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THE ONTARIO BROKER
THE OFFICIAL PUBLICATION OF THE INSURANCE BROKERS ASSOCIATION OF ONTARIO (IBAO) JUNE 2013
Upcoming Licensing Program
ill w ng en
PRemier message 02 President’s MessAGE 08 a q&a with premier 04 OLIP Update kathleen wynne 06 CEO Corner 10 queen’s park 07 succession strategies awareness day
12 Legal Briefs 13 Viewpoint 14 Community View
PRESIDENT’s Message The Official Publication of the Insurance Brokers Association of Ontario (IBAO) Published by
Editor Angela Stelmakowich email@example.com 416-510-6793 Senior Publisher Steve Wilson firstname.lastname@example.org 416-510-6800 Associate Publisher Paul Aquino email@example.com Account Manager Michael Wells firstname.lastname@example.org Account Manager Christine Giovis email@example.com Account Manager Elliot Ford firstname.lastname@example.org Art Direction Sue Williamson The Ontario Broker is published monthly by Canadian Underwriter magazine (www.canadianunderwriter.ca). Canadian Underwriter’s Insurance Group of publications is part of Business Information Group (www.businessinformationgroup.ca), a subsidiary of Glacier Media Inc., a leading Canadian information company with interests in daily and community newspapers and business-to-business information services. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. The articles that appear in this publication represent the opinions of the authors and do not represent or embody any official position of, or statement by, IBAO; nor do they attempt to set forth definitive action standards or to provide legal advice.
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The Ontario Broker / June 2013
Debbie Thompson, CAIB, CRM President IBAO When I think about how strong our distribution channel is with our association, more than 12,350 members strong, it gives me a sense of pride. We have some of the brightest minds in our industry serving as the trusted choice for the consumer when it comes to the right representation for insurance products and services — and just as important — being an advocate for our customers. Advocacy is described as a political process by an individual or group that aims to influence public policy. As the main distribution channel in our industry, our advocacy efforts take this one step further. As representatives, we believe there are a series of actions that should be taken and issues highlighted to transform “what is” into “what should be.” It is this strength that we bring whenever we deliver our message to Queen’s Park and meet with MPPs, as we did in April of this year.
OUR MESSAGE Our messaging is always clear, and always has the consumer’s interest in mind. That is the way it is and the way it should be. It is the consumer that we represent and on the behalf of whom we advocate. Whatever our message — whether relating to auto insurance, the anti-fraud task force, banning the use of credit scoring from personal property insurance or tackling the issue of credit unions misuse of online advertising and promotion of insurance products on their websites — our focus is the consumer and “what should be.” Over the years, our association has proved an important voice both within the insurance industry and to government regarding a number of policy-related issues that affect our customers and member brokers. We are seen at Queen’s Park as highly trained professionals with very strong community ties, a combination that has gained IBAO the respect of each of the political parties represented at Queens Park and in Ottawa. Whether we are speaking with an MPP on a provincial issue or an MP on a federal one, elected officials take the time to listen to our concerns and to fully understand the issues that we bring. The political process is one that could be described as interesting, sometimes frustrating, but always time-consuming. Being a member of parliament comes at a cost and I applaud those who have chosen to serve in this capacity.
