School of Hard Knocks

No one can accuse Danny Craig, the down-to-earth incoming president of the Insurance Brokers Association of Canada (IBAC), of getting into insurance the easy way. In fact, his entry into the profession through the School of Hard Knocks touches in a very fundamental way on several of the main issues he sees facing Canada’s brokers today — education, succession, perpetuation and technology.

The subject of Craig’s favourite song never came up in a phone interview with the Walkerton, Ontario broker. But looking at Craig’s professional background, one might suggest Frank Sinatra’s famous ditty ‘My Way’ is an appropriate theme song for his appearance on the broker scene.

After leaving university, Craig started work in the forestry division of Ontario Hydro, but a serious chainsaw accident severed most of his right arm. Doctors were able to reconstruct the arm and put it back together, but the operation left him unable to climb — a prerequisite for his former place of employment. Craig therefore started seeking other career opportunities.

Craig recalled seeing a Toronto man marry into a Walkerton family and start working for his wife’s father in a local brokerage business. That got Craig thinking about working in the insurance field. “I went to one of the local brokers and asked if he would give me a job,” Craig remembers. “I told him I was interested in sales. At that time, he told me there wasn’t enough room for another broker in town. I said, ‘Fine, I’ll start my own [brokerage].'”

Craig home-schooled himself, obtained a license, and established a brokerage in October 1977 with sponsorship from Farm Mutual and Commercial Union. Thirty years later, his brokerage now has six offices with 38 employees.

Craig’s current success is a far cry from that first day at work, when Craig said he confronted the difference between mere ‘book smarts’ and knowledge gained through practical experience. “Knowing now what I didn’t know then, I would never, ever have done this [again],” he observes with a laugh. “It was quite a learning process. But doing it like that taught me a tremendous lesson.”

What was that lesson?

As is his style, Craig draws on personal experience to make his point. “When I opened the office, I had studied and studied at home, and I knew every inch of the Commercial Union manuals on giving an auto quote or a homeowner’s quote,” he says. “And so I had my little desk and my typewriter, and I sat there for the first couple of days waiting for somebody to come in. Finally, this gentleman came in and I was anxious, nervous, because it was my first sale. He wanted a quote on snowmobile insurance. And I said to myself, ‘Oh my God, what’s snowmobile insurance?’

“So I am fumbling through this manual trying to figure it out. I finally fumbled long enough that he walked out. Ten years later, that man became a client of mine.

“I learned something that day about education. I was going to learn everything that I was possibly going to learn about the business, and never be put in that position again where I didn’t know or understand a product.”

Young brokers today could not do what Craig did, given the evolution of the graduated licensing system — and that’s a good thing, Craig notes. He reiterates his full support of the nation-wide CAIB education program for brokers. He said he encourages his staff to take the program, making education an essential part of their work at his firm.

All brokers must educate themselves to keep up with the latest changes in insurance products and technology, he notes.

Technology is particularly important, Craig observed. “It was a big disappointment to me,” he says, to see the CSIO Portal technology project abandoned in December 2005. The Cdn$12-million tech project was intended to allow brokers single-entry Web-based access to multiple carriers for the purpose of expediting quotations to customers.

Craig says technology has improved to the point where uploads and downloads between brokers and single carriers has improved immeasurably, considering brokers only started to use faxes about 14 years ago. But he believes universal access to multiple carriers is still what’s needed to defend and increase the market share of independent brokers.

“We’re developing portal technology right now and it’s quite good,” he says. “The upload/download capability that we’re doing with some companies [has resulted in] really, really good work flows when you’re helping the customer. But the problem is that if you’re [dealing with] six different securities of six different companies, it’s still cumbersome. We have to do that to provide the kind of service we need [to provide to customers]”

Craig says if brokers don’t keep up with the latest advances in technology, that part of the distribution channel could start to disappear rapidly. The same warning applies if the succession and perpetuation issue is ignored, he says.

Craig, 57, says he and his “buddies” are in a generation that will soon be looking to retire and sell off their brokerages. Naturally, they would rather sell to a younger generation of brokers than to non-brokers. This begs the question of whether or not the younger generation is ready and/or financially able to receive the mantle from their predecessors.

“If my figures are right, the average age of principals is about 57 to 58 years of age,” Craig said, adding the caveat that his figures may include only Ontario statistics. “There’s going to be a big transition in the next five to 10 years of younger people coming into the business, and I think we have to help prepare brokers for that change.

“How do we go about this transition, if not through family? Is it selling to larger corporations? Is it selling to employees? What are our options? We can do a tremendous service right across this country by trying to educate brokers and teach them about the selling of business and about valuations and financing.”

Craig said he’s talked to some people in the younger generation who say they can’t afford to buy brokerages at the multiples being thrown around today. IBAC, he said, is helping by educating them about their options. In particular, he noted a forum IBAC recently developed in which young brokers who successfully acquired brokerages came to talk to their peers about the art of the possible. “In one meeting, we brought in brokers across Canada — smaller brokers that have been very successful in buying other brokerages and expanding their business in the rural communities. We had brainstorming sessions with them in order to tell us why you’re successful at what you do and how you’ve done it.”

The intent is to use the ideas generated in these kinds of sessions to develop a nation-wide plan that can be of benefit to brokers across the country.

Craig is clearly a practical man. At the end of the interview, he jokes about how he is looking forward to parking his “new” 2001 Chevy S-10 truck next to the Lexuses and Beamers generally parked at the posh Royal York Hotel in Toronto, the occasional home to industry gala events. When he is told his joke is representative of the “little guy” born in Walkerton, Ontario making it big, Craig laughs and recalls yet another lesson learned from his past experience.

Craig remembers when an e-coli bacteria found its way into the town’s water supply in May 2005, killing seven people and making 2,300 others ill. He described the town at the time as a “war zone,” in which every street was dug up — every lawn, every pipe, everything had to be replaced. He said there were miles of pavement and lawns dug up, with eight-foot-deep holes and piles of dirt.

“The year I was president of the IBAO [Insurance Brokers Association of Ontario] was in 2001, and that was the time of the Walkerton water crisis,” he recalls. “So my introduction everywhere I traveled was: ‘My only claim to fame before being president of the IBAO was that I was the broker of record on the largest municipal liability claim in history.'”

But while those were tryin g times for everyone involved, it was also a time Craig said he was proud to be a broker. He remembered IBAC representative Ken Orr presenting a cheque at that time to the Walkerton mayor for Cdn$70,000, gathered from individual brokers across the country. He said it was a selfless act that didn’t garner much publicity at the time. But, Craig, said, getting hard on himself for using “pie in the sky” terms, it demonstrated the spirit that keeps him going as a broker, which is to help people in times of need.