Commercial Concerns

Every November, at the Four Seasons Hotel in Toronto’s posh Yorkville neighbourhood, members of the industry don their finest formalwear and gather at the Toronto Insurance Conference’s (TIC) Black Tie dinner. Though many consider this event the highlight of the insurance social calendar, the TIC is about more than throwing a good party.

“When I first joined the board, I asked myself the question, ‘What is the TIC?’ All I could say was the black tie dinner,” says Robert Harrison, current TIC president and account executive at Martin Merry & Reid. But after more than six years on the TIC board, Harrison has developed a deep respect for the advocacy work the organization has done over the years on behalf of commercial brokers across the country. “The TIC comes down to being a conduit for discussion and solving current problems,” he says.

The Toronto Insurance Conference was established in 1918 as a forum for Toronto brokers to discuss and collectively deal with common industry issues. “That really hasn’t changed from the very beginning,” says Jack Lee, TIC past-president and BFL Canada vice president and associate, national marketing manager. But unlike other brokers’ associations across the country, the TIC is solely focused on commercial insurance issues as they relate to insurance companies and the commercial clients. “Your typical broker in Canada is about 80% personal lines and 20% commercial,” says Lee. “Typically, your Toronto Insurance Conference member is the opposite.”

We have a direct pipeline to all kinds of insurance carriers. So, in that regard, there are real tangible benefits [to TIC membership].”– Robert Harrison, account executive, Martin Merry & Reid Ltd.

TIC membership has almost doubled in the last 10 years. Firms must be a certain size to be eligible for membership (see sidebar), and due to the consolidation trend that has been sweeping through the industry, a number of brokerages have recently reached that threshold. Today, the TIC has 23 full member firms with 13 representatives sitting on the executive committee. Some of the largest brokerages in Canada—and the world—have representatives in the TIC, including Aon, Marsh, Willis and HUB. This affords the organization a unique position within the Canadian industry. The TIC is the only organization that is not a provincial brokers’ association with a seat at the Insurance Brokers Association of Canada (IBAC) table. Even more importantly, through its powerful members, Lee says the TIC has influence with the insurance companies in Canada. “We can get a hearing with the largest of all the insurance companies down to the smallest,” he says. “Not everyone can do that. We treat that ability with great respect.” Having the clout to bend the ears of Canada’s top insurance companies is critical when TIC is looking for solutions to commercial challenges.

Advocacy: Disasters and Taxes
Imagine you own a company and you’re in the midst of renewing your property policy when a wildfire spreads through town. Communication lines are down, your office building is destroyed and the event has been declared a national emergency. When you recover from the shock, you look to your insurance company to cover your losses, but during this disaster your coverage wasn’t bound and your policy expired. “The insurance company can say, ‘Well, according to our file the insurance lapsed at 12:01 this morning. It’s too bad your building burned down at noon, but we never got instructions to renew, so you’re on your own,’ ” says Lee.

At the Toronto Insurance Conference, any member company can bring an issue forward affecting clients’ interests or issues of their own with insurers and use the influence of the entire body to make their points. Certainly this is a powerful tool.” – Jack Lee, vice president and associate, national marketing manager, BFL Canada Risk & Insurance Services

The Insurance Bureau of Canada (IBC) realized that a scenario like this could be a significant issue—not to mention a publicity nightmare—so it worked with TIC members to draft a disaster endorsement. The IBC has since published endorsements for property and liability policies which state that, in the event of a national declared emergency, coverage that was up for renewal will remain in place until the emergency is over. However, the endorsements do not attach to automobile policies, and even though it is an approved endorsement, it is not mandatory, says Lee. As it stands, the endorsement could potentially do more harm than good for brokers. “Go back to the $6 million building that burned down. [The policy is] with an insurance company who is a member of the IBC, but the broker didn’t ask for the endorsement to be added to the policy. So the loss happens and the insurance company says, ‘Well the broker didn’t ask for that endorsement so you didn’t have the cover. Gee, we would have given you the cover had it been asked for.’ ” To mitigate this potential E&O exposure, the TIC is working with Canadian insurance companies to establish an Emergency Declaration Agreement applicable to all policies in force. “We’re trying to keep it simple and at this point we’ve got a good number of companies that have agreed to what we want to do in principle,” says Lee.

