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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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Summer Storms, GIC Elections, Problems with the Level-3 Licence Exam

Posted By Thom Young, August 12, 2016

The Lazy Days of Summer Are upon Us

We continue to have an exceptionally weird summer here in Alberta. Someone told me that Calgary had more rain in July than Edmonton and that the total amount topped the usual annual precipitation for the city. All I know for certain is that every day in Alberta seems to end with severe weather warnings for many places. While we were in Ponoka at the beginning of July, a tornado formed almost directly over us. It touched down less than two kilometers away, took the roof off a home under construction, and threw a porta-potty into the trees, making quite a mess. Luckily, the amount of damage was negligible. Still, I’m left wondering what could have happened. On the ridge east of Aldersyde where I live, we have watched the severe storms moving from the north west to the south east through Calgary, Okotoks, and High River, soaking our place with large amounts of rain. We’ve seen many funnel clouds, and hail storms are almost routine. Cutting the grass is becoming a full-time job!

The summer storms have produced some catastrophic losses for our industry, and summer is far from over yet. The Fort McMurray fire has been declared the worst insurance disaster in Canadian history, a record previously held by the 1991 Calgary hail storm. This past weekend saw parts of Calgary dealing with wind, hail, and overland water—all in one afternoon. Will we start seeing claims settled under the new “flood” wordings? The response of those who were not offered the coverage and have now suffered an uninsured loss will be interesting. Can any of you enlighten me with examples of any such situations?

Elections for the General Insurance and Life Insurance Councils

If you hold a General or Life insurance license, you should have received an email link to the Election Buddy website for voting. This link is configured uniquely to the email in your AIC profile. If your email address has changed, contact the AIC and have this corrected so you can vote. Voter apathy is a concern, especially given the history of how the election was created. Before the 1990s, the superintendent of insurance would choose agents for the position on the councils. Industry pressure to make the process more representative initiated a change to the process, and we were given the ability to vote for candidates. Ballots were mailed out but yielded extremely poor returns. The electronic voting system has been in use for quite a few years, but the response rate is rarely much above 10%. Please stop what you’re doing, and invest 10 minutes of your busy day by clicking on that link and choosing a candidate to represent your interests in the regulatory process.

Six candidates are running for the two openings on the General Insurance Council. My term has expired and I am running again. If I am successful, I think this will be my last time on the General Insurance council. I am going into my second term, candidates are allowed to serve only on two consecutive 3-year terms, and I am getting close to retirement. Sherif Gemayel, who is an IBAA director, is also running. If you click on each candidate’s name, you can read a brief bio. The entire process of going to the website, reading each bio, and selecting two candidates will take you less than 10 minutes. Do it right now! If you have only 10 minutes, do it rather than read the rest of this essay! If you have a life-insurance licence, you will have received an email for this election between three candidates as well. Roy Jaques is running again and has served the life-insurance licence holders well. Again it takes less than 10 minutes to click the link, review the list, and make a choice. When a regulatory change or review arises that you do not like or have thoughts to share, you can open the conversation with “I voted for you….” You will likely have more influence in the outcome.

If you’ve read this far without voting, let me remind you once again. Go to the email from Election Buddy, make your choice, and then come back to read the rest of this entertaining epistle. It will wait for you!

Don’t you feel better that you did that?

Alberta Level-3 Licence—the Designated Representative for Your Brokerage

Let me apologize to those of you who have no interest in the Level 3 issue. While this discussion might be boring for you, I would appreciate you mentioning to your DR that she or he might be interested in this article.

When a brokerage started up, it used to have to register its name with the AIC. The name was then linked to the brokers working there, and that was pretty much it. The regulations on “holding out” are quite simple. The brokerage advertises itself. The broker employee licences are managed by the DR for the corporation (including the DR). All these staff are bound by the regulations governing all General Insurance agents. Other than the regulations specific to the role of a DR (supervising the activities of sponsored agents and notifying the AIC when an agent is terminated), the rules for market conduct of the brokerage are the same for the agents.

