Brokers Unite

Maintaining client-conscious brokers is one way for Canadian brokers to side-step taxing issues hitting the insurance market, such as the impending bank act review or the disclosure concerns resulting from the Spitzer trials, according to incoming president of the Insurance Brokers Association of Canada Robert (Bob) Kimball.

“Canadian brokers keep the clients interests primary and we generally don’t allow any conflicts of interest to cloud our advice,” Kimball says. “What’s best for the client always works itself out to also be best for the brokerage. This is one of the reasons why brokers in Canada sell the majority of the country’s insurance.”

Behind every good broker is a base of good business practices – including consumer choice, professional knowledge and placing the client first. Kimball, president of Pearson Insurance maintains that unlike primary companies, a broker looks to find a policy that provides the best answer for the consumer, not themselves. This tenet may however soon be deemed invalid if bankers are awarded the ability to use and “abuse” consumer information to sell insurance. So how do independent brokers battle the banker bulge?

Political action and public affairs. In other words, lobbying.

“Most people actually see IBAC as a lobbying group,” Kimball explains. “While we certainly do and will continue to do that, there’s much more that IBAC does for our member associations and in turn the individual brokers all across Canada.”

ILLUSTRIOUS LOBBYING

Lobbying, in Kimball’s view, is one of the most important functions IBAC offers brokers; it is one area he portends to “perfect” during his presidency. “I want to make sure that our lobbying task force is fully utilized,” he says. “The only way that we can effectively lobby is through individual brokers approaching their individual MPs.”

Brokers are not just Bay Street. They are also, even more so, small town Main Street. “Over the past year, it’s been said that IBAC and brokers in particular have had the most influential lobbying group on the hill,” Kimball says. “We want to make sure that we continue that and get the brokers out there and remain visible.”

Recruiting brokers to assist should not be difficult, as IBAC has every area in Canada covered through its member associations.

IBAC’s mandate is to look at national issues. One of the major concerns Kimball forsees will demand the most attention throughout his presidency is the bank review act. “The giant power and control banks have will affect brokers right across Canada,” he says.

THE BIG BANK BATTLE

Grassroots lobbying is the main strategy Kimball plans to implement in IBAC’s battle against the bank act review. However, he reiterates that IBAC is only part of the answer; the voice of individual brokers must be heard to get the message across.

“We’ve got small and large brokers that are often in smaller communities working with the customers, for the customers benefit,” Kimball says. “But if the banks get their way and are able to control insurance, the best interest of the clients will become compromised.”

Kimball is concerned that if the banks’ request is fulfilled, brokers may begin to dwindle. He does not view banks as direct rivals. In order to be a competitor, the playing field must be level, he says. But if the impending review ignores brokers concerns, the banks may soon have more than a minute edge. “If the banks are given the ability to use their clients information and send it directly onto their insurance arms, it could be disastrous for the broker force.”

Through the bank act review, Canadian banks have requested the legal right to provide inter-company insurance arms with client information, which can be utilized to capture clients and thus cut out the middleman – the broker who builds relationships rather than passes them off to the next level in a transaction tower.

“Royal Bank is even asking to seize clients directly by setting up insurance arms right alongside their branches,” Kimball states. “The other banks are being a little more coy by suggesting they just want to pass along information.”

In response to the competition that bankers pose to brokers, IBAC has set up and is in the midst of finalizing a task force that has a representative in each provincial association.

While the task force is operational, Kimball says it is still too early to discuss the specific tactics they plan to use against the banks call. “Suffice it to say we have hired a number of people to assist us with this.”

SURROUNDING SPITZER

Tremendous time and effort has also been allocated to issues arising from the stigmatic Spitzer trials, which IBAC first began to address in October 2004.

“The Spitzer report is an issue that all the brokers associations have been dealing with and it’s taken a tremendous amount of effort and time out of IBAC nationally and provincially,” Kimball says.

Through its efforts, the association drafted the Canadian Council of Insurance Regulators’ (CCIR) Report, which created further inquiries on market conduct and disclosure of which the responses required an equally tremendous investment of time.

“The response phase has kept everyone with IBAC busy but as a result we’ve presented 11 or 12 regional association responses.”

