Keeping it in the Family (September 01, 2008)

One year ago, Peter Fredericks’ predecessor as president of the Insurance Brokers Association of Canada (IBAC), Danny Craig, cracked a joke at his own expense that still resonates with Fredericks to this day.

Canadian Underwriter profiled Craig a year ago in anticipation of his becoming IBAC president in September 2007. For that issue, Canadian Underwriter commissioned an artist to draw a ground hog for its cover, intending to represent the forecast for the Canadian auto insurance market.

Coincidentally, Canadian Underwriter had dropped the traditional thumbnail picture of its profile subject from the front cover of the magazine.

Craig, who expected to see his profile photo on the front cover, referred to the artist’s rendition of the ground hog in his inaugural address to IBAC’s annual general meeting, thanking CU for devoting its entire front cover to his picture as incoming IBAC president.

Fredericks, a fun-loving principal of a four-person brokerage in Bedford, Nova Scotia, is now poised to succeed Craig as IBAC president in September 2008. Fredericks jokingly recalled his friend Craig’s speech from a year ago. And so, after the conclusion of our 40-minute telephone conversation, Fredericks is asked: “What animal would you like to be on the cover?”

After laughing for a few minutes, Fredericks replies: “I think I want to be a Saint Bernard — looking after everybody’s interests, trusted, faithful.”

In essence, this depicts Fredericks’ view of how he and other insurance brokers across the country should be perceived in the public eye. It also suggests a theme in Fredericks’ professional life as a broker since Feb. 8, 1977.

After dabbling in some construction work out in Alberta, Fredericks followed his father and mother into the insurance brokerage business in 1977. At that time, when he was 19 years old, he answered the call to join his father’s business, Ray F. Fredericks Insurance Ltd. Ray Fredericks had started the insurance brokerage in 1965.

“My dad started the business, so I am second generation,” Fredericks says. “It was two brothers and myself, so there were three of us in the family and it was funny, actually, it was sort of pre-ordained for me. I guess personalities being what they are over the years, it was just always assumed that I was going to come into the business.”

It wasn’t only about being loyal to the family: he also had the right personality for the job. “There was always a ‘fit’ for me,” Fredericks says. “I always enjoyed the business. I enjoy people and that’s a big piece of it. If you don’t enjoy people, it’s just not going to work for you at all.”

Fredericks has remained a broker for the rest of his life, save for one brief period when he said he had a minor “dust-up with the old man.” The incident prompted Fredericks and his wife to try their hand at operating a Robin’s Donuts franchise in Bedford — an idea that never really took off.

Fredericks soon returned to the insurance broking business. Eventually, he bought his Dad out “with a handshake and a smile.” From the time his Dad and Mom retired from the business, Fredericks says he has been “basically the principal, the president, the manager, chief cook and bottle-washer” of the small brokerage firm.

In his journey through the IBAC ranks, Fredericks once again followed in his father’s footsteps — only this time, he says, loyalty to the brokerage community, not familial loyalty, was his primary motivator.

He joined the Insurance Brokers Association of Nova Scotia (IBANS), as his father did before him, and became IBANS president in 2003. At the time, the province’s auto insurance product was in a state of reform and flux. It was a perfect opportunity for him to demonstrate what he calls his “Larry-the-Cable-Guy, Let’s-get-‘er-done” attitude.

“I was president of [IBANS] in 2003, just when the hard market hit and everything went all to hell,” Fredericks recalls. “I remember at the [IBANS] AGM during the year, I was stepping down as president and becoming chairman. Some of the past presidents were coming up to me, shaking my hand, thanking me and telling me: ‘You did a great job.’ And the comment I heard from a couple of them was: ‘I’m glad it wasn’t like that when I was president.’ I remember standing there thinking: ‘I’m glad that it was,’ because if you’re going to do something, make it worthwhile. If you’re going to be involved, be involved. Make sure that you’re contributing or making a difference.”

As far as making a difference goes, Fredericks sees three opportunities during his upcoming term as IBAC president in 2008-09.

First of all, he said he would be surprised if there isn’t a federal election at some point during his term. [As of press time, Prime Minister Stephen Harper called an election for Oct. 14.] An election would provide a golden opportunity for brokers to express their interests to Parliamentarians, he noted. Talking to MPs is paramount in advance of a second major, forthcoming issue for brokers: the mandatory five-year review of the Bank Act.

This time around, the Bank Act issue might be influenced by recent recommendations from the federal government’s Competition Review Committee, Fredericks notes. The committee’s mandate was to review the financial services sector and recommend ways in which the country could become more competitive in the global financial marketplace. Among its recommendations, the committee suggested dropping the current ban on cross-pillar mergers, effectively allowing banks to buy out insurance companies and vice-versa.

Fredericks expects this would very definitely become an issue in any future Bank Act discussions. “When you look at the banks and the way they’ve approached other industries or other areas where they’ve looked for extended powers, it really frightens me to think we would ever get to the point where we would allow that few players basically to control everything around us,” Fredericks said. “Do we really want allow six major banks that much power?

“Competition is good, regardless of whether it’s banking or insurance. When one business or person has an opportunity to make all of the rules, I don’t think anybody’s served.”

As a second-generation broker, perpetuation is near and dear to Fredericks’ heart. He himself is dealing with the ‘Third-generation’ dilemma: he has two sons, both in their 20s, neither of whom seems like they will be picking up the torch from their father and getting into the insurance business.

“I sat through [a recent conference dealing with perpetuation] in Ontario, and you read articles and books, and you read that if a business is going to fail, it traditionally happens in the third generation,” he said. “Because the person who forms the business gets it going, has that vision and has that drive. The second generation comes in and wall-to-wall you have an established business, but there’s still that drive to go forward and try and outdo the last one. And then when the third generation comes in — again, historically there are lots of cases when they’ve done well — but if you look at it, it’s where they say: ‘It’s not for me,’ or ‘I’m going to sell it off.'”

This is where promoting the Saint Bernard’s loyalty to the insurance broking business comes in. Perpetuation strategies are far more sophisticated now than when they were during the time he bought the business from his Dad, Fredericks observes. But it all boils down to the insurance broking community being a good place to be.

“It’s good business, it always has been,” Fredericks said. It’s a funny industry, in that if you look at the people who are in it, both on the brokerage side and the company side, once we get into this business, we tend to stay. And I think if you’re inclined to want to work with people and just be involved in this industry, it’s not a bad way to make a living.”

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“If you’re going to be involved, be involved. Make sure you’re contributing or making a difference.”