A couple of years ago, a new regulation that required the DR to pass an examination came out of the blue. While it did not specify what had to be tested, the direction from the government to the AIC was clear: DRs are to be tested. No one recalls any industry consultations that implied a need for this testing. DRs in other provinces aren’t tested. I certainly would have had an opinion on this requirement if I’d been asked. I first became aware of the new testing requirements when people started calling me to complain about the difficulty in passing this exam. The pass-rate for the Level 3 exam continues to be ridiculously low. Strangely, most of the people having difficulty with this exam are long-term, experienced brokers. Many of the new people attempting and failing it have demonstrable academic skills, business degrees, and advanced management experience, all of which should have made a reasonable test of their aptitude and the understanding of a DR’s role a breeze. Either the test is not focusing on what these people were studying, they were studying the wrong stuff, or the educators in our business are teaching the wrong material. Regardless of how the change occurred and who is to blame, the problem is serious for our industry. In my role as one of your broker representatives on the General Insurance Council, I have been working very hard to fix it by sitting on the licensing course-curriculum review committee for all three levels of licensing as well as on the equivalency committee.

This spring, we made recommendations to the government to amend the regulations and approve particular equivalencies for Levels 1, 2, and 3 licensing exams. While the process of government approval on this is painfully slow, I have heard that progress is being made to get this implemented. I am not holding my breath for an immediate response, but I am hopeful. We have amended the curriculum of study for both Level 1s and 2 licensing. Level 1 was implemented several months ago, and we have seen some improvement in the pass rate. It is still under 40%, which in my view is unacceptable, but it is steadily improving from the low 20s when we began the process. The General Insurance Council is working with the education stakeholders to help them further understand the curriculum necessary to pass the exam. After each review, the results seem to improve, and we seem to be moving in the right direction: even before the exams changed as a result of the curriculum review three years ago, the pass rate for the Level 1 licence exam was never higher than 48% over all. Individual course providers have had better results than the average. The new Level 2 examinations, based on the revised curriculum, were introduced last month. The initial results from a very small sample show a mid-40% pass rate, and we are hopeful that for Level 2 we have found the balance we were looking for. Time will tell. The Level 3 examination remains the same convoluted and confusing thing it has been since the exams for this level were introduced.

The committee has so far done a lot of work to make the testing of the DR commensurate with the role. As all the technical insurance material is tested in Levels 1 and 2, we have removed it from the course curriculum for Level 3. The requirements for the information necessary to run a business, not relative to the regulations, have been reduced to an appropriate level. However, we have no unanimity on these requirements. Some believe the exam should test a level of proficiency that is beyond the reach of regulations governing our business. I am not in that group.

I believe we should not even need an examination to become a DR. What a DR really needs to know for regulatory obligations is covered in two pages of the regulations. A DR should have a Level 2 licence and have been in the business for two years. The management and organizational material, as well as the insurance technical knowledge, is already tested in the Levels 1 and 2 licences. The role of a DR is not hierarchical either in the gathering or the exercising of expertise. Often in larger brokerages, the DR is an HR function, while in the smaller ones the DR also empties the waste baskets and answers the phones. How do you test for proficiency at the level necessary for a 100-person brokerage or a 3-person brokerage and be fair? How do you permit the smaller brokerages to start up and become established in the usual manner without creating a very challenging barrier with a complicated exam designed for proficiency not needed in a small brokerage? Eliminating the need for an exam is an option, but complicated, because it would involve a change in regulations. The best solution is to make the exam relative to the role of all DRs at the lowest common denominator.
    