The time commitment and demands when the house is sitting goes beyond what I imagined before becoming involved with our grassroots efforts on behalf of IBAO. OUR PRIDE Our strength and advocacy is also shown in so many other areas — and one that gives me additional pride is our sponsorship of the Ontario Legislative Internship Programme (OLIP). The OLIP program provides IBAO an opportunity to increase our brand recognition, create an image of what an insurance broker does and, as one intern astutely wrote in her Intern Paper on Sponsorship, offers an opportunity to display our social conscience. For our association, it is not just about paying our sponsorship fee; we want to make sure we are engaged with the individuals who are taking part in this opportunity. We want to ensure that our future leaders know that we value and support their learning experience and that we, as an association, are non-partisan. The interns themselves are some of the brightest individuals I have had an opportunity to meet and during their tenure in the program, they play a vital role in keeping the political process moving forward. The program itself is designed to provide backbench MPPs with highly qualified assistants. Beyond providing practical experience with the daily workings of the Ontario legislature, OLIP
We’re building more than a team; we’re building the future for Canadian Surety
gives interns a chance to Ottawa. Our approach is CEO’s Schedule: President’s Schedule: supplement their university simple, speak to the issue at training through regular hand, do what we can to June 1-3 June 4 academic discussions and make sure our elected repIBAC Meetings, Ottawa IBAC Hill Day, Ottawa business is important by writing an Your academic resentatives are informedto us. That’s why we have put together June 4 June 5-7 paper on a topic of their and knowledgeable as it a team of surety specialists who are focused onConference, Niagara Falls IBAC Hill Day, Ottawa YBC choice. relates to our issues, offer collaborative solutions, innovation and Juneproduct 5-7 June 12-13 There are, of course, assistance and thank them YBC Conference, Niagara Falls Territory 2 Conference many reasons why we sponfor what they do. building onI encourage a solidevery foundation of 140 years of experience to & Regional Meeting sor this program, although one June 11 help compete grow your business.June 18 the main one is to give back of you toyou drop by the office and Red Trillium Fundraiser — to thank our MPPs for of your local MP or MPP Road Safety Achievement June 12 their support, and to help over the summer and let Awards Dinner LIBA Luncheon eight to 10 interns, each and them know that if they June 20 every year, supplement their have constituents who call June 18 Executive Meeting university training through in with insurance-related Justin Trudeau Fundraiser a highly competitive process issues that you are available June 21 June 20 that makes the overall to help, and are only a Board Meeting Executive Meeting investment worthwhile. phone call away. It will go June 23-25 June 21 Each year, we take the a long way toward building Commercial Insurance Symposium June Board Meeting time to meet with both our our strength. MPPs and MPs either in Leading the Way… June 26 Deakin AlexBrand, Campbell Group PlansSean their ridings, at David Queen’sSmith Our Vision, Our Meeting Senior VP and VP Regional National VP, Park or on the Hill in Our Strength Head of Surety Underwriting General Manager, Canadian Surety British Columbia ANNOUNCEMENT
Paul Hollingworth VP Contract Surety, Ontario and Atlantic Region
Richard Pouliot, BAA,CPA-CA, National Vice President, Operations & Distribution Management, The Guarantee Company of North America (The Guarantee) is pleased to announce the appointment of Dean Bast as Vice President National Distribution Management and VP Regional General Manager, Ontario/Atlantic region effective April 1, 2013. This appointment is another example of the Company’s commitment to maintaining and enhancing its market leadership in the Canadian Insurance and Surety.
Bob Gallimore VP Regional General Manager, Prairie Provinces
Dean began his career in 1980 as an Insurance Broker in Ontario, holding positions of increasing responsibility while gaining experience in brokerages, insurance Francois Forget Dick Longland Dan Fletcher Advisory Organization. In 2001, he joined The Guarantee VPcompanies Surety, and the InsurersNational VP, Surety Manager, as Manager Distribution Systems and most recently held the position of VP Quebec Commercial and Halifax Branch Marketing/Business Development and National Vice President, Guarantee GOLD. Developer Surety Moving into his new role, Dean is now focused on our national broker relations strategy, the coordination of our various growth initiatives, and will continue to strengthen The Guarantee’s brand in Ontario and the Atlantic region. The Guarantee Company of North America is a leader in specialty insurance within
The Guarantee of North America is aAmerican leader in specialty insurance withinknowledge the Northand American Dean Company Bast the North marketplace. We offer in-depth expertise in niche Vice President National marketplace. We offer in-depth knowledge and including expertisetheinconstruction niche segments construction segments, industry,including corporatethe programs and customized Distribution Management and industry, corporate personal insurance. personal insurance. For more information visit theguarantee.com. Regional General programs Manager, and customized Ontario/Atlantic
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June 2013 / The Ontario Broker
Beth Elder Ontario Legislature Internship Programme
Life in the Pink Palace As some of you may know, IBAO is a lead sponsor of the Ontario Legislature Internship Programme (OLIP). What is OLIP? Let me explain. Each year, eight to 10 lucky university graduates are selected to spend 10 months inside the Pink Palace. Running from September through June, the internship involves interns working for two different MPPs — one on the government side and one on the opposition side. For those interested in politics and policy, it is pretty much a dream job. Interns are able to see the inner workings of government on both sides of the house through a non-partisan lens. They work for backbench MPPs, offering
