Trusted Advisors

Brokers need to make themselves “trusted advisors” to their clients as a way to compete with the 24/7 immediacy offered by Internet service, Toronto lawyer Ian Gold told insurance brokers attending the Insurance Brokers Association of Alberta’s annual meeting in Jasper, AB.

“I could say, ‘The Number 1 challenge you [brokers] are facing is,’ unveil a computer, and then say ‘Thank you very much’ and go home,” Gold told his audience of roughly 100 insurance brokers. “In my view, that is the biggest challenge that this industry is facing today; by that, I mean the Internet.

“Really, with all due respect, who needs you?”

Gold told his audience the Internet may be able to provide ready access to information regarding insurance quotes, but this is only a fraction of what is involved in obtaining the proper insurance coverage.

Gold said brokers can provide a level of trust with the client that a computer can’t; as a result, the broker will be able to obtain information from and coverage for a client that is substantially improved over that a client might obtain online.

But to compete with the Internet, brokers must make themselves more available to help clients, Gold said, even if that might involve bringing the broker into the claims process to advocate on behalf of a client to the insurer.

SHORT CUTS AND FALLING SHORT

As far as access to information goes, the Internet has made it possible for consumers to find insurance information without needing to work through the broker channel, Gold observed. He noted many consumers research and buy their insurance on their own computers, in the privacy of their own homes.

“There’s no lack of information out there,” said Gold, a partner at Cassels Brock in Toronto. “[Consumers] can compare rates. They can do that 24 hours a day, and at 3 o’clock in the morning they can go online and enter information.”

Gold said his feeling was that auto insurance is “the hook” for people to buy their insurance online. Once people get the hang of shopping online for their own auto insurance, homeowners insurance will be the next frontier, he predicted.

“That is concerning,” Gold added. “I think computers fall short in many respects. They may not be able to ask enough questions to provide adequate coverage.

“And they can’t answer enough potential insurance questions to determine what kind of coverage you need so you can make some informed decisions — if you want to have a discussion about deductibles, [for example], or if you want to talk about what’s an adequate limit.”

Gold said the broker’s advantage over computers is that brokers are able to develop relationships of trust with their clients. “Doing things over the computer, there is no personal relationship, there just isn’t,” Gold said. “Trust is critical in providing valuable insurance advice, and that’s why I think an insurance broker should aim to be a trusted advisor.”

Most people find insurance to be intimidating, Gold noted. The vast majority doesn’t understand it, or trust it. Computers might be handy sources of information, he said, but they don’t demonstrate the same analytical skills that good brokers bring to the table when they consider the proper insurance coverage to a client.

For example, Gold said, even educated professionals such as lawyers may not know a homeowner’s policy could potentially cover personal injuries that happen outside of the house. He cited the example of someone in a supermarket tripping over a can of peas.

Also, he noted, many consumers wouldn’t know from the media hubbub surrounding the Supreme Court of Canada’s Childs v. Desmormeaux that homeowner policies already include “social host” liability coverage. This protects people from liability for the actions of intoxicated guests who may become responsible for personal injuries or losses after the party is over.

Brokers, because they have developed a relationship of trust with their clients, may be able to provide this kind of advice to clients. Clients buying their insurance over the Internet or through a call centre, on the other hand, might not even know to inquire about such information.

Brokers, Gold noted, have to educate consumers about their value. For example, they can offer coverage specific to a client’s needs. They can also respond to the need for mid-term policy changes.

Brokers can also, where possible, “inject themselves into the claims process,” Gold observed. “I believe it is an integral part of your job that you help those people through the process and not just say ‘Here’s the phone number for the claims centre.'”

Gold said helping people through the claims process could mean something as simple and straightforward as calling up a client a week after a claim is reported and seeing if the client requires any more help from the broker.

“The other thing I would like to see brokers do more of — and it’s tough because it absolutely puts you in the middle of a conflict — is to resolve disputes between your clients and insurers,” Gold said. “I understand how you make your money. You make your money by making peace. But there are some cases where you can’t do that. And in those cases, I think you have a duty, first of all, to go down swinging on behalf of your client.”

Gold said he gets calls all the time from people who have problems with their insurance claims. He said the first piece of advice he gives them is: “Call your broker.” In many cases, he said, it’s a simple matter of providing the client more information about coverage.

GOING TO BAT

Gold said he spent a large amount of his time discouraging people from resolving their disputes with insurers through litigation. “A lot people will come to see me, and I’ll say: ‘You know what? I’d be thrilled to take your money. But I’m going to take a lot of it. And at the end of the day, I think it would be better served if you go to your insurance company…’

“I tell you, you [brokers] should be injecting yourself into the claims process at a variety of levels. I suppose the greatest danger you run is one day an insurer is going to say: ‘Hey, I heard you referred that guy to legal counsel.’ You know what? I think it’s a risk you should take. I think it’s a risk I think you owe to your policyholders.”

Gold, who has acted both for and against insurers, said lawyers do have cost-effective means at their disposal to settle disputes. And brokers needn’t worry that litigators will simply take the side of the client against the insurer or otherwise make the conflict worse. “We can provide the legal picture [to the client],” he said. “We could say: ‘You know what? The insurer is right. Call it a day and move on.'”

Of course, lawyers can aid brokers with the benefit of their advice as well. If brokers want to be “trusted advisors,” for example, their advice to clients must be sound and completely transparent, noted Gold’s colleague, Tom Donnelly, also a partner at Cassels Brock.

Donnelly’s presentation featured some tips to help brokers avoid insurance claims involving misrepresentation. He noted that in 1990 the Supreme Court of Canada, in Fletcher v. Manitoba Public Insurance, acknowledged the broker’s role as an “expert” on insurance. “Place quote from SCC here.”

But along with the status of an “expert” or “trusted advisor” comes the requirement to be careful about what is – or is not – recommended to clients. Brokers should definitely take good notes whenever they provide advice to clients on insurance terms, limits, policies and coverage, Donnelly pointed out.

Gold recalled defending an insurance agent in a case involving a man who had been severely injured in a motorcycle accident. The motorcyclist’s insurance had lapsed and he accused the insurance agent of misrepresenting the state of his coverage.

As Gold describes it, the insurance agent was calling various clients to see if they would be interested in purchasing a value-added life insurance pro
duct in addition to their property and casualty insurance. Each time she made a call to a client, she would look at the screen to check the file of the insured.

The agent said she recalled talking to the person who was later injured in the motorcycle accident. She remembered mentioning to the client at the time: “Oh by the way, your premiums are overdue, and you have to bring them in the next five days or else it’s going to lapse.”

“Great practice, an absolutely fantastic practice,” Gold said of the agent’s diligence in pointing out to the client the potential lapse in coverage. “But does she have a note of it? Absolutely not one. How long would it have taken her? Five seconds. We didn’t end up paying for that claim, but it took me a real long time to convince the other side that we had done the right thing. The point is if you keep notes, you’ll spare yourself a lot of grief.”