I have strong views about regulations limiting access to our business and will not bore you here with a thousand-word essay on it. I ask you to think about these issues because the AIC is going to send all DRs a survey. The direction of the Level 3 licensing study and testing will be guided by the responses received. I am told the survey will be out in the coming weeks, and I am looking forward to seeing good participation in this process. The relevance of the representative process that results from the voting for members of the councils is often challenged because voter response is so low. When I have dug my heels in on an issue, I have been told that I am not representative of brokers because so few actually participate in the voting process. I certainly hope that each DR will grasp the serious need for input and a positive result on this issue. At least a half dozen smaller brokerages are currently in a holding pattern on the sale and the succession of their businesses due to the difficulty of getting this Level 3 licence in place, particularly in the rural communities. This problem needs to be fixed now.

Those who is not Level 3 licence holders will not get this survey but may well have some ideas on this topic that are important. Do you think you might want to own a brokerage some day? If so, you will need to get a Level 3 licence. Send your opinions directly, and I will make sure they are reviewed by the General Insurance Council. (I will meet with members of the council in person if I am successful in getting elected to another term.)

In Closing

That’s it for this issue. We’re off to points west for a couple of weeks, hopefully to get away from the never-ending rain and thunder storms. I’ll have to get some heavy equipment in to cut the grass when I get back!

If you haven’t voted yet, please do it now!

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:  elections  flood  General Insurance Council  hail  Licensing Level 3  tornado 

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Ride-Sharing Policy, Brexit, Storms and Systems

Posted By Thom Young, July 5, 2016

SPF 9 for Ride-Sharing Companies

The Alberta headline for the week is all about the SPF 9. George Hodgson sent a memo on June 28th to all IBAA members outlining this new automobile form, how it works, and where it applies. I can’t add anything of substance beyond the very excellent explanation given, so I’ve simply reproduced it below:

Superintendent Approves SPF 9 for Ride-Sharing Companies & Their Drivers

Uber and other ride-sharing drivers experience a unique mixture of personal and commercial exposures. The new SPF 9, if purchased by the Transportation Network Company (TNC), is designed to function with the owner's personal policy and to kick in when commercial coverage is required. How does this coverage work and what does it mean to you as a broker?

The driver's risk is broken into 4 categories that reflect the personal/commercial exposure:



The personal owner's policy covers exposures until the driver logs into a TNC. Upon login, some coverage from the SPF 9 could be available if the owner's policy does not provide coverage and the SPF 9 will provide coverage when the driver has accepted a ride and is en route to pick up. The policy does not cover street-hailed passengers.

What the SPF 9 Means for Brokers

  • Transportation Network Companies would purchase this commercial policy. The standard application form SAF 9 for this policy is attached to the Superintendent's bulletin.
  • The following endorsements are approved for use with the SPF 9: SEF 44 (Family Protection), SEF 23 (Mortgage), SEF 21A and 21B (Blanket Basis Fleet), SEF 13D (Limited Glass), SEF 13H (Hail Deletion), SEF 20 (Loss of Use), and SEF 43 R&L (Limited Waiver of Depreciation).
  • Fleet rating programs may be used with the SPF 9.
  • Drivers for a TNC should disclose that they are a driver to their broker as this is a material change in risk. Brokers should record and rate the risk appropriately on the SPF 1 owner's policy. In some cases, this may mean re-rating the risk as a class 07.
  • Brokers should be able to explain to their clients when their owner's policy (SPF 1) will provide coverage and when the TNC's policy (SPF 9) would provide coverage.

For full information please read the attached Superintendent of Insurance Bulletin.

For further information, please contact Rikki McBride, Chief Operations Officer, IBAA, at rmcbride@ibaa.ca / 1-800-318-0197 ext 101 / 1-780-702-3715.