a great way for these MPPs to get some extra help in their offices. The catch is that MPPs must apply for interns who, in turn, get to interview MPPs to see who they would like to work with. Working at Queen’s Park provides access to some of the most influential people in the province and the opportunity to meet with them has been so enriching. We have heard from MPPs, our sponsors, public servants, media outlets, stakeholder groups and private industries to learn about Ontario politics and how government really works. Throughout the year, interns have the opportunity to visit different legislatures across the country and internationally. In 2013, interns will have a chance to visit Ottawa, Yellowknife, Victoria and London, England to compare the legislative process in different jurisdictions. In addition, interns conduct primary research on a topic related to the provincial legislature, much of which is gathered through interviews. This year, I am doing my research on why our sponsors choose to support OLIP. As such, it was great to meet with representatives from IBAO to discuss that question. OLIP has been a great experience so far. The internship affords an amazing opportunity to gain a deeper understanding of the political and legislative process
in Ontario. Every time I walk through the main doors of Queen’s Park, I am reminded of how lucky I am. urban and rural My opposition placement was with MPP Lisa Thompson of Huron-Bruce, while my government placement was with MPP Laura Albanese of York South-Weston. It was great to experience both a rural and an urban riding, which face a very different set of issues. It was also a pleasure to work with these two strong and inspiring women. OLIP could not exist without the support of the Ontario Legislative Assembly and our other sponsors. Each year, OLIP hosts two receptions at Queen’s Park with all of our stakeholders, including elected representatives, alumni and sponsors to thank them for their support. We also publish a magazine twice a year called the Queen’s Park Insider to update stakeholders on the interns’ activities and to show our sponsors where their money is going. We want to say a big “Thank You” to IBAO for its continuing support of the intern program. Interested in learning more about OLIP? Check out our blog at: http://olipinterns.wordpress.com, or follow us on twitter at @olipinterns
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The Ontario Broker / June 2013
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Karen Gavan President and Chief Executive Officer Economical Insurance
Ontario Auto in Need of Repair Let’s face it. Ontario auto is broken. Successive legislative reforms have tried, but failed, to deal with the underlying issue of excessive accident benefits and liability claims costs. The real driver of these costs is the abusive over-treatment of minor injuries by for-profit medical rehab clinics that are funded entirely by the auto insurance industry. If this abuse was removed, it would not diminish one iota the quality of care Ontarians receive through their accident benefits. The cost savings would, in turn, be passed on to Ontario drivers by way of lower auto insurance premiums. To ensure the driving public in Ontario has access to affordable automobile insurance, a more permanent, sustainable auto insurance solution with enhanced regulation and cost containment controls is needed. This demands having concrete measures to eliminate the over-using, over-treating and over-assessing of claimants by participants within the accident benefits claims economy that are keeping auto insurance premiums high. In the past two decades, achieving stability in the Ontario auto insurance market has proven to be elusive. Since the Ontario Motorist Protection Plan (OMPP) was implemented in 1990, there have been four major reforms to address the shortcomings of Ontario auto. With each reform, claims costs fell for two to three years before rising again. The most recent reforms implemented in September 2010 addressed rising claims costs to stabilize premiums. The average accident benefits claim in Ontario 06
The Ontario Broker / June 2013
that year was $49,170; the next highest was New Brunswick at $11,983 (General Insurance Statistical Agency 2012). In 2011, the average accident benefits claims cost in Ontario had fallen to just shy of $30,000, proving the 2010 reforms did, indeed, help reduce claims costs. Despite this significant drop, Ontario still has the highest average accident benefits claims payouts in the country. Right on cue, Ontario auto is sailing into troubled waters yet again. A PERFECT STORM Given the potential 15% rate reduction noted in the May 2 budget, the absence of an effective catastrophic impairment definition, the lack of clarity around the definition of incurred for attendant care benefits, and the recent Scarlett v. Belair decision that could have serious consequences for the Minor Injury Guideline, the Ontario auto insurance system is headed for a perfect storm. The 2011 Ontario Auditor General’s Report revealed Ontario drivers pay, on average, the highest premiums in Canada to insure their vehicles. This does not have to be. The price of auto insurance is set at a level to cover the costs of delivery. The largest contributor to the cost of auto insurance premiums, by far, is claims payments. With the highest accident benefits payouts in the country, it should come as no surprise that Ontarians pay more than counterparts in the rest of Canada. But the generous nature of the Ontario accident benefits system does not explain the significant difference in the levels of accident benefits between Ontario and the rest of Canada. In Ontario, about 30 cents of every industry dollar of auto premiums, or $3.5 billion, is used to pay Statutory Accident Benefits Schedule (SABS) benefits, which are mostly related to medical and rehabilitation. There are currently 9,000 clinics and 30,000 individual health care providers in Ontario registered with the Health Claims for Auto Insurance (HCAI) system (a centralized system that transmits information in SABS forms between insurers and health care providers) to provide medical and rehabilitation services to accident benefits claims.
