Ab broker april may 2014

THE ALBERTA

Evacuated!

But are they covered?

PRAIRIE POWER 2014 IBAA Convention Guide Page 26

Just the Facts (Please!)

The info you need to be competent and confident

The Telematics Revolution Can brokers lead it in Alberta?

April - May 2014

Cdn Publication Mail Registration 40018149

after 10 years of service, I thought I’d offer him the opportunity to educate.

Thom sent me his article, “Insuring the Worst of the Worst” (page14), from the beach in Jamaica, proving his dedication knows no bounds.

By happenstance, two articles in this issue focus on the notion that price is not THE deciding factor of today’s insurance consumer, although the authors come at it from different angles. In “Just the Facts” (page 6), industry consultant Karen Rutherford reasons that in order to ensure that cost does not become the primary issue, brokers need relevant, accurate claims information to fulfill their advisory role.

Sharing the young broker’s perspective, PYIB’s Jonathon Brown contends that the post-baby-boomer demographic of insurance consumers cares about a whole lot more than just price and that it’s time for brokers to “Step Out of the Comfort Zone” if they want to survive (page 38).

It wouldn’t be a complete issue of The Alberta Broker without a cautionary tale or two. “Legal-Ease” (page 34) and “Know E&O” (page 20) provide great examples of what, and what not, to do if brokers want to avoid costly mistakes.

Annette Hubick

Message from the Editor Ah, the IBAA convention at the Fairmont Jasper Park Lodge ( JPL), or what I like to call “summer camp for adults.” There is just something about the JPL’s combination of rustic and luxury that casts a relaxed, positive vibe over the whole event. Nestled in the majestic Rockies, cabins and lodges are scattered throughout the grounds, necessitating walks in the fresh air to get from point A to B while sharing the space with our hosts, the elk. Speaking of elk, did you hear that the famous, or infamous, Moose Milk is making a return to the convention after a one-year hiatus? (Nice segue, eh?)

For those who will be enjoying this delicious concoction for the first time, just remember to alternate with water and you’ll be fine. For you veterans, well, you know better.

Of course, the IBAA convention offers much more than a fabulous locale. There

are many opportunities to gain insight, make connections, voice opinions and share laughs. Turn to the convention guide (page 24) to find out how you’ll be informed, entertained and inspired.

One of the hot topics included in the convention seminar lineup is telematics, which some say will revolutionize the insurance industry. In his “The Advocate” column (page 12), IBAA CEO George Hodgson contends that brokers should be at the forefront as telematics makes its way into the Alberta marketplace.

I’ve been observing the IBAA annual general meetings for several years now.

Often, I’ve witnessed Thom Young stand up to address the audience about the Facility Association (FA). Many times, Thom expressed that the average broker did not know enough about the FA’s workings and true role in the insurance marketplace. So, when I read that Thom was retiring from the FA’s national board

IN THIS ISSUE

April - May 2014 The Alberta Broker is the official publication of the

Hope to see you all in Jasper!

3010 Calgary Trail, Edmonton, AB T6J 6V4 T: 780.424.3320 •1.800.318.0197 F: 780.424.7418 • www.ibaa.ca

President Gord Enders Chief Executive Officer George Hodgson

Published six times annually by:

9249-48 Street Edmonton, Alberta T6B 2R9 T: 780.448.0936 • F: 780.465.6201 E: albertabroker@linkpr.ca Publisher and Editor Annette Hubick Printing McCallum Printing Group Design and Layout Ron Leckelt Advertising Michele Schuldhaus 780.448.2890 michele@linkpr.ca The Alberta Broker welcomes articles about the insurance industry and its people. Letters to the Editor are welcome.The opinions and viewpoints expressed in The Alberta Broker may not necessarily be those of the association and its members.

Material in The Alberta Broker may be reproduced with the credit to the author and the following: “Reprinted from the Insurance Brokers Association of Alberta’s magazine - The Alberta Broker (date).”

Please send a copy to the publisher.

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Message from the Editor

4

Message from the President

6

Just the Facts (Please!)

10 12

14

19

Claims Information Paramount to Client Retention

22

Know E & O

24 26 36

Chinook Country Report

42

PYIB Perspective

44

Viewpoint

46

Commercial Break

48

Professional Development

Email Security with TLS The Advocate Can Brokers Lead the Telematics Revolution in Alberta?

