Print Page   |   Contact Us   |   Report Abuse   |   Sign In   |   Sign Up
Young's Stuff
Blog Home All Blogs

Stampede Breakfast, Brexit Effect on Industry’s Economy, GIC Elections

Posted By Thom Young, July 14, 2016

Yahoo! Ride ’em Strong!

Our annual Stampede Breakfast event has come and gone again. Last Wednesday morning was cool with threatening skies all around our venue but, other than a wisp of some misty sprinkles, no rain appeared until after our event came to a conclusion. Attendance seemed to be a down slightly from previous years, perhaps because of the threatening weather. It certainly did not deter those who did come from having a good time.

World-champion chuck-wagon driver Kurt Bensmiller came down once again with his wagon, donated his time, and made the day for a long line up of young children with his attention. The cowgirls in attendance were all anxious for a selfie with him. Many took pictures and obtained autographs. His wagon sponsor once again this year was the Tsuut’ina (Tsuu T'ina) Nation who provided an elder who performed blessings and songs of his people to honour our gathering. Perhaps he contributed to our avoidance of the foul weather in the rest of the city that morning. I wonder if he also helped Kurt win his heat that night at the Rangeland Derby.

Allen Christie and his band once again put on a terrific show, straying often from his country music roots to give the crowd some unique rock-and-roll performances. You can tell an event is going well if the band is enjoying itself, and Allen played 20 minutes longer than he was contracted!

Some controversy arose about how long this event has been going on. Our poster announced the 23rd year, but I’m certain that the first one took place in in 1992, the year before the event’s co-sponsor Southland Registrations opened. I think we had less than a 100 people show up the first year. Now over a thousand come each year. A company regional VP told me that his July broker contacts are mostly covered at our event on the Wednesday of Stampede week, and that this was his 10th year there. Hope to see you there next year!


Brexit Revisited

This topic continues to be in the forefront of our industry news along with the current mess made of the political process in the UK. A new prime minister has taken over and is charting what may well prove to be a costly unpopular course for the country. The “leave” constituency is taking the place of the “stay” representatives of the same ruling party. This expression of the democratic process in parliamentary democracy is sometimes difficult to comprehend. A change in party leadership produces a new government without an election, and the direction of the body politic changes mid-term, not to suffer a public-confidence test until the next general election. As is increasingly becoming clear to most of the voters in the UK, the process of leaving the European Union will not be without at the least short-term negative factors. A day of political reckoning that will overturn the results of this last silly referendum may well be at hand. Strange times.

From an industry perspective, the uncertain economic factors have had immediate impact on the investment side of the insurance business. As everyone should know, the profitability of our business and its ability to meet its obligations are directly impacted by the return on the premiums managed until the claims are paid. Sometimes companies invest these monies in self-administered funds that are industry specific, such as mortgage funds and the like. To simplify, these funds also attract other investors who share in the wealth generated by them. Large commercial-property projects are often funded in this way. Acting almost like a mutual fund for institutions, successful returns on the money held make these funds very attractive to investors. However, concerns about the viability of the investments can stimulate investors to remove their money from these funds, even when the returns are good. When funds are withdrawn, liquidity can be a real issue. Investments in long-term mortgages and the like can’t be easily turned into cash, so all these funds have time limitations on redemptions. That time allows the fund administrators to find other investors who will provide the cash needed to pay back those who have jittery feelings and want out. According to Insurance Business, Aviva and Standard Life have suspended redemptions on billion-dollar UK property funds in order to protect the interests of their investors. As you might imagine, a lot of investment institutions now have to deal with the “jittery feelings” that Brexit has caused with the resulting uncertainty about the economic future.

Amid the shouts of “The sky is falling, the sky is falling,” even a promise of huge returns on share investments doesn’t seem to be having the desired bolstering effect on those values. As Insurance Business notes, the share values continue to slump.

As I write, some stability seems to be returning to these markets, but we’ll have to wait to see if stability will return soon. Nonetheless, the implications of the falling stocks in our global marketplace extend to our country and throughout the whole of our industry.