The industry has taken up the opportunity offered for this coverage in the Alberta marketplace. I’m told that ING has effective coverage through a national brokerage firm for the Uber ride-sharing operations. The coverage works much like an umbrella policy by picking up the commercial exposure where it exists and leaving the personal exposure and rating in place. As IBAA later clarified, the all-comers rule will not apply to TNC driver’s personal insurance applications due to the partial commercial exposure. It will be interesting to see if the personal-lines underwriters will accept this policy as mitigating the extra exposures incurred, look to limit their participation somehow, or apply a limited-experience rating to the equation. All of us are closely following the industry response. As this new set of circumstances is only a week old as I write, I look forward to seeing how it may evolve in the marketplace. If anyone has any insights on this change in our marketplace and how smooth its implementation will be, I’d be very happy to hear from you!

Everyone Is Talking about England These Days

Headline story 1: The English have been beaten at their sport (football/soccer) by the Icelandic national team made up of mostly part-time players with few professional prospects (until now) and coached by a dentist who volunteers his time to help the boys out.

Headline story 2: The English have passed a referendum to withdraw from one of the largest and most successful trade packages ever put together.

Imagine. Over the past three hundred years, successive conquering armies have expended men and resources for the authority to control and govern the European continent, and none have been able to make a go of it. Tired of the waste from competition within the virtually identical genetic haplogroup, the people came together in the name of trade and commerce and formed an economic union that allowed each other to share in the strengths of their markets without interfering with their local traditions and rulers. Wow, was that an achievement, and without a drop of blood shed anywhere! Under the heading that you can’t make everyone happy, many argued the worth of the deal, but the benefits couldn’t be denied. Like the North American Free Trade Agreement, national interests were respected while the free flow of goods between the signatories was promoted to the advantage of everyone. Further, the European Union enabled the citizens of each country to move freely over each other’s borders to pursue education, residency, and employment on a level playing field. What a concept! The union seemed to be a win for everyone by every measurement, and particularly for the United Kingdom. With UK dominance in the financial services sector, its competitive advantage as the main player in these European Union markets brought it huge gains from its participation. Well, along comes political discussion and the economic considerations seem to become unimportant. To placate the body politic in England, the political leaders agreed to hold a referendum on remaining in the European Union and began campaigning vigorously for the “remain” side of the question. For all intents and purposes, winning the vote to "remain" seemed to have slam-dunk certainty but, as we are seeing in many political contests at the moment, the expected logic of the electorate doesn’t seem to apply anymore.

With seeming illogic, the “leave” side carried the day by a margin of less than 2%, and financial markets worldwide are still reeling in shock.  All the positive economic factors in play can’t seem to win an argument against a xenophobic rant that is rooted in the myth of ancient prejudices and promotes the fear of nationalistic failure. Sadly, the process of becoming something bigger and better—of adding the best of your own worth into the mix and of benefiting yourself and everyone else—is too often overtaken by promoting fear of change and fear of those who are different.

The real loser here will be the UK people. Their “United” Kingdom is showing further cracks in solidarity at the prospects of leaving the European Union, and their currency devaluation will hamper their ability to import raw materials for the competitive production and sale of their goods ("U.K. Businesses in Limbo Due to Brexit"). Their education will now be limited by political geography and increased costs. Getting a visa isn’t always easy. Their ability to draw on an elite work force through unfettered access to competitively priced labour markets will further interfere with their current market advantages ("U.K. Businesses in Limbo Due to Brexit"). While some will be happy to proclaim control of their own destiny, that control decreases when people and companies become uncompetitive and difficult to deal with in today’s global marketplace.

What will the future bring for the relationship between the UK and the EU? I believe the UK will soon see the error in its ways. In the process of disentangling themselves from this trade pact, the people will see that they’ve been sold a bill of goods by the “leave” side of this contest. While they were convinced of the positives, they will soon be willing to trade those for the benefits they had by staying. None of this process will be quick. The political turmoil will continue for several months, and the demand to revisit the discussion will dominate the next political contest. History is written from the perspective of those who win in the end, and I believe that those who promoted Brexit will not later be held in high esteem. We shall have to wait and see though. In today’s political environment, I’m increasingly less certain of how things will eventually turn out. Am I getting older and more confused, or has anyone else noticed this unpredictability?