Inspiring “The Worst of the Worst” Lessons and Tales from My 10 Years on the Facility Board

IBC Insight The Big 5-0!

It All Starts with an Application

2014 IBAA Convention Guide Legal-Ease Precious Gems ...Wealthy Clients Sue Broker After Jewel Theft Step Out of the Comfort Zone Blanket Appeal Uncivil Authority Do you have a #DigitalStrategy PLUS IBAA Courses

The Alberta Broker April - May 2014

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Gord Enders

Message from the President Well, we’ve been talking about it for a year and now the time is here. I’m talking, of course, about the changes to property insurance—what else do I write about it in this column?

Some of the changes have already been realized and others are still to come. What I want to focus on is how we deal with these changes within our offices, regardless of the company or the changes being made.

Change, of any kind, can be hard—especially when you’re not the architect of the change. The toughest part is when the change first takes place. New things are happening and, a lot of times, there are no answers to the questions being asked. But as time goes on, the new way becomes the standard, people figure out how to deal with the change and it becomes easier.

Eventually, the change becomes second nature.

In our case with property insurance, there is a tremendous amount of change and we’re in the phase where there are not many answers.

• How do I talk to my client about these changes?

• How does a client decide what’s the right amount of insurance for sewer backup?

• What are cleanup costs and how much does basement reconstruction cost?”

It will get easier. After a few months of speaking with clients, you’ll have learned how best to address the issues.

You’ll have determined how to work with your clients to help them determine the value of their basements. By July, this will all have become second nature.

In the end, I do believe we’ll be better brokers for this.

We’ll be having meaningful renewal discussions with our clients and providing them with the best advice and service of any insurance distribution model that’s out

there. It’s what we do; we’re brokers—we adapt, we survive and we succeed.

This is my last article as my term draws to a close. I can’t tell you how much I’ve enjoyed my year as your president.

It has been a wild ride and a great experience. By nature, I’m a doer and an innovator, and with the challenges we have faced this year, all of the IBAA board members and office personnel have had a chance to get involved.

For those of you who are considering running for an association position, or for that matter those who aren’t, just do it! It is an incredible experience that gives you the opportunity to serve and a chance to give back to the industry. More than that though, as with any volunteer role, you get so much out of it. For example, I had a chance to be involved in Canada’s first ever property insurance forum, bringing brokers, underwriters and stakeholders to the table for meaningful discussion.

During the floods, our association was front and centre helping our members—seeing the flood zones, meeting our member brokers and witnessing their resiliency was awe inspiring.

Advocating to our insurers on behalf of brokers and consumers has been a tremendous experience and seeing some of the wins that IBAA and individual member brokers lobbied for has been truly gratifying. Knowing that insurers can still be influenced by brokers demonstrates the important role we play in our distribution channel.

Participating in “Hill Day,” when brokers from all over Canada gather to meet with their MPs in the centre of government, and hearing how Finance Minister Jim Flaherty told one broker that he had a lot of time for insurance brokers and that they are “good people” lets you know you’re efforts are working. In fact, they work so well that IBAA organized its first provincial Hill Day this March.

Knowing that insurers can still be influenced by brokers demonstrates the important role we play in our distribution channel.

4 The Alberta Broker April - May 2014

Having the opportunity to be involved in industrychanging trends such as telematics and working to put IBAA front and centre so brokers are not bypassed in the data exchange, is exciting because it’s new technology and there is so much at stake for our businesses.

Making a presentation on telematics to the Superintendent’s office to solidify IBAA’s position as a first-level stakeholder on all things insurance was an incredible opportunity for the association, and full advantage was taken. The goal was to ensure brokers are consulted on the development of solutions prior to decisions being made that affect our businesses.

Seeing the response rate on IBAA’s recent property insurance survey, and the opinions provided, was remarkable.

Knowing that brokers collectively are engaged and willing to speak out is reassuring for the future of our association.

Meeting brokers throughout the province and having the chance to speak with them during the annual president’s tour to every local council was fantastic. Across the province, brokers have one common goal: helping clients protect their homes, businesses and vehicles; making sure they’re treated fairly; and, in the event of a claim, ensuring their lives are restored.