General Insurance Council Elections Are Here Again

I’m always amused by the stakeholders’ consultation meetings that the Alberta Insurance Council hosts for insurance licence holders each year. This year, I attended both the one in Edmonton and the one in Calgary. Around a couple of hundred people showed up at each and, after a brief report from the chair, the usual questions were raised. As usual, the Life guys complained about the price of the licence and their processes; then one of the General guys got up and complained about having to listen to the Life guys complain. This time, the idea was voiced that separate stakeholder meetings should be held for those in General and Life insurance—a silly idea as the discussions clearly didn’t warrant that kind of attention and the numbers represented at the meeting wouldn’t justify any ruling one way or the other. What distressed me, though, is that many of the weighty issues I’ve been dealing with as a member of the General Insurance Council for the past three years (and years earlier) weren’t really the main focus of the discussions. When I attend industry functions (meetings of IBAA or the Blue Goose and the like), someone invariably corners me to discuss one of these issues passionately. Where were they during these consultations? A mystery to me.

In Alberta, licensing and discipline of General insurance licence holders is administered by the General Insurance Council. This council is made up of 3 elected insurance brokers, 2 appointed public members, 2 direct-writer agents sent by CADRI (their industry association), and 1 General insurance-company employee sent by IBC (the General-insurance industry association). Each serves for a three-year term, and they can be re-elected or nominated for two consecutive terms. A call for nominations for the election of 2 insurance brokers has been emailed out to all brokers holding a licence. My term is up, and I have been nominated for election to a second term.

If you are a broker holding a general insurance license, you will soon receive an email with a link defined by your licence number that will allow you to vote for your representation on this council. Unfortunately, of the more than 6000 brokers who are eligible to vote, often less than 1000 actually make the effort. We fought long and hard to get a voice in the regulatory process, and that voice is often challenged as irrelevant or unrepresentative because of the lackluster participation in the selection process.

With the email linking you to the voting survey, you will also receive a necessarily brief bio of the individuals running for election. Make this review and election a top priority, and encourage your fellow brokers to do the same. The brokers who sit on this committee are the ones who review the misconduct investigations that are brought forward for discipline hearings. They should bring the very unique broker perspective of how the industry works and an understanding of the process through which a responsible broker deals fairly and ethically with the challenges that present themselves in our business. They should also have an interest in keeping the regulatory process simple, effective and, most importantly, fair: fair to the licence holders, fair to the companies, and fair to the public. Bureaucracies can often overtake the interests of its departments, and strong and effective leadership is often the only way to reign in their intrusion into the process of a self-regulating body. I know that you will choose the person you think will be the best for the job, if you in fact make a choice. Sadly, though, I also know from past experience that many will not even bother to open the email to participate in the process. Such apathy reduces the effectiveness of the process and, consequently, the results as well.

As your representative on the GIC, I’ve been working very hard on the licensing issues that brokers have been dealing with in Alberta. Getting people over the licensing hurdle and into our business has been difficult in the past few years. Hopefully, the many changes that have been made and those that are coming will produce positive results. If they don’t, we’ll be revisiting the issues to find out why and fix the problem. The proposal for equivalencies continues to sit on a desk somewhere in the process of government approval. Alberta remains the only province in Canada that doesn’t recognize the value of our industry’s professional designations and forces people who have already invested their own time and money into taking examinations that benefit no one. Perhaps the government considers other issues more pressing, but the broker who is trying to buy a business and can’t get past the level 3 licence examination would surely disagree. People with CAIB, CIP, and other advanced degrees such as MBAs are having difficulty with the process. This process is just wrong and should be fixed, shouldn’t it? If you choose to vote, I would be happy to receive your endorsement and will work hard for you over the next three years. If I’m successful, this will be my second term and likely my last “kick at the cat” because I will be long past my prime when I’m eligible to run again!

Many other issues are at stake as well. My email address is below and my phone still works if you’d like any more information. You can also read my profile on LinkedIn.

