Canadian Underwriter

Why Canada’s ongoing soft market has brokers seeking online continuing education

August 16, 2016   by Peter Hohman

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Prolonged soft market conditions have helped shape how Canadian brokers and agents learn, with more of the industry’s sales force moving online to get their continuing education (CE) credits.

Soft markets are characterized by increased capacity for P&C insurers, meaning insurance companies have more funds available to underwrite more and different types of coverage.

This definitely keeps brokers and agents busy, says Mike Hordichuk, vice-president of commercial insurance at Harvard Western Insurance in Regina, Sask.

“As a broker, we do seem to be in a perpetual soft market, and it has been that way for multiple years now,” Hordichuk says. “The pace at which product changes are happening is most definitely accelerating. Packaging coverages for specific industries is becoming commonplace. We’re seeing insurance companies invest more heavily in their product development departments.”

The pace doesn’t promise to slow down anytime soon. Globally, insurance industry capital has increased by 51 per cent since 2005, according to Aon’s 2015 Global Insurance Market Opportunities Report. And the pattern is continuing into this year, confirms Marsh Canada in its 2016 Canada Insurance Market Report.

The Canadian P&C insurance market generally reflects what’s happening in the global insurance space, although local conditions will always affect markets in specific lines of business, says Joel Baker, president and CEO of MSA Research in Toronto. For example, the Fort McMurray wildfires, estimated to have caused almost $3.6 billion in insured damage, may lead to higher reinsurance rates and, as a result, some market-hardening in Alberta.

The effects on learning

But how do these soft market conditions shape how Canadian brokers and agents learn?

Along with soft markets come new products and coverages, as insurers keep pace with emerging risks. Brokers and agents must quickly and thoroughly understand the new offerings in order to explain them to clients. The rapid rate of change has resulted in a steep learning curve.

“I’ve been in the industry for 20 years and I cannot believe the differences today—and even just over the past five years or so,” says Lisa Vetter, personal lines manager at Smith Petrie Carr & Scott Insurance Brokers in Ottawa. “Policies used to be pretty static and pretty similar market to market. Today, the markets are so different that now, more than ever, I feel there’s a need for us to continually be ahead of the game.”

Those who aren’t up to date with current changes in insurance technology, regulation and coverage risk will make costly mistakes. Get something wrong and a client could sue the broker or agent for compensation. “It opens up more E&O potential,” says Joan Wager, producer at Hutcheson Reynolds Caswell in Huntsville, Ont.

Where do brokers and agents feel they need the most help? The Insurance Institute of Canada recently surveyed more than 600 brokers and agents to find out. (See “What Brokers and Agents Want to Know”.)

“What we heard is that brokers and agents are looking for more knowledge in two key areas: emerging trends and product knowledge,” says Lisa Boniface, vice-president of programs at the Insurance Institute of Canada. “You can see a combination of these things in new trends such as Uber and [other] ride-sharing insurance. We’re trying to be nimble in creating CE courses that explore the trending topics.”

Packed schedules, technological change and limited budgets have translated into a greater demand for online education, says Hordichuk, who recalls how CE used to be delivered when he first joined the industry almost 20 years ago.

“You went off-site for a seminar,” he says. “You went for half a day to another town. Or you went to a hotel in the city you were in, had your lunch and stayed for the afternoon. People came from all over the province because it was held in one centralized location.”

Now brokers and agents find it difficult to justify leaving the office to get their CE credits. “As a broker and a leader of the commercial team for Harvard Western Insurance, it’s difficult for me to say, ‘Here’s a cyber liability seminar for a half day or a full day in Saskatoon. I’m going to send four people,’” says Hordichuk. “I just simply can’t let four people go anymore. I need them here.”

“Online courses are the way to go,” Wager agrees. “You can sit in a webinar for an hour and then everyone’s back to work.”

Today’s online CE market is quite competitive, says Julie Harnden, commercial account manager at McDougall Insurance & Financial in Belleville, Ont. “In order to get the best bang for your buck, CE needs to be interesting, easy and accessible,” she says.

It should also be applicable to the everyday work experience of brokers and agents, says John Stathakos, director of academic programs and product development at the Insurance Institute of Canada.

Stathakos cites studies showing that people can lose between 85 per cent and 90 per cent of what they learn within six weeks after training if they aren’t able to apply their knowledge. That speaks to the need to incorporate case studies into CE learning, he says.

“Rather than just being presented with facts and figures, brokers and agents can learn through case studies to communicate with their clients clearly,” Stathakos says. “Hopefully, their clients will want to buy a particular kind of coverage because they appreciate the way the broker or agent communicated that product knowledge to them.”

What brokers and agents want to know

The Insurance Institute of Canada recently asked 600 brokers and agents about their continuing education needs. Brokers and agents from every province participated, and about 70 per cent of respondents had more than 10 years of industry experience.

Note: The percentages do not total 100 because respondents were able to make multiple selections in certain questions.

Brokers and agents identified four key challenges in the survey:
1. Staying current with product knowledge
2. Ensuring customers understand the risks and coverages available to them
3. Identifying the effects of new technology and industry innovations
4. Understanding new government regulations
Brokers and agents are interested in advanced product knowledge and trending topics. The top five trending topics of interest were cyber risk; errors and omissions; business interruption; directors and officers for public and private companies; and overland flooding. Relevant topics, quality and eligibility for CE credits were the three most important factors for brokers and agents when choosing online courses.

Peter Hohman is the president and CEO of the Insurance Institute of Canada.
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the August 2016 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.