Working with fantastic people and building relationships with them—from executive and board members to IBAA management and staff, brokers and sister associations across

Canada, including IBAC—has been amazing. You won’t find a better group of people—committed, hardworking and fun.

So if you’re still sitting on the fence after reading some of the experiences I’ve shared, jump down, pull out the splinters and join us for an incredible opportunity—you won’t regret it. I certainly don’t—it’s been one of the highlights of my career. Thanks for giving me the chance to experience it.

There’s an App for That!

Download the IBAA Convention Guide for easy access to all the information you might want to know about convention at just the touch of a button. Get info about the program schedule, specific events, dress codes, speakers, sponsors, exhibitors and much more.

See page 34 for instructions.

The Alberta Broker April - May 2014

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Just the Facts (Please!)

Claims Information Paramount to Client Retention

By Karen Rutherford

6 The Alberta Broker April - May 2014

R

ecent developments in the personal lines world pose all kinds of challenges for brokers.

Managing all the changes introduced by insurance companies, changing workflows to ensure you do not expose yourself to an E&O claim and training your staff to be sure they are aware of all options—along with the associated costs and managing the stress these changes always bring to the frontline people is no small feat. It is no wonder some brokers aren’t feeling particularly warm towards their insurance company partners.

Perhaps the greatest challenge is meeting with clients and trying to sell the changes. The most powerful tool to use with customers is accurate claims information. Recently, in a conversation with a few brokers, it was made clear to me that they are not receiving adequate claims information from their insurance companies. This explains so many things that I have been observing over the last couple years.

There is a significant difference in what customers want and what brokers have been selling. The vast majority of brokers tell me that customers want the cheapest insurance.

Nothing could be further from the truth. However, I will agree that if you present two identical products and the only visible difference is the price, we all take the cheaper price. But insurance policies are not all equal, are they? Not all insurance companies offer the same quality of claims service, do they?

Customers care about claims, the coverage they need to respond to claims and, finally, cost.

The dilemma I am hearing is that some brokers don’t really know the key differences in wordings and hope and believe policies are the same. Part of the distress these brokers are feeling right now is the mixed offerings coming from insurance companies with changes to hail coverage, sewer backup, etc. No question that the recent rash of claims brought a focus

on the changing policies, but the truth is that there were always differences in the policies, significant differences.

Perhaps some brokers weren’t reading the policies to find the differences but they were always there. So while the current changes put pressure on brokers to do a more thorough job, the upside is that clients will get a proper review and brokers will have improved their awareness of the differences between insurance companies.

The one issue that has no easy solution is the current trend of some insurance companies not providing adequate claims information that would allow brokers to talk effectively to customers in an informed manner.

Many brokers in Canada are unable to tell a customer how long a claim will take to settle on average, or the status of open claims involving injury claims.

They don’t have important facts such as the amount of money spent on sewer versus fire claims, for example.

continued on page 8

The Alberta Broker April - May 2014

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continued from page 7 Many brokers have no idea what insurance companies are up to with their reserving practices or the accuracy of their IBNR (incurred but not reported) estimates.

There are significant differences in the need for this information for commercial clients versus personal lines clients.

Commercial lines clients are a titch more informed. While the broker who tracks claims and insurance lawsuits can provide a much better picture to commercial clients, often clients are aware of litigation in their fields and of the differences in coverages. This general information is often shared by commercial clients through their associations, group programs and the never-ending parade of new brokers looking for their business.

Personal lines clients rely on their current broker to help them understand changes and make the best buying decision. To do this, brokers need their insurance companies to provide the facts.

Brokers should be given a complete claims report on a regular basis. Insurance companies have the information at their fingertips and have provided high-quality information in the past.

Given the significant changes being implemented in the personal lines landscape, it is important that brokers speak up and demand better quality information from their insurance company partners.

What does a good claim report look like? Every market should be providing quarterly reports that show: • Number of claims this year versus last year • Average cost of claim • Average time claims are open • Break down of which coverages are suffering losses For auto, the breakdown should be by section of the policy and for property policies it should include a cause of loss—fire, wind, hail, sewer backup, water, theft, etc. This information is necessary to help all brokers be confident and credible when explaining changes to customers.