In Closing

Do you know how difficult it is to get the appropriate number of words into this essay during Stampede week? Well, the rest of my day is set: off to the rodeo and then to the Zac Brown Band concert tonight! Edmonton will get its own version of our Stampede in the coming weeks, and each small town will enjoy a summer celebration that honours our Western heritage! The good and honest values represented by these celebrations are the same ones shared by all decent human beings who believe in the strength of community, fellowship, and fair hard work! Get out and have fun. Don’t step in any political commentary that might have fallen out of the back of a farm animal!

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:  Allen Christie  Brexit  CAIB  designations  General Insurance Council  investment  Kurt Bensmiller  licensing  Stampede breakfast  Tsuut’ina (Tsuu T'ina) Nation 

Share |
PermalinkComments (0)
 

Flood Coverage, Broker-Direct Balance, Stampede Breakfast, IBAC (CAIB) Volunteers, Orlando Massacre

Posted By Thom Young, June 21, 2016

Flood Coverage

In my discussion of federal political advocacy last issue, I mentioned that the politicians all seem to be very aware of and interested in our industry’s response to the need for flood coverage. I’m always quick to mention the terms “overland water” and “sewer backup” in the discussion because people need to know that the changing dynamics of these coverages seem to be merging them into one. In order to drive flood coverage towards premium adequacy, you can’t have one without the other in some markets. It’s a saleable perspective: if you are in an area where you should be concerned about a sewer backup, you should be also concerned about overland water. Most people will agree that the proximate cause of most sewer backup is actually overland water. Combining the two coverages eliminates “the chicken and the egg” claims discussion that generates public confusion and protest when one side of the street is covered. This random coverage is an ongoing issue because many companies are still not providing any coverage for “overland water” perils and are offering only the old “sewer backup” endorsement. This competing coverage is now both a public issue and a broker E&O nightmare.

The failure of the insurers to develop a standard of coverage that is set out in common wording and is used by all companies referencing this protection will likely be a major issue for our business. No company or insurance adviser is immune from the confusion that will arise with the next catastrophic loss in a major urban centre. If we as brokers are advising clients to take coverage with one company or another but are confused by the variances in the wording and the special limits for “overland water” or “flood” coverage, we will not be able to describe the differences sufficiently for the client to understand the coverage and make an informed choice. Consequently, we will be held responsible for any shortfall in the coverage that causes the client an uninsured loss. Of course, the insurers will suffer the same challenges and may even be found liable to the public for failure to set a standard of coverage, but any liability charges would be years after the headlines sullying our reputations have long passed.

The political perspective on disaster relief programs may further jeopardize public good will. Some provincial and federal politicians have suggested that the programs in place for uninsured losses from flood can now be reviewed and the budgets for them limited so that these funds can be freed up for other needed programs. Well, the reduction may not be that simple. As most brokers will tell you, “overland water” coverage is excluded for those living within 300 meters of running water and the new forms won’t likely even cover “sewer backup” for these folks. When these exclusions become apparent after the next weird weather event, don’t be surprised if you’re asked to explain what happened. I can’t help but note that, as I write, the community of Dawson Creek is suffering from just this kind of thing. I know everyone’s tired of hearing me quip that we are just three days of rain away from a repeat of the 2013 flooding that devastated Calgary and High River. I recently toured some of the work underway to mitigate the Highwood River’s potential to create havoc again. While mitigation is happening, we’re far from prepared to deal with the kind of flood we saw just three years ago.

Nature Abhors a Vacuum—Eventually Everything Finds a Balance

The issue of “broker” companies entering into the direct-writing business is always foremost in discussions between brokers. Of particular concern is the manner in which the competition takes place and the use of the data accumulated from the customers for further sales and marketing by both the brokers and the company. The other main concern remains the name by which the competition takes place. It should be clear to anyone that competing with your brokers by using the same name as that used to write the business the broker sends the company is seen as a breach of trust, a violation of the exclusivity anticipated in the contract between the broker and the company and just downright wrong! To further belabour the point, the public is also very confused when they see the same name on the insurance contract that is on the broker’s wall and advertising. They expect to receive service and advice from the broker. Well, this confusion will of course sort itself out, eventually. If a “broker” company wants to be a “direct writer” under the same name as it is a “broker” company, then it will damage the relationship. Their support from brokers may wane to their detriment. All things being equal, I believe they will either have to commit fully to participating in the marketplace one way or the other.