The TIC has also done important work to make it easier for brokers to comply with the Excise Tax Act. “The [Act] says that if you buy insurance with an unlicensed insurer and/or without a licensed broker that you are required to pay an additional 10% tax on your premium,” explains Brenda Rose, chair of the TIC tax committee and vice-president of Firstbrook Cassie and Anderson Insurance Brokers. However, if a client can not find insurance in Canada, the broker can apply for an exemption. But the application process is very cumbersome. According to Rose, some large brokerages employ people solely to put together the necessary documentation. To help address this issue, the TIC has worked with brokers and insurers across the country to develop an exempt list of types and classes of insurance that are not available in Canada, or insurance which is only available up to a certain limit. “Every year, for January 1, we have a fresh list that’s been updated. It’s been looked at by the community and everybody’s had an opportunity to provide input,” says Rose. “If there is something on the list that says ‘such and such coverage is not available in Canada’ and some insurance company here decides to write it, [then] it comes off the list because you can get it here,” thus facilitating the administration of large accounts.

The TIC is an excellent forum to have proactive discussions on industry trends and there is definitely an opportunity to benefit from peer to peer insights on important industry and client issues. “ – Sean Duggan, practice leader, HUB International HKMB

The TIC, along with IBAC, has also helped to clarify regulations around insurance placed by more than one broker, including unlicensed brokers. Formerly, the Canada Revenue Agency (CRA) required the client to first speak directly to the local broker without relaying any instructions to another broker in between. “That’s not always the way it works on an international account,” says Rose. International clients often use one controlling broker, who could be licensed anywhere, to issue instructions to the local brokers where the coverage is being placed. “The CRA was saying, ‘Oh no! Because those instructions didn’t come directly to the local broker first, you still have to pay the tax.’” But after TIC’s discussions with the CRA, the Agency agreed that as long as there is a local broker on the placement, the CRA will no longer insist on an order of communication. This new agreement came into effect in 2012 and Rose touts it as an important victory for the Canadian insurance industry.

Education for Today and Tomorrow
In addition to its advocacy work, the TIC has increased its focus on education in recent years. In 2008, the TIC created an award to aid students of Fanshawe College pursuing commercial broking. Though the annual, $1,500 award is in its final year, Harrison says the TIC is actively pursuing other ways of attracting students to the business, including promoting the IBAC MBA program.

In addition to providing funding for students, the TIC also hosts seminars on important industry issues, which are available to members and non-members alike. “Our education focus, in terms of our seminar, [is] to take a topical, a present-day subject that seems to have some concern or buzz and turn it into something more than a newspaper article—turn it into an interactive event where we bring some experts who can share some opinions,” says Harrison. This year’s seminar will take place at The University Club of Toronto on October 4 and will focus on reputational risk, a topic which has received a lot of attention in the media recently.

The Social Network
On a hot summer’s day in June, at an exclusive golf club north of Toronto, members of the industry sport their coolest khakis and polo tees to compete at the TIC’s Annual Golf Classic. Though the TIC is about more than hosting a fun gathering, industry socials do serve an essential function. “It’s important to get the major players to be able to be relaxed in each other’s company, to be able to share ideas, to be able to have friends and colleagues in common,” says Harrison. “It’s very important to keep an open conduit between competitors within an industry because it fosters a better industry.” And who doesn’t like to have a little fun at the same time?

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Membership Requirements
To qualify for TIC membership, a brokerage must produce $20 million in commercial-lines premium volume and two current board members must sponsor the applicant. In addition, Lee says the TIC is looking for a willingness to join the executive and participate, but also an “awareness of changes in the industry that are going to impact clients.”

Current Members:

• Aon Canada
• Arthur J. Gallagher (Canada) Group
• Baird MacGregor Insurance Brokers LP
• BFL Canada
• The CG&B Group
• Creechurch International Underwriters
• FCA Insurance Brokers
• Hallmark Insurance Brokers Limited
• Hargraft Schofield
• HUB International HKMB
• Hunters International Insurance
• Integro (Canada) Ltd.
• Jones Brown Inc.
• Jones DesLauriers Insurance Management Inc.
• KRG Insurance Brokers
• Lyon & Butler Insurance Brokers Ltd.
• Marsh Canada Limited
• Martin Merry & Reid Limited
• Moore-McLean Corporate Insurance Limited
• Ovilvy & Ogilvy inc.
• Purves Redmond Limited
• Thomas I. Hull Insurance Ltd.
• Willis Canada Inc.

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Copyright 2012 Rogers Publishing Ltd. This article first appeared in the September 2012 edition of Canadian Insurance Top Broker magazine.

This story was originally published by Canadian Insurance Top Broker.