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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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Licenses, Equivalencies, and Exams

Posted By Thom Young, December 16, 2015

Licenses, Equivalencies, and Exams

As a member of the General Insurance Council, I’ve spent a lot of time recently with issues surrounding this topic. I’ve been sitting on sub-committees for issues related to marking equivalencies for license levels 1, 2 and 3. Decisions have been made and sent to the Superintendent’s Office to prepare amendments to the regulations. Amendments to the regulatory standards are not easy to achieve. The many dynamics in the process include political review and oversight. Each step of the process is painfully slow.

You might wonder why this matter wasn’t addressed with the license regulation revisions that put into play new rules for each of these license levels. Well, I can only note that I wasn’t on the council when this occurred. It’s as much a mystery to me as it is to you. I’ve been arguing within the industry and with the regulator for about 15 years on the need for regulatory recognition of educational achievements in industry and academic courses. If people invest their time and effort to achieve professional recognition in a standard that far exceeds (my opinion here) the bar set by the regulator, they shouldn’t need to prove that knowledge to the regulator as long as the industry approves of the standard and, particularly, if the industry operates a recognized professional educational program designed to set the students above the norm. I’ve always lobbied for Alberta to be a leader in these areas but, ironically, the initiative did not arise in Alberta until these courses got the regulatory nod in other jurisdictions. Did I mention that this process is painfully slow and tempered by competing interests and different points of view? The General Insurance Council has agreed to equivalencies for Licensing Levels 1, 2, and 3 in CAIB and CIP courses. Now we await the regulation adjustments that will provide options for the AIC exams and the industry course exams. When you get your memo on this issue from the AIC, I would encourage you to talk to your association representatives on any matters that concern you and ask them to carry your concerns forward to the regulator. As with all group efforts, much of what has been achieved is a compromise of perspective, and that’s sure to annoy as many people as it pleases.

The AIC exam issue continues to confuse and evolve to new standards. A committee of academics and GIC members has reviewed the curriculum from which the exams are prepared and, in consultation with industry stakeholders and educators, agreement has been reached on the Level 1 curriculum. Educators will now be able to prepare a course of study to help students pass the exam. The curriculum design document for Level 1 License exams can now be viewed on the AIC website. This document contains the topics for study and the weight of the questions by category. The bugaboo about “soft-skill” questions has been addressed by removing all of these types of questions. (As the pass on these questions was better than that in most other sections, we hope that this change doesn’t cause a drop in pass rates.) The major emphasis in the exam is on insurance technical knowledge—where many believe it should be. If we devote the majority of teaching/studying time to this subject, pass rates should greatly improve. Technical knowledge was a struggle even before the changes to the exams and will continue to be for the Level 1 and 2 exams after the coming changes. Please look for the AIC information releases on its website and in the mailings being distributed. The details here are not an official update on these matters, but simply general terms from my own perspective.

The Licensing Level 3 examination is currently under review. Along with the many schools of thought on the form and content of the examination, some even question the need to pass an exam to qualify for a Level 3 License. At the present time, to become a Level 3 broker you are required to hold a Level 2 License for a two- year period. At Level 2, the highest technical components of knowledge are tested, and the technical duties and authorities of the Level 2 License holder, as well as the representations of insurance matters to the public, have no limit other than the regulatory requirement to work under the supervision of a Level 3 License holder. The Level 2 agent is required to understand the regulatory and licensing issues completely. The required knowledge is not exceeded by a Level 3 agent. The single difference is the Level 3’s duty to endorse the applications personally within an agency or brokerage for License 1 and 2 employees. Understanding insurance-based ethical and professional responsibilities of a broker are fully required of a Level 1 License holder and tested. The test of this component is no different for any license level, so why are we retesting it? That leaves a Level 3 agent with administrative issues that may well be necessary to manage any business properly, but should the regulator be testing business knowledge or acumen before granting a permit to start a business? Is that the role of the insurance regulator? Does doing so provide any additional protection to the buying public?

No bar is set for any other business or profession that limits entry to the competitive practice of the profession. I cannot reconcile with the history of business the requirement that those with the capital needed to start a business, the confidence of their suppliers to endorse and sponsor their application for a Level 3 License, and the technical knowledge of the craft needs to be tested to obtain the right to compete. So far as I can recall, not a single example of disservice to the public under any provision of the Insurance Act has been linked to a person’s inability to run a business properly. Nor can anything be properly tested that will provide further assurances to the public that people starting any kind of business will be successful in this regard.

The problem with setting a bar to entry in any business is it limits the free flow of capital that drives new initiatives and adds an additional bureaucratic step that complicates the process of succession. There’s much more to discuss and debate on this topic, but I'm going to stop here. Let me know if you’ve any thoughts. I’d be happy to represent them for you in my role on the General Insurance Council.

Wrapping up this topic, I should note that the new Level 1 exams will be coming into play early in the new year. With the clearer and more concise curriculum design outline, success in training new entrants into our business should improve substantially. The implementation timing for Levels 2 and 3 is being driven by a sense of urgency, but the wheels of progress turn slowly when trying to appease so many perspectives. Deadlines were pushed back once because, at the 11th hour in the Level 1 review, a letter from an industry association was received that resulted in the entire process being revisited. I can’t deny that the review produced a better outcome, but I can observe that it could have been delivered in a more timely fashion. The process continues!

Here Comes Santa … and All That Stuff

Another year is just about over, and all the little ones are anxiously awaiting the arrival of Christmas morning hoping they get the gifts they have asked for. For some, this is the most wonderful time of the year. For others in need, not so much. Imagine that the premise of the whole celebration is to share with each other the treasures we have. These treasures are not distributed equally though. We have the power to make a difference in the world. A dollar to the food bank, a hamper in the food-bank box at the grocery store, $20 dropped for the Sally Ann. Wish someone a Merry Christmas. Sing a Christmas carol with a little one. Never underestimate the power of caring—the single most important act you can do to both improve your life and someone else’s. It’s contagious, so pass it on.

I hope these holidays find you surrounded by friends and family within ear of young children playing and laughing and that you have to suffer through a meal’s blessing given by an old person glad to have the floor for the occasion of it. May these things give you joy and make you happy for the good things in your life. In my life, I count each of these moments as special and hope to encourage others to find the enjoyment as I do.

For those who don’t share the Christmas tradition, all the fuss we make of it must be interesting to you. I hope you find the joy in our message that is also to you: Peace on earth and good will to all!

See you all next year!

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  CAIB  CIP  General Insurance Council  licensing courses and exams  Licensing Level 1  Licensing Level 2  Licensing Level 3 

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

Posted By Thom Young, June 2, 2015

To Quote Shrek, “Change is good, donkey”


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

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

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

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

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

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

Online Crime Continues to Increase


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

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

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

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

The First Competitive Response to Overland Flooding Coverage


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

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

AIC Stakeholder Sessions Have Been Completed


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

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

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

In Closing


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

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

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

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