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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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