Kimball says that some of the general opinions to the CCIR indicates that whatever precipitated the bid rigging problems and such in the States has not developed in Canada. For Kimball and IBAC in general, this means that a lot of the issues arising from the Spitzer report can be simply acknowledged and put to bed.

Further discussions are likely to arise, but Kimball is not concerned. He is confident Canadian brokers are far removed from the situation in the States and, equally important, that Canadian consumers are equally displaced from broker backlash surrounding Spitzer.

“The Spitzer response doesn’t seem to be consumer driven,” he explains. “The Ontario board did a study and found that out of millions, only about 200 clients had any questions resulting from Spitzer and those questions weren’t even regarding disclosure or conflict of interest.”

In order for independent brokers to develop and maintain business practices that “properly” respond to disclosure and market conduct recommendations, IBAC agreed a stronger communications department was necessary. Therefore, 2005 marks the first year a communications manager has been part of the IBAC team. One project the communications manager introduced is a recurring newsletter explaining the activities at IBAC.

“We’ve had our first ‘IBAC At Work’ article that’s developed to attempt to keep the community communications open,” Kimball says.

Another successful program Kimball says is guaranteed to continue not only at the IBAC, but to branch out further, is the Brokers Identity Program (BIP).

A “BIP” ON BROKERS RADAR

“Our Broker Identity program continues to have great success,” Kimball says. “The program is doing well in the public domain because it really makes them aware of what we do for them.”

BIP was originally set up to make IBAC and brokers in general, recognizable primarily to politicians and secondarily to consumers. However, the program has created an impressive consumer awareness. Kimball says at IBAC they are continually trying to quantify what the BIP symbol means to clients so that they will be able to make BIP work even better.

“It (BIP)’s not something that’s best steered from the top down,” Kimball says. “We work in very close ties with our trusted advisors in the advertising end.”

This year is a production year for BIP, which means Kimball will be concentrating on reassessing the program’s brand messaging and subsequently developing new commercials and other advertising mediums for this year and next year’s launch.

BIP is not the sole recipient of IBACs devoted attention: the Centre for Study of Insurance Operations’ (C SIO) portal, although fully rolled out in Ontario, continues to be refined and worked on.

“It (CSIO)’s working great in this region (Ontario) and we’re looking forward to bringing it further afield,” Kimball says.

HARD LESSON LEARNT

One lesson Kimball hopes the insurance industry has learnt is a result of “Hard Market 101.” The hard market was beneficial, as it brought brokers much closer to the clients that remained. As a result of these strong relations brokers developed and hopefully maintained during the soft market, brokers should be able to convince their clients that “it’s in their best interest to have a long term policy and avoid fluctuating pricing changes as they will be best served by having a good long term relationship with the carrier and your broker.”

Kimball says the insurance market has to look at softening in general and learn from previous mistakes, thus ensuring reasonable and fair pricing that’s going to be good for the company and the consumer while maintaining a stable market.

A FAMILY AFFAIR

Kimball belongs to a family of insurance aficionados. His father started a managing general agency over 40 years ago. Fresh out of high-school in ’76, Kimball had intentions to jump right into the insurance industry. But because insurance in New Brunswick at that time was troubled, his father advised him to go to university.

In the Spring of ’81, Kimball graduated with a degree in geology, in ’82, he ran right back into the arms of his insurance heritage. In ’88 and ’89, he further developed his professional standing by acquiring three insurance degrees – CIP, CCIB and CAIB.

The brokerage Kimball joined in ’83 and over which he now presides, Sussex, NB-based Pearson Insurance, was started up in 1935 and purchased by the Kimball family in December of ’81.

“I’ve worked my way up through the company,” Kimball says. “When I first started here you got to deal with all the clients so, 23 years later I know most of the people in town.”

The office is small and quaint with a staff of six, including Kimball’s own wife. It exudes the business ethic he believes inherently exists within a good brokerage – professional yet open, accessible, consumer friendly and all about building relationships.

Leading up to his role as incoming president of IBAC, Kimball served as president of his local New Brunswick association in 2000. He initiated this tenure by “asking a lot of questions of the executive director in New Brunswick, so many so that they asked me to join their board.”

“I did that and enjoyed helping the brokers, getting more knowledge, more contacts,” Kimball reflects. “I enjoyed the challenges and so I decided I wanted to move my name forth and move up IBAC’s ladder.”