March 17, 2015 by Terri Goveia
A few years ago, Sean Graham’s Toronto brokerage gave up its membership in the IBAO. Part of that decision was about disconnection—he acknowledges that KTX Insurance Brokers’ online mission sets them apart from other members, but it was also rooted in a little frustration.
“We felt the association wasn’t meeting our needs in terms of technology,” says Graham. But after a four-year hiatus, the brokerage recently opted back in, with brand-new membership status and hopes for a new brand of innovation.
Membership, as they say, has its privileges. But it also has its challenges, especially when members have different goals or perspectives for value. Few organizations can be all things to all people, and associations across the board face higher expectations today, say leadership consultants Jay Karen and Ben Martin. Members are looking beyond industry-specific concerns as consumers demand more, a point they put forward in their book, Membership Essentials: Recruitment, Retention, Roles, Responsibilities and Resources.
“It is no longer acceptable for the association to simply advance a cause or defeat forces that negatively affect its constituents,” they write, advising associations that a smaller scope of “tangible” offerings stands the best chance of hitting the most marks with members.
What marks are Canadian broker associations hitting? Most agree that they have made headway on core mission issues, like advocacy. “Associations across Canada have done a great job lobbying on behalf of brokers and the insurance industry at large,” says Graham. “We’ve had some victories over the years.”
But the general association stance on banks doesn’t acknowledge those who see room for competition, says Bruce Rabik, CEO at Rogers Insurance in Calgary. To Rabik, it doesn’t make sense to limit competition, given that brokers elsewhere have proven they can cope with it. “In British Columbia, banks compete for insurance, or at least credit unions do, and some brokers have continued to thrive. We have always believed we can compete against the banks. I agree with level playing fields, but we already have a good example of that in British Columbia.”
The associations’ singular focus on banks also means that brokers are losing sight of the real threat: the incoming wave of digital commerce giants like Google and Amazon. “The biggest threat was never, ever the banks,” he says. And the lack of competition doesn’t help brokers, Rabik adds. “I see it as a form of protectionism. It’s allowed brokers to not get better.”
But there is a way for associations to step up: they have a valuable opportunity to help brokers arm themselves with technology, notes Graham. KTX has an obvious advantage in tech-related issues, but “brokers who are slow to adapt see that they have to go out and innovate. They’re looking for support and leadership from the association.”
Are they getting it? Brokers have grappled with long-standing tech issues, ranging from online marketing, discordant broker management systems and now, e-commerce. Certain efforts, like eDocs in Ontario, have hit the mark among members, he says. But projects like myinsuranceshopper.ca weren’t as forward thinking as they could have been. “Their heart is in the right place,” he says. “We just haven’t seen any results in anyone taking leadership and resolving those issues.”
The slow traction on technology stems from short-sightedness, says one Ontario broker, whom we’ll call Broker X. Associations don’t seem to look at long-term repercussions—“It’s ‘oh, portals, we’re all doing portals,’” he says.
Their efforts might be better served in helping brokers with other in-house efforts, like streamlining and standardizing automatic payments, which snarl brokerage processes, he says. “It’s a problem.”
Even better: concrete action on nextwave technology like mobile apps, adds Rabik. His own brokerage has invested in Sharp Insurance, a small, new brokerage that developed an app for making client’s vital insurance information easily accessible. Five years ago, the broker-developer didn’t know anything about insurance, he says. “Now, he has the most sophisticated app. How did he do that? Why didn’t the association spearhead that? Or at least facilitate discussion?”
The lack of innovation at the association level isn’t just disappointing, it’s dangerous, he adds. “If brokers don’t create that future, someone else will build it for us.”
A similar shift in thinking is needed in education, says Broker X, who has been pushing for association upgrades to both broker and consumer education. Part of the issue: current broker education doesn’t match the complexity of the product. “You write a multiple choice exam, you sit some RIBO hours, and you’re good to go,” he points out.
Higher standards will go farther to meet provincial and Insurance Broker Association of Canada missions to support consumers, he says. “When you think about what we’re doing here, we’re selling legal products to the consumer,” he says. “RIBO hours are a joke. They’re nice to go to, you get some management hours, but there’s no testing, there’s nothing.”
He points to the possibility of a mandatory CIP designation for brokers as well as another underdeveloped area for the association: consumer education. “Nobody knows anything about insurance. They don’t know anything about liability. Terminology escapes them,” he says. “Let’s educate the consumer—what’s a mortgage? What’s insurance?” Associationsponsored workshops in high schools, for example, could give future insurance shoppers the basics, to “help them balance their bank book. [Then], they’ll come out and buy insurance.”
