October 4, 2016 by Peter Hohman, President and Chief Executive Officer, Insurance Institute of Canada
With emerging fields of insurance – such as residential overland flood, cyber risk and the sharing economy – many brokers need to learn more about new coverage options and how to explain them to clients.
“Today the markets are so different from one another,” says personal lines manager Lisa Vetter of Smith Petrie Carr & Scott Insurance Brokers Ltd. “Every company is coming up with different ways of handling issues and rating methods. More than ever, profitability strategies and coverages are so diverse that brokers are challenged to educate themselves to stay current and make sure their clients are properly covered.”
The Insurance Institute of Canada, the educational arm of the property and casualty industry, recently polled approximately 600 brokers and general insurance agents across the country about their key challenges and education needs. These results were used to create CE OnDemand, a catalogue of one-hour, online courses designed to give brokers advanced product knowledge and more information about emerging trends.
In the survey, seven out of 10 broker respondents said their key challenge is “staying current with product knowledge.” Almost 65% of polled brokers reported another key challenge is to ensure that “customers understand their risks and the coverages available to them.”
Brokers are seeking highly relevant knowledge in two key areas, says Lisa Boniface, vice president of programs at the Insurance Institute of Canada.
“One is emerging trends in the field,” Boniface says. “The other is product knowledge. We are trying to be nimble in creating new online CE courses, such as CE OnDemand, that delve into the trending topics. Also, when insurers introduce new products, we are able to integrate this into our (online) course content.”
What are the trending topics for brokers?
Cyber risk, errors and omissions, business interruption, directors and officers (private and public), overland flooding, driverless cars and Uber (sharing economy) are the Top 7 topics of interest for brokers, based on the survey results.
What, specifically, do brokers want to know about these topics? Answers to this question vary across individual brokers/brokerages and their particular circumstances.
But, clearly, brokers benefit from CE in at least three general ways: it helps brokers understand new products and coverage options; it makes brokers aware of any potential coverage issues and it helps brokers communicate to their clients.
After the Calgary flooding in 2013, one of the largest claims events to date in Canadian history, insurance companies responded by introducing overland flood insurance in Canada. Coverages are unique to each insurer, creating a need for brokers to advise their clients about their options.
“We have been inundated with overland water material, information and wordings over the last year,” says broker Lorna Geldart of Birkett-Hassard Insurance Brokers Ltd.
“There is no common language for flood. They all call them different things. You’ve got ‘overland water,’ you’ve got ‘enhanced water damage package’ and you’ve got ‘groundwater’ – they are all different,” Geldart reports.
Continuing education helps brokers to keep track of the various new flood products and what they offer. And it is not just education for brokers.
“Our job in insurance is really about educating our clients,” emphasizes Toronto broker Brad Neal, a member of the Greater Toronto Area chapter of the Insurance Institute of Ontario.
Potential coverage gaps are coming to the fore as a result of sharing economies like Uber and Airbnb. For example, Uber’s online, ride-sharing platform is raising a number of coverage questions for brokers, suggests Philomena Comerford, president and chief executive officer of Baird MacGregor Insurance Brokers LP.
Uber now has an insurance policy in Canada that covers its drivers for rides offered through Uber’s online platform. But the drivers in question are still required to carry their own personal auto insurance policies to cover any claims unrelated to Uber rides, and Uber drivers are also required to inform their personal auto insurers if driving for the company.
“If you want to narrow it down to what would be real present concerns for brokers, it would be whether or not the personal auto insurer would be agreeable to allowing the use of the vehicle for the purpose of accepting rides for compensation under the Uber platform,” says Comerford.
“Whether or not there are any coverage gaps is another concern,” she comments. “Uber X drivers will only be able to access basic accident benefits under the master Uber policy. There is no mechanism for providing enhanced accident benefits under the master Uber policy,” she explains.
Lease agreements are another issue. For instance, there have been reports of Uber drivers renting cars and then carrying passengers for hire using their rental vehicles. The coverage of a claim involving the rental car of an Uber driver is not clear.
Continuing education helps brokers identify and understand these kinds of emerging issues and potential coverage gaps that may exist.
EXPLAINING TO CLIENTS
Cyber risk is an example of how brokers are looking for ways to explain new insurance solutions to clients.
“Even though cyber claims are prevalent in the paper and on the radio, I think a lot of customers still have some hesitation or lack of knowledge as to how it’s going to directly affect their business,” suggests Paul Martin, president and chief operating officer of RRJ Insurance Brokers Inc.
“I’m just not sure we have enough examples where we can go into small and mid-sized businesses and say, ‘This happened to a store just like yours. You have all these credit cards and information. Someone shut you down. Can you still do business?'”
Serge Solski of AdviseAware Risk Consulting has worked with many brokers on the issue of cyber risk. Solski, who acted as a subject matter expert for the CE OnDemand cyber course, says brokers need to keep several things in mind when talking to clients about cyber risk.
“Brokers need to figure out who is the best person to have the conversation with,” Solski points out.
“Many times business leaders have a preconceived notion as to what cyber risk is. They may say to a broker, ‘I think that’s a great idea, but I want an IT person to validate that.’ Brokers need to nip that in the bud and bring it back to the business leader, who truly understands the broader business risk of a cyber attack,” he recommends.
Brokers also need to advise their clients on risk mitigation, rather than simply trying to transfer cyber risks through insurance. “It’s not all about coverage,” Solski says.
“Your client cannot effectively manage their cyber risk with coverage alone. There’s just not enough they can buy to cover all of the potential losses they might suffer from a successful cyber attack,” he explains.
Brokers are inundated with new product information. They need to understand new insurance solutions and how they might affect their clients. Brokers also need to synthesize all this information so that they can make it easy for their clients to understand what they are purchasing.
All of this information was used in developing the new CE OnDemand catalogue. Each an hour long, the courses are designed to provide busy brokers with the information they need quickly so that they can best serve their clients in a timely and well-informed manner. In addition, the courses take an applied approach to learning, based on the needs of brokers.
“The education of my staff is core and essential,” says Mike Hordichuk, vice president of commercial insurance at Harvard Western.
“But are there more creative ways to invest in them? Am I going to pay two people mileage, plus a day of work, when they can take a one-hour, online CE course and get the same thing out of it?” Hordichuk asks.
The courses “use either real-life or scenario-based examples to illustrate the challenges or the types of conversations that brokers may be having with their clients,” Boniface points out.
“Brokers are looking for concrete examples to help explain the value and types of coverage to clients in a sales situation. Having an in-depth knowledge of different claims scenarios is a real asset in creating a strong value proposition for the coverage,” she continues.
-Peter Hohman, President and Chief Executive Officer, Insurance Institute of Canada