Given that there are about 70,000 accident benefits claims annually — the vast majority of which are minor sprains, strains and whiplash — this translates to 7.8 injured claimants per clinic per year. However, there are only 2.3 claimants per individual health care provider. Clearly, there are too many clinics and health care providers chasing too few claimants. To remain economically viable, it appears these clinics and providers are over-assessing and over-treating claimants. This, in turn, leads to over-utilization of the entire system. This situation is even more troubling when one considers that, as the Auditor General reports, Ontario has one of the lowest per capita rates of auto accident death and injuries in the country. Yet treatment costs continue to rise. KPMG’s Forensic Report, released in June 2012, revealed that although the number of accident benefit claims in Ontario decreased by 28% between 2001 and 2010, average accident benefits claims costs increased by 174% over the same period. So, at the end of the day, Ontario auto is less about auto insurance and more about an insurance industryfunded health care system. To add to the problem, health care providers registered with HCAI charge auto insurers higher fees than what they charge the public health care system, the Workplace Safety and Insurance Board and life and disability insurers for the same service. The standard of care for accident benefits claimants, as per the SABS, is also significantly higher for auto insurers than for these other systems. But even with all of these challenges, it is possible to provide quality care that produces positive health outcomes and a reasonable bottom line for the industry. We must reduce excessive, wasteful and unproductive health care spending and re-direct those savings into making auto insurance more affordable for Ontarians. It is time for the Ontario government and the Financial Services Commission of Ontario to get serious about eliminating all the game playing in the medical and rehabilitation auto insurance system and adopt a robust evidence-based system that delivers quality care to accident benefits claimants — no more, no less.
Susan Latremoille Director, Wealth Management Richardson GMP Limited Co-author, Who Will Take Over The Business
Tax Implications of Succession Planning Several elements need to be considered as part of any examination of succession planning, ranging from estate freeze to capital gains exemption and family trusts. WHAT IS AN ESTATE FREEZE? In general terms, an estate freeze is the process of freezing the value of an asset at its current value, while future growth — and the tax liability associated with that growth — is transferred to future generations. Typically, capital gains accrued up to the date of the transfer will be taxable to the person doing the freeze, usually the parent, and future gains will be taxed in the hands of the beneficiary of the freeze, usually the children. CORPORATE ESTATE FREEZE A corporate estate freeze involves exchanging existing common shares for preferred shares that are redeemable for the fair market value of the company at the time of the freeze. The value of the corporation, at the date of the estate freeze, is reflected in the value of the preferred shares. New common shares with a nominal value will be bought by family members directly or through a newly established family trust, such that any future growth in the company’s value will be reflected in the newly issued common shares. The tax liability associated with the growth will be taxed in the hands of the new owners on eventual disposition or
upon the new owner’s death. Typically, the exchange of shares can be carried out on a tax-deferred basis. However, there may be circumstances where it is beneficial to elect that the transfer occur at a value that would generate a capital gain in order to utilize your capital gains exemption.
• to receive dividends tax-free and provide additional flexibility in the timing and nature of eventually dispersing these funds; and, • to transfer certain assets of the company in order to split the company into multiple companies to provide separate businesses for multiple children.
CAPITAL GAINS EXEMPTION In general, the capital gains exemption is an exemption from tax on up to $750,000 of capital gains on the disposition of qualified small business corporation shares. Implementing an estate freeze may provide an opportunity to access additional family members’ capital gains exemptions and to save as much as $170,000 per family member in additional taxes. The federal budget, announced on March 21, 2013, proposes to increase the Lifetime Capital Gains Exemption for qualified small business corporations, and qualified farm and fishing property to $800,000, beginning in 2014. This new limit will also be indexed for inflation for tax years after 2014.