Nothing is more compelling than the facts when you are explaining to customers why they may want to buy more insurance.

Remember, customers worry about a claim happening to them, then the

coverage that would help and lastly, cost—unless all you present is cost!

Insurance companies would like their brokers to be able to sell insurance effectively and if sharing information is helpful, why wouldn’t they? A broker recently told me one of his markets said the information was confidential. Really? Why? If the claims justify the increase in costs or decrease in coverage, brokers can use the information to help clients understand the changes and perhaps retain that customer for both the broker and the insurance company.

Brokers are the front line. They must be credible when explaining the policies they sell. If changes are necessary because of changing loss ratios, then brokers should have the facts clearly laid out and able to share them with clients. Clients are definitely smart enough to know when they are hearing the true facts versus when a salesperson is just “winging it” with explanations. If brokers don’t have information such as how much was paid out in hail, sewer backup or water claims, then their choices are to make it up, offer vague explanations, blame the insurance companies or admit they don’t know for sure. None of these will create the trust that is so important to client retention.

KAREN RUTHERFORD International Accelerated Learning kruther@telusplanet.net

A FACT is worth a thousand words.

8 The Alberta Broker April - May 2014

Email Security with TLS Brokers communicate a significant amount of confidential information on behalf of their clients to insurance companies, but there are security risks associated with sending this information in an unencrypted manner via regular email. Email can be an acceptable medium for transferring such sensitive client information only when it is secured. Transport Layer Security (TLS) is a proven, low-cost solution for implementing robust email security at your brokerage.

Western Financial Group (WFG), a brokerage based in High River, AB, proactively implemented TLS in the mid-2000s—long before most organizations in the P&C industry. Raj Misir—the Winnipeg-based manager of information and communications technology at WFG—has been pushing TLS forward at his brokerage since starting there in 2005. “If you’re not using TLS, then your email is not truly safe,” warns Misir. “The reality is that there are people out there looking to intercept the sensitive client information brokers are often sending via email.

Brokers can prevent this from happening with TLS.” TLS is recognized across multiple industries as the best low-cost email security solution for businesses. TLS protects the emails you send over the Internet by encrypting them, making them very difficult to intercept and decode. “TLS is a protocol for email security that provides strong encryption and authentication features,” explains Misir. “It’s essentially a handshake between the email client and the server and it prevents third parties from eavesdropping on and tampering with your email communications.” Most insurance companies in the Canadian P&C industry already have TLS fully enabled on their email servers.

There are many benefits to implementing TLS, including ensuring that your brokerage complies with privacy

10 The Alberta Broker April - May 2014

legislation such as PIPEDA, which states, “personal information shall be protected by security safeguards appropriate to the sensitivity of the information.” TLS can certainly be considered one of these safeguards. “The importance of TLS is growing in the insurance industry, especially when you consider compliance legislation such as PIPEDA,” states Misir. “TLS is an important piece of WFG’s privacy strategy; it helps us comply with privacy legislation. We are already using TLS with all insurers who are requesting it, and as more and more insurers come on board with TLS, we expect to eventually start enforcing it for all our emails with insurers. We currently enforce TLS encryption with certain partners, so no email will be transmitted between our two companies unless TLS is used.”

TLS can help brokers stay within their own Broker Management System (BMS) more often when completing policies for customers. “Many brokers have their BMS tied directly into their email system, so with TLS enabled by all parties, brokers shouldn’t have to leave their BMS to send sensitive client information to insurers,” explains Misir.

“The whole purpose behind TLS is to establish secure and private tunnels of email communication, so if a broker and insurer both have TLS enabled, it’s really not necessary to ask the broker to leave their BMS to send an email.”

TLS can even be used as a marketing tool for brokerages. Once implemented, brokers can promote TLS during their sales process to communicate that they have secure email. “TLS is an important part of Western’s security initiatives over the next few years, and we will even consider using it as a marketing

tool to reassure our potential customers that we have secure email and take data security very seriously,” says Misir.

“Smaller brokerages might perceive that enabling a cryptographic protocol such as TLS on their email communications is a difficult or expensive task, but it really isn’t,” clarifies Misir.