Still, one thing seems certain: with the dominance our industry has in the European marketplace through the stepping stone of England, our industry will suffer if the UK leaves! As Autonomous Research reports, the insurance business is already struggling and will likely slow further with Brexit.


Summertime and the Living Is … Easy (?)

Watching the wild and wacky weather shaking itself out over our part of the prairies these days brings to mind many concerns about the continued discussions about overland water and sewer backup. When a whole community such as Woodlands in South Calgary is completely surrounded and cut off by water from a local storm, I question once again the engineering of our storm runoff systems. On the other hand, when nearly 200 centimeters of hail shut down the main north-south highway in the province for a whole afternoon, I find myself once again in awe of what Mother Nature can toss into the mix whenever she feels like it.

In Closing

I’m presently enjoying my grandchildren while camping out in front of the Ponoka Legion—our 10th year at the same location for the rodeo and chuck-wagon races, boondoggling on the grass. It’s fun to see the teenagers just as excited about the show now as they were 10 years ago. While we’re roughing it out here, the inevitable summer storms are rolling through and pounding us off and on with rain and wind. It’s tornado season. Thankfully the damage has been relatively minimal. Let’s hope it remains so. The prediction is for Canada to be sunny and warm. The flag is proudly flying off the back of our motor home! I hope all of you enjoyed the Canada Day weekend. I know we did.

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:  all-comers rule  Brexit  flood  hail  ride sharing coverage  sewer backup  SPF 9  TNC  Transportation Network Company  Uber  wind 

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Federal Lobby and National Insurance Education Standards—Strength in Unity

Posted By Thom Young, June 10, 2016

A Report from the Capital


This past week I participated for the first time in the annual Insurance Brokers Association of Canada lobbying efforts in our nation’s capital. Once again, we focused on maintaining the status quo in the upcoming parliamentary review of the Bank Act. Currently, banks are able to compete with brokers so long as they separate their insurance operations from their banking operations. Under the current regulations, they are restricted from offering insurance products out of their branches and restricted from advertising their banking products with their insurance products. The Bank Act comes up for review every five years, and the influence peddlers called lobbyists work very hard to convince the lawmakers to produce regulations that favour their competing business plans and interests.

This year, the task is particularly onerous for both sides of the argument. Last year’s election results produced the largest turnover of MPs in several decades, so many of them are receiving these messages for the first time. This freshness can be an advantage as these people are just as diverse as our population. While you may think that their political stripes set the baseline for their opinions, I have found in my years of talking with political representatives that most are willing to hear you out and listen to your thoughts on the topics. Granted, they may have preconceived opinions. Nonetheless, most are doing their best to learn about the issues while finding out what being a representative of the people is actually all about. Getting to talk with newly elected members of parliament is a golden opportunity to present a good case for your cause that will not only influence their perspectives but will also stimulate discussions and debate within their caucus. The challenge to get an effective message on behalf the insurance industry to these people is coordinated by IBAC and delivered by volunteers from insurance broker associations from all across our country.

This year, we had nine people on task from Alberta and were very well received by everyone we met. Our message was brief and concise: our concern continues to be that, if banks and other credit-granting institutions are allowed to retail insurance from their branches, the public will be unfairly coerced into the purchase of insurance products. If the products are offered at the same time a loan is granted, the inference that the loan is conditional on acceptance of other services deters consumers from assessing the comparative value of the product for their circumstances and puts the insurer at an unfair advantage. If the bank doesn’t directly sell the products required to mitigate its loan risk, then consumers (or their brokers) are more motivated to shop for the best product. Since 1991, the banks have been restricted from selling insurance products from their branches, and the evidence shows the consumers well served by a competitive insurance marketplace. We’d like to see that competition continue.

