and the absolute lack of regulatory review and correction by the government to limit it. The reporters correctly connect the dots between the amounts paid in claims and the amounts paid in insurance premiums and put the blame for escalating auto insurance costs on the real culprit. While the mantra of insurance corporate greed is often chanted in the political arena, the reality is becoming clear. As a friend of mine often used to say, you can have whatever kind of insurance scheme you want so long as you are willing to pay for it. If you didn't get to see this episode of W5, you can view it on CTV’s website.

It’s strange being in Alberta at this time of year and the only snow I can see is on the mountains. Nice not to have to plow the drive way though.

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:  adjuster  Cobra dash camera  customer service  ethics  fraud  GoPro  ICBC  insurance industry reputation  insurance regulation  IT  Progressive Insurance  risk management  telematics  The Claim Game  UBI 

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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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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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