With more competition in the direct-writing market, the direct writers may well be gearing up to hold their market share by offering their products at the same price through the brokerage market. According to Canadian Underwriter, “CAA Insurance Company announced on Thursday (June 16, 2016) that it has appointed 17 ‘well-known and experienced brokerage firms across Ontario’ to provide its customers with more choice.”

This is quite a move for an affinity-group insurance company. Would a membership in the Automobile Association come as part and parcel with an insurance application? I wonder as well if the agent will get a fee for this part of the transaction. Auto clubs have affected the insurance industry before. The roadside assistance endorsement SEF 35 was created to provide a direct competitive response by the insurance industry to the entry of automobile clubs into the automobile insurance markets. An actual Auto Club package that provided some of the auto club services such as mapping and hotel planning used to be sold by brokers for one market. Now most that has gone by the wayside—no need to spend an hour talking about a road trip with someone when you can simply Google a route (complete with turning directions) and immediately get a whole bunch of information on all the amenities you might need on your trip. As in most of the travel industry, technology has taken over the heavy lifting, leaving little money for the service providers, but the affinity group of auto-club members continues to survive. In Alberta, their operations seem quite healthy, and they compete actively in the insurance and travel marketplace. I wonder if they will be appointing Alberta brokers to represent them. If not, I’m pretty sure they’ll be watching the success of the Ontario efforts closely. I know I will be.

Stampede Breakfast in Calgary, Wednesday, July 13, 7:00–11:00 a.m.

9705 Horton Rd. SW, CGY, Southland parking lotCome and join around 1500 of our closest friends for a regular old-fashioned western whoop up. There’ll be lots to eat, world famous chuck-wagon drivers, line dancers, and a live band. It’s our 23rd time, and I think we’re starting to get it right. This has turned into an “all industry” event that you don’t want to miss. It starts early enough that even the 15 people in Calgary who do any work that week can get in on the fun before they get to the office.  

IBAC Volunteer Work—CAIB Review

I’m working my way through the chapters of CAIB 2 covering business interruption and crime coverage and reviewing their content for relevancy and accuracy in our ever-changing marketplace. Reacquainting myself with the material is interesting: I find I learn more by teaching than I ever did by studying. As I’m plodding along with this project, the thought crossed my mind that those of you far more in tune with the current market than I am might have helpful contributions to these topics. If you, do I’d be happy to include them in my overview of the suggested changes to the instruction program. For example, we’ve come a long way from the old 3D wording as the basics for crime coverage, but all the new package stuff just builds on the old foundation. I wonder if tossing out the basics might hinder comprehension of the reasons the new package works the way it does. Many of you are far wiser on this topic than I, so I’d welcome your ideas. The email address below is my personal one. Feel free to drop me a note.

In Closing

Real life is stranger than fiction—watching the news these days sure hammers that saying home. The events unfolding to the south of us make me pause and reflect. The aberration that occurred in Orlando leaves me simply overwhelmed with grief for the people killed and injured and their families. I can make no comment that makes any sense of this. It is just so sad. Something has to be done. While I can hope for change, the lack of it after the massacre at Sandy Hook leaves me with a fatalistic view, believing that it will continue to get worse before it gets better. Pray I’m wrong!

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

 

Tags:  broker channel  CAA  CAIB  competition  direct writer channel  disaster relief  Hill Day  insurance industry reputation  mitigation  Orlando massacre  overland flood insurance  sewer backup insurance  Stampede breakfast 

Share |
PermalinkComments (0)
 

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 

Share |
PermalinkComments (0)
 

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 

Share |
PermalinkComments (0)
 
more IBAA Courses and Events

2018-12-10 » 2018-12-14
Licensing Level 1 Immersion - Calgary

2018-12-12
PYIB Trivia Night—Grande Prairie

Featured Vendors

Online Surveys
Membership Software Powered by YourMembership  ::  Legal