FAMILY TRUST Trusts are typically used in conjunction with an estate freeze to provide maximum flexibility, control and creditor protection over the transferred assets. Trustees may use their discretion to distribute income and capital to certain beneficiaries. In addition, trusts are often used in an estate freeze to ensure the ongoing qualification for a small business corporation by extracting non-active business assets. There are many complex rules that affect trusts as well as their beneficiaries. It is recommended that you contact your tax and legal advisors to ensure the estate freeze is carried out effectively without undesirable tax and legal ramifications. For more information on wealth management advice, contact The Latremoille Group — helping successful business owners plan their financial futures and manage their wealth. Please e-mail Sandra.Balind@richardsongmp.com or call 416/969-3051.
HOLDING COMPANY Depending on the fact situation surrounding an estate freeze, a holding company (Holdco) may be incorporated into the corporate estate freeze plan to provide for additional flexibility. Some of the more typical reasons for setting up a Holdco are as follows: • to receive non-business assets from an operating company to ensure it remains eligible for the capital gains exemption;
The text above is an excerpt from an article produced by the Tax & Estate Planning Group at Richardson GMP Limited. This publication is intended for informational purposes only and is not intended to constitute investment, financial, legal or tax advice. You should seek advice regarding your particular circumstance from your personal tax and/or legal advisors.
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June 2013 / The Ontario Broker
Auto insurance was front and centre this spring in the Ontario legislature, and played a key role in the passage of the Wynne government’s first budget. Arthur Lofsky, government relations consultant for IBAO, recently asked Premier Kathleen Wynne to talk about her approach to auto insurance and other issues of interest to Ontario’s independent broker channel.
Premier message Q: Your budget commits to lowering auto insurance rates by 15% on average over an undefined period of time. How does your government plan on achieving this? The new Ontario government is committed to protecting drivers, but lowering rates in a responsible fashion. And we think there are many opportunities to do so. Our plan starts with the reforms that are already in place, especially around providing certainty for treatment plans, and goes farther by implementing the recommendations of the Auto Insurance Anti-Fraud Task Force report. The reality is that there is too much fraud in the system that takes advantage of vulnerable people and increases rates for everybody. It’s especially prevalent in the Greater Toronto Area, and we believe we can achieve substantial savings by ensuring that health care billings for auto insurance are fair and transparent. The task force published an estimate, finding
that the elimination of fraud and abuse could lower rates by as much as 22%. We’re ensuring that companies provide lower rates for drivers with a good safety record — something many companies practise anyway. Because of the breadth of reforms, and because we think it’s fair for drivers to start to see lower rates sooner, rather than later, we thought it was important we introduce legislation around a number of these issues. We also plan on continuing to monitor costs and premiums in the system, with an annual independent review that will help us determine whether and what further reforms might be necessary. The first review will take place in the spring or summer of 2014. As a government, we place a high premium on collaboration as a way of solving problems. More than anything, we’ll achieve a 15% rate cut by working together. We’ve met with IBAO, with many insurance companies, and we share that
commitment to lower rates, done right. Charles Sousa, the Minister of Finance, has lead responsibility for this, and he will be working closely with all players in the industry — insurance companies, brokers, health care providers and patient advocates, to make sure we implement reforms that take costs out of the system while maintaining access to quick, highquality health care for accident victims.
Q: Clearly you responded to the NDP demand for a 15% reduction. 15% is aggressive. It will be difficult to achieve. Why did you not respond with a more moderate commitment — say 10%? We’re confident that we can get to 15% reduction on average across the system, but we’re going to do it in a responsible fashion. We know that there are some cost reductions that have already been achieved, so that insurance companies can start passing those on
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The Ontario Broker / June 2013
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Photo courtesy of the Premier’s Office
Premier Kathleen Wynne was sworn in as Ontario’s 25th premier on February 11, 2013. to consumers, allowing them to lower rates immediately. One part of our plan that didn’t get much attention, but will help clarify the rules, is around the Minor Injury Guideline. Our legislation will ensure that the Superintendent’s rules around this guideline, which was meant to provide the right amount of fast, predictable care for less serious claims, are enforceable. That will also lower costs. We also encourage consumers to compare rates between providers, because we know — and your members live this every day — that shopping around can help lower rates for many drivers.
Q: Our members have been very concerned that an arbitrary 15% reduction could create an availability crisis in the province, meaning that insurers may stop writing business in certain areas or for certain classifications. Can you assure our members that you will not let this happen? Absolutely. That’s why our government is committed to reducing rates in a responsible manner by working together with the industry. We take the independence and fiduciary role of our regulator very seriously. In our legislation, there is an
explicit provision that prohibits the Superintendent of the Financial Services Commission of Ontario from approving rates that are not just and reasonable, or that impairs an insurer’s solvency.
