Communicating the value of brokers

The Bank Act review is dominating the roster of hot issues on Beth Pearson’s agenda for her tenure as president of the Insurance Brokers Association of Ontario (IBAO). “Right now the hot topic for the agenda of 2005-06 is the Bank Act review and mobilizing our members to get out and visit their local MPs and to get the message across about why it is not good for consumers,” she says.

Currently the act says that although lenders can buy smaller insurance companies, Canadian banks cannot solicit insurance customers in bank branches. Anticipating Ottawa’s upcoming review of the Bank Act, the Canadian Bankers Association (CBA) has begun lobbying the government of Canada to ease restrictions against banks selling insurance so that banks can compete better with insurers.

However, Pearson explains that allowing banks to sell insurance in their branches could potentially devastate independent brokers in Ontario, because the size and networking ability of banks gives them too much advantage over small brokerages.

Pearson observes that over the long term, competition with banks would result not only in a decrease of broker jobs but also a freeze on competition. For example, while brokers offer consumers choice, insight and personal service, banks boasting a majority of the “insurance pie” would offer fewer policy options. Pearson says the concern is that with banks on board, brokers may be forced to abandon ship and therefore fewer products, policies and companies would be represented in the overall market.

In order to douse the flames of the Bank Act blaze, Pearson says IBAO members must take the lead and show the value of being politically active all the time. “I was probably one of the least political people but my role at IBAO allowed me to see the value of being in touch – of communicating,” Pearson says. “Brokers need to get involved and not just wait until there’s an issue like the Bank Act.”

Pearson says in order to retain their livelihood, brokers must react to the Bank Act review by visiting their local MPs and MPPs and implementing lobby initiatives within their communities. In the future, she adds, brokers and the IBAO at large should be proactive and not wait until an issue arises to get involved. In the meantime, however, the plan is to roll out lobbying initiatives, which the IBAO is supporting in part through its recently released “Grassroots Advocacy Kit.”

GRASSROOTS ADVOCACY KIT

Pearson says the IBAO’s grassroots kit was developed to aid members in their lobbying. It does so by providing discussion points brokers can use in their communications with MPs and thus ensure political understanding and support of the brokers’ plight. The grassroots advocacy method focuses on four key messages.

The first message relates to competition. “If the banks are allowed to sell insurance through their branch network,” Pearson explains, “healthy competition will be destroyed and that’s wrong. If you allow banks to sell insurance through their branch network, it will eventually reduce the competition altogether by weeding brokers out.”

The second message brokers are asked to put on the table is the fact that consumers will see no additional benefits from buying their insurance through a bank branch. “The consumer wouldn’t see any difference in service,” Pearson elaborates. “In fact, they might possibly find themselves with restricted choices and there wouldn’t be a change in price. Products can’t be free there has to be a premium in place.”

Third on the roster is the reduction of jobs for Ontario’s independent brokers. Pearson foresees that if banks are authorized to sell insurance through their branch network, then brokers – unable to compete with the size and networking capabilities of megalithic banks – will begin to dwindle and the community itself will be hurt. “In Ontario alone, there’s over 1,500 licensed brokers and that number will begin to reduce dramatically if they have to compete with bank-based insurance sales,” she explains.

The final point is foremost of importance, Pearson says. That is, “now is not the time to discuss allowing banks to sell insurance through their network.” IBAO advocacy supports the original intention of the 2001 Bank Act, which aims at making the Canadian banking sector more competitive. Despite this goal, Pearson observes that the six chartered banks still hold virtually the same market share as four years ago. If banks are awarded the legal right to sell insurance through their branches before their market dominance is curtailed, competitive imbalance will only be exacerbated. “We believe these reforms (2001 legislation) need to take time to work before major changes are made,” she says.

In order to ensure that enough time is allotted for real results to be seen, IBAO members must become proactive in their lobbying through enhanced and consistent communication with their MPs, the media and their consumers. This will work to enhance broker identity and consumer confidence, increase awareness and apathy on the political playing field and curtail competitive injustice, she says.

COMMUNICATION IS KEY

If Pearson has her way, the IBAO is poised to benefit from enhanced communication initiatives. “My main focus, and where I want to take IBAO this year, is building on the communication aspect,” she says. “Communication is vital and it’s not just about talking, it’s about listening.” Although the IBAO is doing a great job communicating its concerns, efforts and ethics, she says there is always room to do better.

One area that she would like to “make better” is IBAO’s communication in the political arena. Pearson says the key to promoting this agenda is getting members out and involved with their communities, MPs and MPPs.

Building the broker image is also a positive result of communication. IBAO has built a branding kit to help improve the image of the broker. The grassroots program, Pearson portends, will provide additional enrichment of the broker image because it forces members to mingle with their community.

“Our members should be communicating to preserve their livelihood,” she says. “We have to prove how valuable the broker is and explain that it is the broker that is the most valuable piece of the insurance pie…

“We do what is best for the consumer. This is what we believe in and we must keep that in the forefront of consumer eyes and political agendas.”

PROMOTING DISCLOSURE

Brokers have been hard-pressed to overcome a negative image of their profession being dangled before the eyes of consumers and politicians. However, Pearson says Ontario brokers have and are continuing to clean up their public image by facilitating complete disclosure.

“As far as disclosure goes, in terms of new business we are letting our customers know our commission ranges that we are getting paid and the markets that we represent – and we do that on all new business, personal lines and policies on renewal,” Pearson says. “We encourage our members to tell their customers their rights and ensure that the consumer understands what they are entitled to and what their obligations are.”

Communicating with consumers is key to the success of Ontario brokers, according to Pearson. “It’s all about relationships, so building a strong relationship with our customers is what will take us forward as a broker community.”

The IBAO’s advertising program will help communicate the brokers’ message, Pearson says. The IBAO provides its members with copyrighted promotional pieces and marketing support tools.

One such tool is a CD that contains print ads, which individual Ontario brokerages can incorporate into their own advertising. The package also offers materials and pamphlets that are designed to enrich awareness and consumer understanding of the broker’s role and the potential value they can offer the public. In addition, because the battle isn’t over until the lady sings, the package has a musical jingle that can be used in a company-specific TV or radio ad.

BACK TO THE FUTURE

Consumers are not the only audience the IBAO is trying to bring on board. Pearson says the association’s education initiatives are aimed at perpetuation and succession of brokerages with ripe young brokers streaming into the industry. “IBAO just had a young broker retreat weekend and we were thrilled with the turnout,” she says. Approximately 40 registrants attended the weekend, which featured three sessions: law firm Cassels Brock’s directors and officers (D&O) session, the Bank of Montreal’s succession session and the Insurance Bureau of Canada’s accidents and fraud rings session.

Pearson says these intimate sessions provide valuable insight into the issues young brokers face as they enter their new industry. Currently, she says, the youth generation is intimidated by the idea of taking over the business administration and human resource reins of a brokerage.

Pearson herself has already confronted these brokerage business hurdles. She joined the family business in 1981, when she received her broker’s license. The company was built from the ground up in 1969 by her father, Art Pearson, and slowly expanded with the addition of herself and her brother. In 1998, the company became known as Pearson-Dunn. Now they operate 11 branch offices.

Pearson, both CAB and CIP designated, currently sits on the facility board and began her role as a Hamilton affiliate. From there, she moved onto the IBAO where she sat as a board member.