“Anybody hosting email on a professional email server such as Microsoft Exchange is capable of turning TLS on. It’s just a matter of asking your IT person to do it, and it can be done within hours.”

There is a very low implementation cost associated with TLS—digital certificates, which tend to range in cost between $45 to $200 per year, must be purchased.

Contact your IT support company and ask them about implementing TLS in your organization. To learn more about the benefits of CSIO eMail Security using TLS and for technical advice on implementation, visit CSIO.com.

PRANAB PANDEY CSIO, Manager of Standards & Business Process Improvement

The Advocate

George Hodgson

Can Brokers Lead the

Telematics Revolution

The answer is a resounding YES! A different opening question would be: Should brokers lead the telematics revolution in Alberta?

As we all know, the Canadian insurance market is somewhat fragmented and geographically diverse. Throw in to the mix the different regulatory and market models that exist and it is no wonder that bringing innovative products, like telematics, to Canada can be a challenge.

The value proposition of the broker network is very clear: Through a broker, a consumer obtains the best value for insurance products and service in the country. Through a broker, consumers receive personalized support and advice that will protect them and their families.

A broker is the only distribution system in the country that has access to multiple insurance companies from which consumers can chose the best product and service that suits their needs and lifestyles.

This is a clear consumer-focused value proposition.

One challenge of today’s broker business model is to significantly increase the frequency of connection that a broker has with its customers, the consumer. The greater the frequency of connection with consumers, the greater potential there is to create value.

If telematics is introduced into the Alberta marketplace in the manner with which it is evolving today in other parts of the country (without broker intervention), then insurance companies will erode the broker value proposition and make the ability for you to connect with your customers significantly harder.

Take some time and think about it.

Really think about it. What we decide to do next could determine the future of the broker network.

In this developing model: • The insurance company provides a telematics insurance product direct to a consumer.

12 The Alberta Broker April - May 2014

Broker facilitates consumer consent to capture data.

Telematics fitted in customer vehicle— customer-specific data captured.

Insurance defined information captured.

Driver performance reported back to insurance company, broker and driver.

Customer and broker interaction to review potential impact on insurance premiums.

• If the company distributes its products through the broker network, it will credit the broker with that “sale.” All reasonable so far.

• The insurance company collects the consumer’s data from a black box inserted into the consumer’s car to affect rating variables to make the product attractive to that consumer.

• As the consumer drives, the data is collected and retrieved by the insurance company, which impacts the consumer’s premium accordingly (how this will actually be affected is still under regulatory review and debate).

in Alberta?

The insurance company is required to communicate to the consumer on a regular basis on how he (or she) is driving and how that driving behaviour is impacting his telematics insurance product.

In the model that is developing across Canada now: • Does the broker communicate with the consumer? No, the insurance company does.

• Does the broker interact with the consumer in a meaningful manner (being able to interpret the impact of driving behaviour on the insurance product)? No, the insurance company does.

• Does the broker have the ability to facilitate consent changes to the access to the consumer’s data? No, the existing consumer consent is under the control of the insurance company.

• Does the use of a telematics product in this manner strengthen the broker brand? No, it significantly weakens it.

If telematics continues to be introduced into the Canadian market in the manner with which it is today, brokers will see their consumer value proposition eroded and their ability to communicate meaningfully with their customers significantly damaged.

Given that the most likely users of telematics products are also the very future generations of consumers of the broker model, this scenario should concern us all.

Should brokers lead the telematics revolution in Alberta? Absolutely!

Can brokers lead the telematics revolution in Alberta? Yes! Can brokers do this alone? The answer lies within IBAA’s very own mission statement, “[IBAA] is dedicated to preserving and strengthening the insurance broker.” The opportunity is in collaborating with our sister associations and leveraging our collective resource capability and scale.

You may be aware that our sister association in Ontario, IBAO, has agreed to invest heavily in developing a solution that will squarely place the broker network at the forefront of the telematics revolution—not only in Ontario but across Canada.

The IBAO solution directly supports the Ontario regulator’s position of placing consumers’ interests up front and foremost, as stated in its bulletin of October 3, 2013.