Q: IBAO strongly supports the implementation of the Auto Insurance Anti-Fraud Task Force recommendations. As you said earlier, you have committed to implementing the report and, indeed, the budget bill would begin to regulate health clinics. Does your government intend to implement all 38 recommendations of the report? The Auto Insurance Anti-Fraud Task Force report is a critical piece of work, and a key part of our plan. Some recommendations — around the regulation of the tow truck industry, for instance — will take more study and consultation. We are committed to implementing the report’s recommendations, but we still need to understand the implications of some of them before proceeding.
Q: IBAO believes the new catastrophic definition that is with the Ministry of Finance should be implemented because it is evidence-based and
will actually help seriously injured people get benefits sooner. It would alleviate a lot of uncertainty with insurers who would be able to plan better and lower rates sooner. Why is the government not implementing this? Catastrophic injuries are a very sensitive area — we want to be absolutely sure that the people whose lives are changed forever in an automobile accident are treated fairly and with compassion. We agree that we need to proceed on the basis of the best medical evidence, and that will guide our work on this issue.
Q: Finally, we could not let you go without asking about the use of credit scoring to price home and other personal property insurance. IBAO believes it is unfair and should be banned. What do you think about our position on this? We’re definitely concerned about credit scoring as a practice when it’s not predictive of risk, and that’s why we don’t allow it in the auto insurance sector. Insurance brokers have brought a compelling case about extending that ban to other forms of insurance, and it’s a topic that’s under active discussion at the moment. June 2013 / The Ontario Broker
queen’s park awareness day IBAO conducted another successful Awareness Day at Queen’s Park on April 16, 2013. IBAO delegations met with Premier Kathleen Wynne, Minister of Finance Charles Sousa and Opposition critics as part of its 35 scheduled meetings that day with MPPs from all parties. IBAO also met with Progressive Conservative Opposition Leader Tim Hudak and New Democratic Party Opposition Leader Andrea Horwath in the lead-up to Awareness Day. All together, IBAO made contact with almost 60 MPPs on and around Awareness Day and at IBAO’s annual Queen’s Park reception.
Rick Orr, Debbie Thompson, Premier Kathleen Wynne, Randy Carroll and Arthur Lofsky
Chris Floyd, Randy Carroll, PC Opposition Leader Tim Hudak and Debbie Thompson
Chris Floyd, Hon. Glen Murray, Minister of Transportation and Infrastructure, and Randy Carroll 10
The Ontario Broker / June 2013
Bryan Yetman, PC Finance Critic Peter Shurman and Rick Orr
Christine Sbrocchi, David Denyer, Hon. Yasir Naqvi, Minister of Labour, and Michael Brattman
NDP Finance Critic Mike Prue, Wendy DaSilva, Bryan Yetman and Dwayne Gagne
Randy Carroll and Hon. Linda Jeffrey, Minister of Municipal Affairs
Randy Carroll and Hon. Charles Sousa, Minister of Finance
Dave Levac, Speaker of the Legislature, and Debbie Thompson
Christine Sbrocchi, Michael Brattman, MPP Catherine Fife, David Denyer and Steve Wagler
Chris Floyd, PC Auto Insurance Critic Jeff Yurek and Debbie Thompson June 2013 / The Ontario Broker
Ian Gold Founding Partner Thomas Gold Pettingill LLP
Taking Spam off the Menu In the coming months, the federal government is expected to announce when Canadaâ€™s Anti-Spam Legislation (CASL) will be coming into force, with many forecasting a date in late 2014. Insurance brokers should take advantage of this temporary reprieve to consider
the impact that CASL will have on their business practices so that they might bring them into compliance with the requirements of the act. The main source of concern relates to the way insurance brokers communicate with existing clients and connect with new sources of business. In this day and age, most brokers employ some form of electronic communication to bridge the gap between themselves and their consumers. Learning how to foster technological innovation without breaking the law will become critical to competing in the modern marketplace. The purpose of CASL is to deter damaging and deceptive forms of spam. Spam can be defined as any electronic commercial message sent without the express consent of the recipient(s). It represents 75% to 90% of all e-mail traffic, and is commonly used to victimize both businesses and individuals alike by means of identity theft, phishing and spyware.