My personal observations of the process were very positive. I’ve been to the Hill more than a dozen times in my life: as a child, a student, a soldier, and often just as a tourist. I recall a visit with my grandfather when I was very young. He was good friend of John Diefenbaker, and I was given what I thought of then as a very boring tour of the place by these two old fellows. I still recall some significant insights imparted to me then that remain in my mind today, especially the point that this is the people’s house and no part of it should ever be unavailable to the people. While some of our freedoms have been necessarily impeded as a result of the need for security (as evidenced by the bullet holes in parts of the building), parliament remains a very open place available to anyone willing to suffer the indignities of the countless security check points. I’m not really complaining about security though. The only downside of the lobbying was the amount of walking needed get to the appointments. It seemed we would just finish a meeting in the Justice building on the west side of the Hill and the next one would be at the East Block and then back to Justice. The timing and location was dictated by the people we were meeting with and not scheduled with our convenience in mind. Accordingly some 14 or more kilometers were recorded in the process by my group.

I found all of the MPs we met with to be interested and glad for the information we imparted. I was most impressed with the Senators we met. As to the issues and our concerns, they very much aware of the discussions and asked the most intelligent questions. Perhaps I’ll have to rethink my opinion of this institution as it does appear that good work is done by many of them regardless of the aberrations that we constantly hear about in the media. Recent changes to the manner in which the Senate works were also explained to me, and I was genuinely convinced that these people want to fulfill their constitutional obligations. Now they are freed from the yoke of political affiliation, they may well able to live up to their intent. Perhaps that’s a topic for a future issue.

Outside of our issues, many of the MPs we met with enlightened us with the concerns of their constituents. I was asked many questions about the impact of the assisted-dying legislation on the life-insurance business. Of topical concern, of course, were the recent fire losses in Fort McMurray. Most of the people we were talking with are following the media coverage. Expiry of the mass evacuation coverage was mentioned several times, as was the industry’s response to the proposed rezoning that would restrict rebuilding in certain areas in order to secure a proper fire break. We able to answer most of the questions, although they showed that much confusion still exists. Flood coverage was raised in almost every encounter we had. Many wanted to discuss the challenges in coverage variances and availability where it’s needed. These discussions left little doubt that our industry and what we do is very important to these people!

Hill Day was a great experience and, if you ever get a chance to go, don’t miss it. The strength and power of participating in a national association is an awesome thing to experience. Meeting with other brokers and discussing the common issues that concern us bonds us with a purpose. While we all compete with each other as we sell insurance, we also face the same disrupters to our business. As a group, our voice is loud and clear. Individually, we have only local influence that won’t protect us from the national challenges we share.


On the Topic of National Standards, What about Education?


Insurance is insurance is insurance, right? I think I could walk into an office in any country in Europe, build on the knowledge I have obtained in my years as an insurance professional, and find myself in very short order apprised of the small differences in the wordings or intent of the coverage offered to the public. I know I can read an insurance policy from England or the U.S. and interpret the coverages and limitations provided by it. In my career, I have completed the review of a number of different wordings originating in other countries that have become available in our Canadian market. I know I can determine in short order the differences in automobile coverage between all the Canadian jurisdictions and provide an overview to clients that would be sufficient for their understanding, albeit limited by the short notice. Where I don’t know the differences in coverage between Alberta and anywhere else, I can find them out quickly and report them accurately. I know I’m not special or different from many other insurance professionals who have not only acquired the body of knowledge needed to answer questions but also acquired the ability to learn and report on topics about our craft. We are always learning and, even without the regulatory requirement to demonstrate an effort each year, those of us who wish to remain competitive spend much more time learning to respond to our markets’ need for answers to questions than we are ever accredited with CE credits.