The model being implemented by IBRI (the IBAO’s wholly owned forprofit entity) will deliver: • A framework that, from the outset, places and keeps the consumer and consumer choice up front and foremost; • Value-added products and services beyond the insurance policy that promote the individual broker brand; • Multiple opportunities (and the tools) to connect and communicate with your telematics customers on a regular basis; and • The ability for brokers to provide personalized support and advice on which telematics product is most suitable for their customers.

The IBAO solution also enables collaboration within and across our industry. Specifically, it offers insurance companies: • The opportunity to support their chosen distribution network; • The opportunity and tools to enable the growth of insurance partner brand recognition; • The opportunity to develop, implement and distribute their own value telematics product; and • A framework that clearly supports and facilitates compliance with the considerations and requirements of the Ontario regulator.

IBAA is currently evaluating its own response to the evolving world of telematics. This work commenced in late 2013 with a meeting with Alberta Superintendent of Insurance Mark Prefontaine and others from his office, as well as Del Dyck from the AIRB to discuss how the implementation of a broker-owned telematics solution would benefit Albertans.

IBAA intends to give you, the broker, the opportunity to not only prevent the

erosion of your consumer value proposition but place you back in to the driver’s seat of telematics. This may or may not be the same solution that is being implemented by IBAO but one thing is for sure: there is strength in numbers, and using our collective scale and market influence can only be to our advantage.

What do you need to do to engage?

Support your local association by getting engaged in this pivotal subject and let IBAA know what you think. It is

important that you commit to participate and ensure that IBAA is fully supported as it continues to preserve and strengthening the insurance broker.

GEORGE HODGSON CEO, IB AA ghodgson@ibaa.ca

The Alberta Broker April - May 2014 13

Insuring “The Worst of the Worst” Lessons and tales from my 10 years on the Facility Association board

By Thom Young Having spent the last 10 years as a director on the national board of the Facility Association (FA), I’ve gained some interesting insights into how the FA functions and I’ve often complained that its role and operations seem to be misunderstood by the average broker.

With that in mind, I’ve been asked to provide a little more information on the FA, what it does, how it does it and the role it plays in the brokers’ product suite.

By the time you read this article I will have attended my last directors’ meeting and Ken Dueck will have assumed my position representing Alberta brokers.

So, I’ve also been asked to give a little history on some of the issues that the national board had to deal with during my tenure. Hopefully this particularly dry subject can be made interesting enough to hold your attention until the end of my essay.

The official story about the FA comes from its welcome page on its website: The Facility Association is an entity established by the automobile insurance industry to ensure that automobile insurance is available to all owners and licensed drivers of motor vehicles where such owners or drivers are unable to obtain automobile 14 The Alberta Broker April - May 2014

insurance through the voluntary insurance market.

The Facility Association is an unincorporated non-profit organization of all automobile insurers serving the following provinces and territories: Alberta, New Brunswick, Newfoundland & Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Yukon.

Every insurer licensed to write automobile liability insurance in any jurisdiction Facility Association serves is required to become a member and remain a member of the Association. All members of the Facility Association must abide by the Plan of Operation.

To understand the purpose for a FA, one has to look at the history of the development of automobile insurance in Canada and the establishment of the minimum legal requirements for insurance to operate a motor vehicle in all of the provinces. It is hard to imagine a marketplace where a “standard” policy form didn’t exist and each company used its own wordings and interpretations of coverage. It’s even harder to imagine a marketplace where there were no minimum limits of coverage needed to

operate a vehicle and no legal need to prove you had either insurance or enough wealth to pay damages arising from your driving habits if you were operating a motor vehicle on the public highways.

At a point in our Canadian history (following the example of our neighbours to the South and our ancestral connections to England and France), we Canadians all got together and agreed on how an automobile policy would read.

This wording was eventually written into the laws of the nine provinces that formed the Canadian confederation. We know these as the statute wordings and, for the most part, their form and content has changed little since the agreements took place over 70 years ago. Along with the wordings came a legal requirement for minimum amounts of coverage to be in place and we know those as the statute limits.

With this legal requirement to have insurance in place before operating a motor vehicle on a public roadway, what do you do if you can’t get insurance because of your circumstances (age, location, driving history or availability of markets)? Another law was made to ensure that there is always a place to get insurance; that place is the Facility Association.

