June 28, 2016 by Terri Goveia
Online forum RedFlagDeals.ca specializes in shopping bargains, but users aren’t shy about sharing advice on other fronts. Last fall, one user posted this plea: “Hi guys, I’m thinking of getting a Registered Insurance Brokers of Ontario license. Just wondering if it’s a good idea to buy the kit from the IIC (Insurance Institute of Canada) or IBAO (Insurance Brokers Association of Ontario)?”
Earlier, posters had traded ideas on web-based prep course PrepNPass, while in another thread, one poster suggested seeking out the RIBO office. There are many roads to RIBO readiness—including intensive or speedy licensing courses—that prepare would-be brokers for the three-hour entrance exam, the provincial gateway to the insurance broker business.
They may be test-ready, but does the exam prepare them for the realities of the insurance business? “It’s a good first step,” says Jerry McDougall, branch manager and commercial producer at Cowan Insurance Group. Still, the Hamilton, Ont. broker worries about the depth of that baseline. “I’m not sure if it tests you for knowledge,” he says, noting that the approach seems to be, “pass an exam and then you’re ready to go talk to the public.”
The exam includes 90 questions, and broker principals have some of their own about its foundations. As coverage issues deepen across all lines, some brokers are wondering whether it’s time to revisit what RIBO demands from entry-level brokers.
Technically, anyone who achieves 75 percent on the RIBO entry-level exam becomes a fully fledged insurance broker. “The Level 1 exam qualifies an individual to become licensed as a broker to conduct any kind of business in any line, whether it’s personal, commercial or specialty lines,” says Vivian Lee, the organization’s qualification and registration manager.
At Orr Insurance and Investment in Straford, Ont., Rick Orr is always impressed by job seekers who arrive with their entry-level license in hand, but their work is far from done, he says. For one, they need on-the-ground training in back office functions, customer service and insurance issues before they have any contact with customers. And more worrisome: the limited grounding they have in commercial insurance.
“Taking a RIBO [exam] might give you a starting point for home and auto, [but] it doesn’t give you anything for commercial lines insurance.”
The second issue is more problematic. As a young broker, Julie Ryan recalls starting out in personal lines before working under a commercial broker and eventually taking on her own commercial accounts. A former professor at Mohawk College’s insurance program in Hamilton and current instructor for a Level 1 licensing course, she says the preparatory text book offers some grounding in commercial lines— “the text book is excellent,” she says—but that the test doesn’t always acknowledge that side of the business.
“On the exam, there might only be two questions,” she says. She’s considered the benefits of a divided course that would give personal and commercial lines equal weight. “If you’re going to walk around and say, ‘I’m a licensed insurance broker,’ you have to have the knowledge.”
Growing complexity on all sides of the business calls for new thinking on entry-level benchmarks, says Brooke Hunter, owner of Hunters International Insurance in Toronto. While she acknowledges that a general exam has merit— “You need some way for lots of people to have an entrance into our industry, that’s good public policy”—she suggests that licensing acknowledge the specialized knowledge and skill sets needed for different lines of business.
Hunter, always a keen observer of the industry asks a pointed question: “Should the person giving the public advice on personal auto and condo insurance be subject to the same licensing and continuing education requirements as the person advising a private equity fund on D&O insurance, or the CFO of a gold mine on business interruption insurance?”
The same can be said of the personal side, McDougall points out. In the past year, personal lines brokers adjusted to demutualization, changes to the Ontario auto product and various new overland flood products. “It’s difficult for seasoned people to keep up with the constant changes.”
While RIBO does an “amazing job” with self-regulation, “I think they know they need to look at an evolution,” says Hunter.
What might that look like? At present, RIBO offers tiered licensing that offers the Level 1, entry-level license that requires supervision, though brokers at this level can write another exam to earn an “unrestricted” license. Higher levels allow a broker to move up into management and principal broker roles.
Orr suggests a framework that tweaks the present one: “I would be in favour of seeing a Level 1 insurance where I can write personal insurance, a Level 2 where I could write commercial, and an unrestricted Level 3, where I could manage or own a brokerage.”
He suggests following British Columbia’s model, where a multi-level system closely corresponds to Canadian Accredited Insurance Broker (CAIB) designations, with some specific checks and balances. For example, a Level 1 license in that province offers a similar general grounding as the Ontario Level 1, but is tied to prescribed education (a CAIB level 1 program or the Insurance Brokers Association of British Columbia Fundamentals of Insurance course), requires new brokers to work under direct supervision and prevents them from signing contracts.
