The Smell of Victory

These days, you might hear Ontario brokers saying they love the smell of regulation in the morning. It smells like…Victory.

The Insurance Brokers Association of Ontario (IBAO)’s 86th convention in Niagara Falls did not manifest any signs of smug self-assurance. Still, brokers there were exhibiting signs of acknowledging that political fortunes seem to be smiling on them – for the time being, at least.

The icing on the cake, of course, was hearing Prime Minister Stephen Harper speak to more than 2,000 conference attendees, reaffirming his campaign commitment to prevent banks from retailing insurance products in their local bank branches.

In fact, reporters had to flip pages to the back of Harper’s prepared text to find out whether he would even mention the subject of Bank Act review at all. When he finally broached the topic, he summed up his approach in fewer than three sentences: “We made a commitment, and we stuck to it. It’s as simple as that.”

Somewhat to Harper’s surprise, those two sentences preceded a standing ovation from brokers and insurers alike. The words themselves may have been plain, matter-of-fact and hardly poetic, but “that’s what brokers needed to hear,” as one delegate said after the speech.

The words represented a significant victory for brokers in the Bank Act review. But that was only the tip of the iceberg. During the CEO panel, more than two panelists suggested this might be a nascent Golden Age for brokers right now, as far as political lobbying in Ontario is concerned.

Parallel to what the feds did in the Bank Act review, in a recent review of its provincial credit union legislation, Ontario rejected the notion of credit unions retailing insurance products from their local branches .

For Ontario brokers, significant gains in the Bank Act and credit union issues would have been enough cause for celebration, cork-popping and other general forms of merriment. But the news got even better just days before the Niagara Falls convention: FSCO announced it was making changes to Bill 18, which deals with third-party liability in commercial auto leasing or rental arrangements. Ontario brokers had been calling on the government to close potential gaps in coverage arising out of legislation that did three things:

* Capped vicarious liability for leasing/rental companies at Cdn$1 million.

* Made commercial vehicle renters (and not just owners) vicariously liable for driver negligence.

* Changed the order in which the liability policies will respond to a claim for bodily injury or death.

Under Bill 18, as originally drafted, it was unclear who was providing insurance coverage to a vehicle renter/lessor if he or she had loaned his or her keys to another driver (a third party), and that third-party driver had smashed the car or been engaged in some other catastrophic event.

Brokers worried that they could be subject to errors and omissions claims for saying the renter/lessor was covered when in actual fact they weren’t. The back-and-forth with the province went on for some time, but just before the conference, FSCO posted an item online that acknowledged brokers’ concerns had been heard.

“Changes to these forms have been developed in consultation with stakeholders, including the Insurance Bureau of Canada, the Insurance Brokers Association of Ontario and rental and leasing groups,” FSCO announced. “Changes have been made to the OAP 1 to clarify that there is coverage for liability for an insured person (i.e., a person who has their own automobile insurance policy) in situations where the person rents or leases an automobile and is vicariously liable for the negligence of another person who drives the automobile.”

During the Bank Act review, IBAC CEO Dan Danyluk denied brokers had any special lobbying savvy, but after the recent spate of political victories, you can forgive his skeptics. Still, Danyluk’s caution against complacency is well-taken: political success is accomplished by dint of hard work. Politics, like insurance generally, is a relationship business and therefore “success” is mercurial. If brokers start to read and believe their own press clippings, if they start thinking they have the Midas Touch when it comes to politics, then all of this could very quickly come crashing down around their heads.

Being vigilant is no doubt draining and takes time. But it’s necessary to consolidate the gains that were enunciated and justifiably celebrated in Niagara Falls.