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The Ontario Broker / June 2013
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TOO HIGH A PRICE? While the goals of CASL are admirable, critics have questioned whether or not the gains made in securing our information come at too high a price. Legitimate businesses often use spam in the same way that grocery stores indiscriminately stuff mailboxes with flyers. They do so because it is an effective way of attracting new clients while also keeping existing clients in the loop. Better yet, it comes at little to no cost. CASL will alter the current landscape by prohibiting businesses from sending electronic commercial messages if the person to whom the message is sent has not consented to receiving that message. The maximum penalty for a violation is $1 million in the case of an individual, and $10 million otherwise. A prohibition that broad is bound to strike fear in the hearts of most insurance brokers, but the act provides a number of key exceptions to soften the impact of its approach. The prohibition does not apply to messages that provide a quote, facilitate an ongoing commercial transaction, provide warranty or recall information, or deliver a product or service under the terms of a previous transaction. These exceptions are meant to permit businesses to communicate with existing clients within the confines of the act. Approaching new clients is a bit trickier. Although the act requires consent, that consent can be implied if the person sending the message has an existing personal relationship with the person receiving it. Consent can also be implied if the person receiving the message has either conspicuously published his or her e-mail address or otherwise disclosed it to the person sending the message without posting a warning that he or she does not wish to receive unsolicited e-mails. This is only a small snapshot of the law. If you think CASL might impact your business, we encourage you to seek out independent legal advice.
The purpose of CASL is to deter damaging and deceptive forms of spam.
Stephen Halsall, CCIB, CPIB President Insurance Brokers Association of Canada
Building Success by Using Past Assumptions Sometimes, it is necessary to challenge assumptions. Sometimes, with new options and information, we can improve on past choices. Within the framework of broker-insurer contracts, brokerages — rather than
individual employees — hold the legal relationships with carriers. Broker principals are responsible for the actions of employees while they interact with the public and with insurers. When communication happens to occur electronically, the nature of these relationships does not change. The insurer-broker interface, however, is commonly designed to require both insurer-approved and insurer-issued individual passwords for broker employees. The authorization for access, therefore, shifts from the brokerage to the individual, even though the employing brokerage determines who communicates with insurers. Beyond clouding legal accountability, these passwords frequently provide admission directly from the Internet, adding great potential for security risk and abuse. How many insurer-issued passwords do you have? How secure are they? If you sent the insurers’ site address and your
password to your home e-mail, could you log in from there? How quickly can access be terminated? ELIMINATING RISK A recently approved IBAC Position Paper asserts that the security around brokerinsurer transmissions should reflect actual legal relationships and enable control where responsibility exists. Insurer interface systems should limit incoming broker transmissions to those identifiably originating from approved brokerage systems, rather than relying on authentication of individual employees’ credentials. Using embedded brokeragelevel passwords accessible only to brokerauthorized staff would eliminate much potential risk, complexity and expense. Communication and interface are current priorities for the industry. IBAC urges insurers and brokers alike to take a hard look at how we have been building connectivity and consider that there might just be a better way.
BROKERS – looking for markets for your specialty, niche and non-standard risks? Find them in the Insurance Marketer! www.insurancemarketer.com We’ve got you covered in the… Published annually in July by Canadian Underwriter magazine, the extremely popular Insurance Marketer is used daily by brokers across Canada. Both in-print and online at InsuranceMarketer.com, the Insurance Marketer is The Source to assist you in finding a market for even the most unique risk!
June 2013 / The Ontario Broker
COMMUNITY VIEW Brett Boadway Director of Broker Relations & Communications Insurance Brokers Association of Ontario Insurance Brokers Association of Ontario is pleased to welcome Brett Boadway in the role of director of broker relations and communications. Brett will oversee the development and implementation of all IBAO member and communications initiatives, both provincially and nationally. Brett is no stranger to the insurance industry, having spent seven years at The Dominion,
Helen Dunlop Director of Broker Development & Education Insurance Brokers Association of Ontario Insurance Brokers Association of Ontario would like to welcome Helen Dunlop in the position of director of broker development and education. Helen will be responsible for the development, implementation and monitoring of broker development strategies and associated initiatives. Primary among these initiatives will be ensuring that IBAO is recognized as an industry leader in education through the provision of high-quality and timely programs addressing the current, emerging and future needs of members. Helen began her career path in the insurance industry in 2000 when she obtained the
most recently as manager of its Corporate Communications Department. Brett has developed award-winning communication tools for brokers, holds relationships with national broadcasters and is fast becoming a trailblazer in all phases of insurance-related digital marketing. She holds a business degree from the University of Western Ontario and a certificate in E-commerce. In her spare time, Brett enjoys skiing, contributing to a popular Toronto publication as a restaurant critic and spending time with her large family.