For a couple of years now, as a member of the General Insurance Council of Alberta (GIC), I’ve been working on educational issues and reviews of educational materials. It was determined a number of years ago that the licensing examinations had fallen behind and were not testing on changes in forms and coverages in use in our industry and that, with the regulatory changes in Alberta providing for three different levels of licenses, new examinations had to be prepared to address the expected Level 2 and Level 3 hierarchy of knowledge. The consequent changes proved to disrupt the process of getting people licensed as Level 1 agents and advancing them to Level 2. As a result, industry pressure on the regulator saw both the materials used to study for the exams and the questions used in the exams reviewed, reworked, and adjusted. The process is a long one involving competing educational interests and the mandate of the regulator to ensure the public is well served by intelligent and proficient general insurance brokers. The issue was not just that the exams were too hard. The study material has also been challenged as perhaps inadequate.

The process of reviewing the material used to study for the exams, preparing curriculum design documents, and preparing new exam questions that match the new curriculum has been underway for quite some time. The educators are still adjusting their course material so their students are well prepared for the exams. The process isn’t over yet but is well underway. My intent here is not to focus on this progress but to comment on the standards and, in particular, the criticism that the standards set by the Insurance Institute courses and the CAIB program are not relevant.

For quite some time now I’ve been trying to track down the origin of these challenges, and I’m distressed to learn that most of it seems to be coming from our sister association members of IBAC who have their own educational programs and who apparently see themselves as competing with the national program. They believe that the national program is lacking in content and in need of an update. Granted, our GIC committee’s very thorough content review of both the CAIB program and the CIP program did find a number of parts in need of updating, but we also found in both programs that the material referenced in the curriculum design documents (the content informing the examination questions for the license levels) was all adequately covered, with the exception of the specifics of automobile insurance in Alberta.

This discontent with the national education programs concerns me greatly. The influence it has with regulators in other provinces filters into our communication with our and other regulators through the Canadian Council of Insurance Regulators and, in particular, into our communication with the Western Provinces Council of Insurance Regulators. The view that the national programs in place are lacking and insufficient both to learn from and measure equivalencies to the licensing standards has created havoc. As you may remember from a blog many months ago, our committee presented its work on equivalencies to the GIC, which recommended to our government that CIP and CAIB designation holders be granted equivalencies for each level of licensing in Alberta. The response from our regulator has been to tell us it may take a year or more before the government will address this issue. Reasons for the delay include the change in government, among other similar issues, but I have also been informed that the validity of the equivalencies is being questioned at the interprovincial meetings of the regulators.

I find it very strange that any provincial entity would want to undermine the validity of a national program provided by its parent association. Certainly, provincial qualification and licensing courses that meet the burden of content for passing a provincial examination are valuable, but the value of a professional designation that has national recognition can’t be discounted. Do we want to see the letters showing our professional achievements suffixed in brackets with our provincial abbreviation? I don’t. Where a provincial association sees a part of the national program in need of review or update, the inclination should be to fix it and to see the nominal cost of that fix as a contribution to betterment of the profession, not an inconvenience caused by the national organization’s failure to get it done in as quick a fashion as desired. For the record, the CIP and CAIB programs are constantly under review, and volunteers like me are actively involved in rewriting the parts that need updating. Don’t let anyone tell you that process isn’t ongoing—it is!

In Closing


I may be stepping on a few toes with this issue. It’s been a while since I took on as controversial a topic as this, but I am saddened to see our lack of unity. It devalues the status of those of us who have put in the time and effort to get a professional designation that, through the national efforts of IBAC, is recognized from Vancouver to St. John’s as a standard of excellence in the delivery of General insurance! We also look like a bunch of kids arguing in a candy store when the regulators meet to deal with our issues.

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:  assisted-dying legislation  Bank Act  building codes  CAIB  Canadian Council of Insurance Regulators  credit-granting institutions  evacuation coverage  flood  Fort McMurray fire  General Insurance Council  Hill Day  IBAC designations  licensing courses and exams  Licensing Level 1  Licensing Level 2  Licensing Level 3  life insurance  property coverage  Senate reform  Western Provinces Council of Insurance Regulators  zoning bylaws 

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