The Insurance Institute of Canada and the Insurance Institute of B.C. also offer equivalencies and licensing exams based on their General Insurance Essentials and Chartered Insurance Professional materials.
B.C.’s Level 2 license—which lines up with CAIB levels 1, 2, and 3—removes the earlier restrictions and takes a strong commercial lines focus. But the British Columbia framework may not be one-size fits all. The bulk of brokers with a Level 1 license in Ontario don’t pursue higher levels, according to Patrick Ballantyne, RIBO’s general manager and CEO. At present, only six or seven percent of brokers advance to Level 2. The rest “make a good career with that one designation.”
That reality doesn’t support calls for licensing changes, he says. “We make an effort to make sure that the exam remains in sync with the broker skills profile. I agree, it’s a baseline, and hopefully [brokers] continue to receive training within the brokerage, but it is the baseline for competency to be a broker in Ontario.”
Then, there’s this: the commercial focus of B.C.’s Level 2 license hasn’t increased demand for it, notes Gerry Matier, executive director of the Insurance Council of British Columbia. Roughly half of the province’s 14,000 brokers are personal lines brokers who don’t see any incentive for Level 2. “The feedback we’re getting from the industry and people who’ve done Level 1 is ‘Why should I be taking these courses if that’s not what I’d be doing?’ I’d rather they develop the skills they’d be working in rather than taking an in-depth commercial lines course they may never use at all.”
Ryan agrees that the Ontario entry-level exam has to stay comprehensive—rather than specialized—to grant a full license. If Level 1 focused on personal and Level 2 on commercial, a new broker couldn’t fully serve clients. “Let’s say you’re my client, talking to me about your auto insurance, and say by the way, I’m opening up a store. I don’t have any knowledge and have to pass you over to a commercial broker. It’s a grey area.”
RIBO’s system may stay the same, but B.C. is working toward licensing changes that address broker feedback and maintain a specialty focus, says Matier. One possibility: a reworked foundation for Level 1, and a Level 2 license that splits into two or more streams. “We’ll set up criteria of things we want them to take, but give them the opportunity to take in-depth personal lines or move over to commercial lines.”
But there’s more than one route to change in Ontario. Hunter points to the continuing education requirements that keep licenses in good standing. While the options offered are often “excellent,” the requirements aren’t specifically tied to a brokers’ main line of business, she says.
“Right now, I could practise commercial insurance and get all my continuing education in personal insurance,” she points out. While most brokers invest in appropriate courses, the lack of specific requirements could lead to gaps, she adds. “Someone who’s been transacting 80 percent of their lines in personal insurance, [could] then turn around and transact a little bit of commercial insurance without the appropriate underlying continuing education.”
Orr agrees that some stricter rules are in order. Although he thinks the number of hours required is fair, not all credits are created equally. With some courses, “you turn on the computer and walk away for an hour,” he points out. “No broker is going to complain that an online course is too easy. RIBO needs to do a better job of auditing some of the education programs that are out there.”
But Ballantyne says that the onus is on broker owners and principals to audit courses. “The con ed requirements are in place to ensure that they continuously update their skills, and we would hope that the brokerage and the principal broker responsible for that broker would help them identify courses that would help them acquire further competency to serve customers.”
At present, brokers are doing just that. Orr’s brokerage has developed a structured program for brokers that falls outside RIBO requirements. It includes a mix of targeted in-house seminars, insurance company workshops and other third-party sessions. “It’s up to the brokerage to develop programs,” he says.
That responsibility is continuous, he notes, pointing to issues like Ontario auto, “probably one of the most complex insurance products in the country.”
McDougall takes a similar approach for new brokers: “an on-boarding process,” which supplements Level 1 licenses with CAIB courses, individual workshops and other seminars. “I’m big on learning by experience, as long as there is support beside you.”
He also advocates specialized accreditation. “When I hire here, if it’s a commercial person, I strongly encourage them to do that section of the CAIB course. If you’re coming into commercial you should do the CAIB course and I would encourage them to get their professional designation as a whole.”
The in-house education underscores the gap between the Level 1 license foundation and the skills needed to do a broker’s job. “It would be a special person and really special circumstances that you would have someone come in having only written the license, and turn them loose,” he says. “You need a whole lot more training and education before that should occur.”
Is there a happy medium between the broker’s role in education and the licensing requirements? That may come in the future, as provincial self-regulators have talked about potential harmonization. In the meantime, Hunter remains focused on the rationale for change. “This is a complex issue, insurance is complex. Ultimately, we want to protect the client, that’s what it’s about.”
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the May 2016 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.