The FA operates considerably differently today than it did in its early days. In the beginning, it functioned in close cooperation with the Insurance Bureau of Canada, which represents the majority of insurers in Canada. The original FA simply existed as an accounting operation where, through a rather

continued on page 16

The Alberta Broker April - May 2014 15

continued from page 14 strange process, the recording of insurance written in the FA was processed on behalf of the insurers on a market share basis.

This was much like the manner in which the risk sharing pools in Alberta function today where the insurers write the business in their own books but apportion the expenses and claims through the FA, which keeps track of things for them and functions as the clearing house for the distribution of the results.

In the late 1960s and early 1970s, the volume of business being administered reached a point where the companies writing it were establishing servicing divisions to deal with Facility business from their brokers and agents. Smaller companies didn’t find it practical to administer the limited number of policies assigned to them by market share because the cost sharing process didn’t equal a fair adjustment of the administration costs for a small number of policies, and the concept of “servicing carriers” developed. All agents or brokers were given access to a servicing carrier for the business they had to place in the FA, and the FA has functioned this way ever since.

In Alberta, however, we have a unique arrangement with our grid and non-grid risk sharing pools and our “all comers” rule. But for those “worst of the worst” risks and special commercial risks, the FA in Alberta still functions in the same manner, with the servicing carriers dealing with the business. Strange, though, that in all of Canada I believe there are only four servicing carriers now, with the majority of the business placed in the FA administered by Nordic and RSA. I’ve often said that the average broker doesn’t really understand the reason for the FA, and, for the most part, I still believe that. In part, the problem is that most brokers see the FA as another market. They don’t really understand that it functions as the relief mechanism used by the public when regular markets have capacity issues or are shedding business that doesn’t meet the minimum underwriting rules they’ve established.

16 The Alberta Broker April - May 2014

In Alberta, since the auto reforms took place in the early part of the last decade, brokers now only deal with the FA on the worst-of-the-worst or on special classes of risk not covered by the auto reforms.

The insurers are able to cede their exposure on those risks they’ve determined unfit for their underwriting rules (whether they’ve posted rates for them or not) into the non-grid risk sharing pool. The grid functions fairly well (from a broker perspective anyway) with the rules set out by the government in consultation with their actuaries, and the companies accept the all comers rule as the law (well, mostly do).

In Ontario and the Maritimes, the FA continues to function as it did prior to the Alberta auto reforms. When the market returned to normal in the latter part of the last decade, the FA’s participation in the marketplace returned to being the place for the worst of the worst (for the most part) and not the place where insurers were dumping market share to meet capacity issues brought on by capital requirements. That isn’t what the FA is for but that is what it has been used for during hard market cycles.

I’ll conclude the dry part of this essay by pointing out that the FA functions under a very specific set of rules called the plan of operation. The plan of operation encompasses the operations of the entity in every jurisdiction in Canada and these rules can only be changed by the agreement of the regulators in each of those jurisdictions.

The rules are very specific in regard to everything the organization can do, including the rates and rules for underwriting.

In Alberta, I often received calls over the years from a broker upset with an underwriter at one of the servicing companies. The story always began with the opinion that the underwriters were off base, wrong and/or had changed some way of doing something that they didn’t have any right doing. There is a process to appeal the actions and decisions of an underwriter for a servicing carrier.

It begins with determining which of the rules set out in the plan of operation

were not followed or broken. So it begins with RTFM (read the frigging manual) and then goes to a provincial board that meets regularly to review such complaints (among other things). If it is felt that this board erred in its decision, it can be appealed at the next level nationally for review and it may even be forwarded to the board that I sat on for the last 10 years (I can recall one instance). This is the process that a broker who’s working hard for his clients should understand.

I’m not saying that mistakes haven’t been made but I will observe that in my experience it’s usually the presenter at fault, not the rejecter, in these situations.

Here are some highlights from my years on this board.

Complaints from brokers didn’t often make it to me but some did. An example would be the refusal of the servicing carrier to provide more than $1,000,000 third-party liability coverage on a Lamborghini operated by a foreign national with an international driver’s license. The broker was convinced the limit should be $2,000,000 though the rules stated otherwise. When the broker called me I told him to write what he could and get the foreign national to arrange an umbrella to pick up the excess.

