Canadian Underwriter


May 1, 2000   by Sean van Zyl, Editor

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This year’s Insurance Brokers Association of Ontario (IBAO) annual general meeting and mid-year conference, which was recently held in Ottawa, drew focus on the need for the brokerage community to unite in the face of rapid consolition and the technological changes sweeping through the insurance industry.

In presenting his opening speech, IBAO president Ken Orr reminded attendees at the 2000 annual general meeting of the theme selected by the association for this year: “Pulling Together”. The independent broker community has arrived at an important junction with regard to future growth and development, an opportunity that cannot be ignored by association members and non-members. “We need to involve as many members as possible,” he adds, with the objective of encouraging non-members to join with the collaborative growth initiatives under the IBAO.

Orr points out that, over the past six years, IBAO membership has declined from 1,100 member firms to 730 firms. In contrast, the association has seen individual membership rise from 7,100 members to the current 8,369 level. The difference in the trend between broker firm and individual membership is clearly a result of the merger and acquisition activity brought by “clustering” and the broker network consolidators.

In terms of overall membership, the IBAO currently represents approximately 61% of the independent brokerage market in Ontario, Orr notes. In the year ahead the association will pursue an aggressive campaign to increase its membership stake. “…Membership penetration is key to our existence as well as our ability to be the advocate for our industry. Everything we do with industry, government and consumers alike is based on the representation of the broker system…our membership representation has to increase…This is a task that cannot be left up to only a few, but needs all of us to encourage non-members to become involved.”

Studies launched

In line with the IBAO’s long-range growth strategy, the association has begun compiling two market surveys, the “Socio Economic Study” and the “Rate Your Companies Survey”. The socio-economic study, which will investigate the financial and social impact the independent brokerage community has in communities across the province, will prove to be an invaluable tool in the IBAO’s discussions with government on the issue of financial services reform, Orr predicts.

The company rating report, which will be compiled by an independent market research company to heighten its credibility, will investigate broker member responses to dealings with insurance companies. There has been strong interest from insurers in the outcome of the relationship ratings, Orr says. “Interestingly enough is the response from the companies that are rated highly in our survey as they are proud of their record and certainly show it to all. The companies that have done poorly use the report to look at areas that need improvement and are challenged to do better.”

Educational programs

Education, advocacy with government, industry and consumers, member services and political action remain the core areas of activity of the IBAO, Orr says.

The association’s education drive through its “offsite education” program has drawn considerable interest, he adds. The program is now available through 22 sites across the province. “I am pleased to report there is strong support for offsite education, and our program involving four insurers has been very successful.”

The IBAO has also made available to members a “Best Practices” study and course. The information provided to those attending the course is based on evaluation of the operational procedures of what is regarded as the top 125 successful independent agents in the U.S. market. “The course allows you to investigate their [the U.S. agents] practices and compare them to your own way of doing business. ..If you have not already investigated this program, I encourage you to do so. I think you will be impressed with its value.”

In addition, the IBAO has moved forward with development of its CAIB program into a “Masters Program” based on three areas of achievement: commercial, personal lines and broker management. “This project has been presented to IBAC [Insurance Brokers Association of Canada], and we are expecting positive movement at IBAC’s next board meeting in Ottawa later this month. We believe this should be a national project.”

Active participation

The IBAO continues to pursue its advocacy role through participating in industry and government bodies dealing with financial services regulation and change, Orr states. However, a critical area to have emerged is the impact technology is having on the direction of the market.

Through participation in the Centre for Study of Insurance Operations (CSIO), the joint broker/insurer body appointed to investigate technology development, the IBAO is playing an active role in maintaining the position of independent brokers, Orr says. What has become an area of concern is the general move by insurers to Internet-based transacting with each company pursuing their own applications for delivery of information.

Brokers can ill afford to allow for this lack of screen standardization to continue, Orr warns. “The current movement in CSIO is to the development of web technology. Many companies already use the web to transact business, however, having each company develop their own screen is really a step back in time akin to having a company terminal in your office.”

As such, Orr called for IBAO members to support their technology position by actively participating in the CSIO forums and committees. “Through IBAO, you are all members of CSIO and have the opportunity of participating in its development and direction. I would encourage you to get involved.”

Bipper branding and support

Dan Danyluk, the president-elect of the IBAO, stresses the need for further member support of the national independent broker identification program under the bipper. A new advertising campaign was launched by IBAC in the beginning of March this year, he notes. Although feedback comments from brokers to the campaign has been lukewarm, with not all believing that the message being presented to the public is strong enough, the fact remains that the brokerage community has to collectively support its own branding initiative, Danyluk says. “The television ads of the bipper were once just a dream. We’re still trying to see where we are going in our approach. The idea is, by May/June of this year to follow up [the television campaign] with print media advertising.”

With broker-supporting insurers paying for the bulk of the $20-$30 million annual bipper advertising campaign, the independent broker movement has to be seen lending its full support to the initiative, he remarks. “We have to satisfy them [supporting insurers] that the program is working.”

In addition to the bipper marketing initiative, IBAC has signed agreement with an new independent Internet portal operator under the E-Post website. Although the site is new and provides a mix of financial service links, IBAC and the IBAO believe it will eventually become a mainstream consumer point on the Internet. Plans are currently in the working to have all 5,000 broker members across the provinces listed on the site. For the first year, the IBAO has decided to pay the cost of listing for its members, Danyluk says. The cost of future listings may, however, have to be carried by individual members.

Membership and advocacy role

IBAO vice president Jim Hawryluk took up Orr’s call for greater membership penetration across Ontario. In his long-range planning update report, he outlined an ambitious initiative to boost the IBAO’s representation of independent brokers in the province to 75% by 2002 compared with the current 61% level. “We must look to the larger cities where there are many non-member brokers and also to the rural areas that contain one or two person brokers. We must look at evaluating fairness of our fee structure and revisit past members.”

Only through a strong m
embership base and representation of the independent broker movement in Ontario can the IBAO effectively pursue its advocacy positions, he adds. In particular, the IBAO through its members needs to maintain a strong drive with regard to developing government relations at both the provincial and federal levels, he remarks. “This is the only way we will gain acceptance as the advocate of the consumer in insurance.”

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