Survival Instinct

Some brokers are worried; some are excited. Some brokers are trend-setters; some are business as usual.

Whatever the current outlook, one thing all brokers must be ready for is change and equipped to adapt to whatever happens, suggests Kent Rowe, president of the Insurance Brokers Association of Newfoundland (IBAN).

“It is not the strongest of the species that survives; not the most intelligent that survives. It is the one that is the most adaptable to change.”

Kent Rowe, president, Insurance Brokers Association of Newfoundland (IBAN); and vice president, commercial lines, Wedgwood Insurance Limited

It is solid advice from no less a source than Charles Darwin. It is also one of Rowe’s favourite quotations and one he believes serves as a timely caution for brokers.

“If you’re going to continue to do business in the same way, using the same model you have in the past, then you’re not going to exist,” says the vice president of commercial lines for Wedgwood Insurance Limited in St. John’s.

That recognition seems to be taking hold, but the challenge may be getting brokers to transform recognition into action in a timely manner.

“The landscape in our business has evolved and has changed significantly since I entered the industry (about two decades ago), and probably exponentially in the last five to six years,” Rowe says.

Running through that change is the ribbon of technology. “Technology, in today’s market, in our business today, is the most important thing brokers need to understand.”

Currently “behind the eight ball,” brokers need to “understand how they can become more efficient and how they can become more available and more attractive using various platforms,” contends Rowe, vice president of the Insurance Brokers Association of Canada (IBAC) and executive sponsor of its Technology Committee.

Kent Rowe, president, Insurance Brokers Association of Newfoundland (IBAN); and vice president, commercial lines, Wedgwood Insurance Limited

Too many brokers still think “they can continue to do business tomorrow the same way that they did business five years ago. They can’t,” he says. “If you’re not willing to evolve and bring yourself into the 21st century from a technology perspective, most importantly provide your business and your customers with the tools they need to interact with you using technology, you are going to go the way of the dinosaur.”

One reason brokers are behind may be that “we’ve always relied too heavily on insurance companies and other vendors to push the technology envelope on our behalf,” he suggests. “To me, that is a fatal flaw and a fatal error,” he adds, emphasizing that brokers need to be “the masters of their own ship.”

LOCAL GOES NATIONAL

Technology is but one of a host of challenges – perhaps, opportunities – that brokers face today.

Each challenge will have its own distinctive local flavour, but many have some sort of link to technology and all need to be addressed. Those issues range from consolidation to the auto book, disintermediation and education.

In Newfoundland and Labrador, for example, Rowe says consolidation activity, on both the insurer and the broker sides, is concerning.

Noting there are now just four personal lines insurance markets dealing with brokers, “if one of them pulls out tomorrow, that creates a massive strain on our system here,” he argues.

“There’s almost an oligopoly in the market,” Rowe says. “No matter how you do the math, you’re going to have more choice with 12 than you are with four, right?”

Having fewer insurers with which to do business, wherever that may be in the country, means “the less choice we have for consumers,” he says. This, in turn, influences the ability of brokers to shape how they service clients and means those insurance companies hold more power “in terms of their ability to shape underwriting decisions and pricing.”

There are, however, some key positives flowing from consolidation activity that bode well for the future. “You see increased efficiency from insurance companies, which translates into increased efficiency for brokers. You’re seeing more depth and breadth of product. You’re seeing companies that are acquiring specialty lines or specialty information and classes of business that are able to help niche or target-focused brokers,” says Rowe.

“Consolidation in all of that space has helped really push the technology envelope, which I think is extremely important for our future and for the future of our industry as brokers,” he emphasizes.

Also, “disintermediation is a huge topic,” Rowe contends. A number of big insurance companies have decided they cannot “reach all the clients they need to reach through the broker channel,” he says, opting to launch direct arms.

Although that is technology- related to a certain degree, “it also should be a bloody big wake-up call to everybody,” he cautions. “When an insurance company says it doesn’t think that it can get to all the clients using our traditional broker channel, my first question is, ‘Why?'” Brokers will “compete with anybody as long as it’s a fair and level playing field, because we think our value proposition stands true,” Rowe says. “We think that clients are going to continue to see that value proposition as long as we evolve.”

Again, technology will play a major role in that regard.

ACCIDENTALLY-ISH

Like many of his age in the insurance business, Rowe’s path toward being a broker was not planned. Taking business at Memorial University, his brother – who was in insurance – mentioned he should consider it as an option. Rowe began picking up some “insurance courses on the side and it just piqued my interest.”

He began his career, as an account executive, at the same brokerage where he works today. Things were going great, Rowe says, but adds “when I got into the business, I always said that in order for me to fully understand how this business really works, I had to have some exposure on the other side.”

He did just that in 2003, when he became business development manager, Atlantic Canada for Aviva Canada in Halifax. “Being in the business development role, you kind of have your hands in everything. You’re involved when there are claims that go off the rails, you’re involved in underwriting decisions, you’re involved in high-level management decisions and strategic planning with brokers,” he says.

“You really get to take a deep dive into what makes insurance companies tick and how important brokers are.”

There for three years, Rowe came back to St. John’s, working briefly at another brokerage before returning to Wedgwood Insurance. In 2013, he took on his current role. Much of his volunteering work has been industry-related, including serving for IBAN and IBAC, teaching courses at the Insurance Institute of Newfoundland and Labrador and being a founding member of the province’s Young Broker Network.

Attracting young people to the channel is essential, Rowe says. Part of that goal may be advanced by modernizing broker education.

Recognizing this, IBAC is modernizing its education program and how it is delivered.

It is also working on “a broker competency profile that’s really going to prove to be the framework for how we look to our educational offerings moving forward, identifying the important skills and competencies needed to be a broker, and building our education around what we identify those competencies to be,” he says.

“What’s our business going to look like in 10 years?” Rowe asks. “There are so many unknowns,” he says. “It’s scary, but at the same time it’s exciting,” he notes. “There’s probably more opportunity today than there ever has been,

because of all of the potential change on the horizon.”

It is also “scary” how open insurance is to disruptors, Rowe says. Although everyone has heard about Amazon and Google, he notes, “I still believe the biggest disruptor is unknown to us at this point.” But one plus to disruptors is “it’s really put us in a position where we finally agree that we have to collaborate,” Rowe says. Insurers, BMS vendors and brokers must work together “to ensure efficient and effective delivery of our products and services.”