Other Than Life licence and sold and serviced personal lines insurance at The Co-operators. Helen later joined Pembridge Insurance where she gained extensive experience in the broker distribution channel while she simultaneously worked to obtain a Master’s Degree in Education. After nine years of service at Pembridge Insurance, Helen took on the role of business development manager at Farmers’ Mutual Insurance, where she acted as the liaison connecting the company with its broker partners. Helen is enthusiastic and has a sincere passion to deliver value and “get things done.” Her long-standing experience in the broker channel, along with her academic background in education, makes Helen a definite asset to IBAO’s team.
Thank you RSA for your past support at the Gold Level of sponsorship. And a big thank you for increasing your commitment at the Platinum Level.
We would also like to say thank you to our newest sponsor at the Magenta Level, CG&B Group Inc.
The Ontario Broker / June 2013
Service. Support. Satisfaction. Aviva is the right choice when it comes to service you can count on. With dedicated resources to support your needs, you can trust Aviva to deliver the best: • Business development strategies through your Account Executive and Business Development Specialist • Personal Lines underwriting provided by our Concierge Sales & Services team • Commercial Lines service through our new service centre model • Claims care provided by our Regional Claims Relationship Managers – your single point of contact when it comes to claims-related issue resolution We’re committed to helping our broker partners win in the marketplace by providing the right services and support to ensure customer satisfaction.
AvivaPartner.ca Home | Auto | Leisure & Lifestyle | Business | Group | Surety Aviva and the Aviva logo are trademarks of Aviva plc and used under license by Aviva Canada Inc. and its subsidiary companies.
IBAO School of Insurance EDUCATION FOR BROKERS BY BROKERS
Summer Education Offerings Canadian Accredited Insurance Broker (CAIB) The CAIB program is a four-part national designation program that includes in-depth review of technical coverages and business management strategies in the Canadian insurance marketplace – covering three major subject areas: Personal Lines, Commercial Lines and Brokerage Management. The Program is offered in three study formats – Self Study, Group Discussion and Immersion. Read more online at ibao.org/caib.
Immersion CAIB 3: September 16-23 CAIB 4: November 4-11
Fall Semester (Self-Study/Group Discussion) September 16 – December 4 (Deadline August 3)
Self-Study: $539 Group Discussion: $619 Immersion: $899 *IBAO Member Prices Only.
CAIB 1 CAIB 2 CAIB 3 CAIB 4
5 Management & 16 Technical Hours 16 Technical Hours 16 Technical Hours 20 Management Hours
Upcoming Licensing Program RIBO Licensing Basic Broker Extended Preparation Course - New for 2013! The Basic Broker program takes students through the “Fundamentals of Insurance” textbook and covers the requirements established by RIBO to successfully complete the Level I Licensing exam. Combining the benefits of classroom facilitation and self-study, this course was structured specifically for individuals who are unable to complete two consecutive weeks of training and/or require additional time to study the content.
Dates (8:30 am - 4:00 pm)
Check our website for 2013 education courses and programs ibao.org/register
Week 1: August 12-16 Week 2: August 26-30
$600.00 (materials included) $25.00 (admin fee for non-members)
IBAO School of Insurance
Connecting with the 21st Century Consumer Connecting in the 21st Century is all about the how not the why. By participating in this program you will review the highlights of 2012’s Understanding the 21st Century Insurance Consumer Workshop and review the NEW results of 2012 Market and Broker Customer Study. You will walk away with a better understanding of how to better connect your businesses to your customers and better understand the difference between the traditional broker brand story vs. new age brand story.
QUESTIONS? Contact the IBAO School of Insurance at 416-488-7422 or 1-800-268-8845.
Who Should Attend this Seminar? Brokerage Owners, Principals, Managers, Producers, CSR’s
Facilitators Bill Morris, BA, Navicom Inc. Bryan Yetman, CIP, CRM, First Durham Insurance & Financial
CE 6 Management Hours
$209 (members only)
Seminar locations available across Ontario. To schedule a seminar in your area, contact Tracey Blouin at email@example.com.