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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


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
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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