Associations should also push for stricter driver training, he says. “The problem is, you get a driver’s license when you’re sixteen and are never tested again.” Among the association’s options: dangerous driving courses, skid schools and even courses on fraud. “It’s an obvious gap to me,” he says. “Brokers need education, the consumer needs education. The whole industry needs shaking up,”
Competing interests are also part of the problem. Broker X compares association efforts to please all brokers to “herding cats.” “There are definite parallels to what we’re doing, to what the IBAO is doing and to what everybody else is doing,” he says. “They’re cats. They look the same, but trying to get them together to do the same thing is impossible, and someone is trying to herd them.”
Some issues run deeper. The dwindling number of truly independent brokerages is a huge concern, according to Rabik. He points out that with so many brokerages either directly or indirectly owned by insurers, the potential conflicts and transparency questions aren’t far removed from the bank issue.
“There’s not much difference between that and having the bank that holds your mortgage sell you insurance,” he says. Many insurer-owned brokerages are still billed as independent brokers, he adds. “In any other business that would be a conflict…[and] associations have never seen fit to make that argument.”
Though a broker-matching system had been floated in Alberta, “it’s almost too late for that, now,” he says. “Nobody knows how many brokers already have rights of first refusal or loan covenants.”
Changing leadership is another wrinkle. It can be hard for associations to make headway on issues when leadership and executive roll over every year, says Broker X. “It makes it hard to establish consistent leadership,” he says. “There’s no business out there that does this…you just get some momentum going and a brand new board comes in.”
And so is perception: associations are often seen as looking out for smaller brokerages, rather than larger ones, says Rabik. One of the reasons Rogers Insurance left the Insurance Brokers Association of Alberta a decade ago was over a fee structure that penalized larger brokerages, he says. That’s since changed, and like Sean Graham, they’ve now rejoined the association.
Maybe a larger problem is engagement, says Anne Di Bello, account executive at Lyon & Butler Insurance Brokers in Toronto. She’s involved in a brokers’ association at the local level and notes very low involvement in events in urban areas like Toronto.
It can be hard to pull in even 50 people to city events, she says, noting that even for a meeting on changing by-laws, “we couldn’t even get a quorum,” she recalls.
That could stem from urban dynamics— the distance to go, the higher demands on broker time—but part of it circles back to perception, she says. “There are a lot of brokerages that don’t see benefits the way a small to mid-size brokerage would.”
It’s something that’s easily fixed, adds Di Bello. “If more brokers and brokerages got involved, they’d have more say … there are so many benefits to being part of the IBAO, they should be benefits that can be had by all.”
Which raises the new question: can broker needs and association goals truly converge? Many agree new thinking should shape the way forward. Broker X suggests associations move away from the membership model towards them being run like a business. “Things haven’t changed for forty or fifty years. It’s the same concept, the same format. We need to put some teeth in this thing, and get things done. There’s not enough value in it.”
There’s also room to break long standing traditions to solve spiraling problems. Broker X points to the disparity in the way homes and cars are inspected for insurance. Home inspectors look for everything to make sure it’s a good risk for insurers, but vehicle inspection is outsourced to the Ministry of Transportation. “They let the MTO do it, and they wonder, ‘Why do we have a problem with car insurance?’ Nobody thinks differently.”
Until thinking shifts, all brokers can do is, “dig in and do their best as a broker and hope that the association does its best,” he says.
As they move forward, associations should acknowledge a new phase to their mission, suggests Graham. “Their mandate has been to protect brokers, and I think that’s been accomplished by and large.” But the next phase demands a new mindset. “I don’t think we need to fight the tide of these new disruptors. We need to find a way to collaborate and make things better … that might require an entire sea change in their way of thinking.”
Association execs are brokers, too, so they understand broker concerns—and at time, their impatience. “We welcome their feedback,” says IBAO president Michael Bratman. “My theme is, ‘Own it.’” He concedes that associations have work to do, especially on specific technology issues. “Customer needs are changing, and we, as brokers, need to respond accordingly. They’re comparing us to their experience with other services, like going to the dentist after 7 p.m. or getting car service on the weekend. The lines are blurred … when someone wants to buy insurance, they want it now, and that’s something we have to respond to.”
In the past, says Bratman, the IBAO put its tech efforts into broker management systems. “What we need to do is leverage that further.” That means extending services into customer management systems and leveraging new platforms. “This will help our members become more competitive.” The IBAO has had success collaborating with insurance partners, such as with eDocs. Its updated mission statement prompts similar conversations on the advocacy front. “We, as brokers, and insurance companies are often affected by the same things, whether it’s rate rollbacks or legislation. [The mission] allows a much more meaningful focus.”
He stresses that open dialogue between associations and members is essential, as is constant assessment on the association’s side. “How do you measure engagement? Is it by the person who just renewed their membership? How often they attend events or education?” The association asks the same questions that brokers do, he says. “How can we continue to be relevant as an association? Whether it’s big or small, we want that feedback, so we can add value to those members.”
Copyright 2015 Rogers Publishing Ltd. This article first appeared in the March 2015 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.