The solution seemed to work out; I didn’t hear from anyone on this again.

On about my second visit to Toronto, in the fall of 2004, I was called on the carpet about what “those idiots in Alberta were doing” in reference to the auto reforms. I guess I made my point to them when I mentioned the meeting in Jasper during the IBAA convention where the Superintendent of Insurance (SI) called all the company people into a room and told them that their market behaviour was unacceptable to Albertans and that they had better get rid of the problem of good people being refused standard rates and forced into the FA because of an NSF cheque on the Equifax report. He also cited insurers’ failure to offer renewals for a myriad of flimsy underwriting reasons that made no sense to the public (or to many of us in the industry) and that, other than one nonstandard insurer with inflated rates, no companies had

been writing new business for almost three months. The SI told them to fix this or he would. They didn’t; he did. You should never underestimate the willingness of a government to act on an issue when their constituents are calling them about it. I wasn’t very popular with a couple of the CEOs in the room at that moment but I didn’t think I was there to be popular anyway.

Not long after the auto reforms in Alberta were in place, the nonstandard insurer, who had been such a great supporter of the brokers by taking new business when no one else was, did a complete reversal on the market and started trying to find any way it could to not write new business. One of several strategies it employed was reducing the commission it would pay brokers placing business with them. This wasn’t very well received by the brokers in Alberta.

In the auto reforms, the companies’ expense allocations were defined and set by the regulator but there were no thoughts about what was the correct

makeup of the expense portion when it came to commission. The “standard” was 12.5 but some limits were in place on certain classes of business. This was a can of worms we didn’t want to open because we might see a lower standard put in place if we asked to have the commission expense set out in the regulations. I figured the problem could be resolved by defining the commission expense by what was paid on the previous renewal, and that any company that reduced commissions would have its expense allocation reduced by a like amount. I drafted a motion and circulated it for discussion, and there was a considerable amount of discussion. The motion didn’t pass. While one could be cynical as to the reasons, at the end of the day, the companies were served notice that we wouldn’t stand to see our compensation under attack in this manner. The company didn’t last much longer either— betraying the trust of your distributers is apparently a hard lesson learned.

The Facility board is made up of most of the movers and shakers in the Canadian insurance business. Through the years, I’ve enjoyed the company of many different CEOs and have shared their insights into our business and had the opportunity to express my own perspectives to them. The confidence of a board is kept by the confidentiality of the discussions surrounding its work.

I will wind this up by leaving it at that and saying that I certainly have enjoyed representing Alberta brokers on this board and I have every confidence that my successor will carry on with the work that needs to be done to keep our industry healthy and strong.

THOM YOUNG Lungren & Young Insurance thom.young@landy.ca

The Alberta Broker April - May 2014 17

IBC Insight

Bill Adams

The Big 5-0!

Well, not quite to the day, but 2014 marks the 50th anniversary of Insurance Bureau of Canada. The property and casualty insurance industry has seen a lot of changes since 1964—it’s been quite an adventure!

Anniversaries are often a time of reflection. A look back at IBC’s beginnings offers an interesting glimpse into the history of the P&C industry as a whole, the issues it faces and how they have evolved over the years.

When we look back, of course, many things were different. In 1964: • The Beatles made their initial appearance on the Billboard charts.

• The first Tim Horton’s opened its doors.

• The Leafs won the Stanley Cup against Detroit Red Wings (there were no Edmonton Oilers or Calgary Flames back then; Wayne Gretzky was only three years old!).

At that time, the situation was also somewhat different for the general insurance industry. Poor data, misinterpretation of that data and improperly priced product led to underwriting losses of almost $74 million—that’s $564.4 million in 2013 dollars.

Kenneth MacGregor, then the federal superintendent of insurance, worried about the solvency of some companies and the lack of industrywide statistics.

Speaking at an industry event, he warned insurers that they needed to “act like a mature, scientific industry,” not a “basement bargain store.”

18 The Alberta Broker April - May 2014

This spurred a group of insurer CEOs to create the Insurance Bureau of Canada.

IBC’s initial mission was to provide industry-wide statistics and information about economic trends that would allow companies to make sounder rate decisions. For the first four years, IBC had no permanent staff. But within about 20 years, it had become the major voice of general insurance companies in Canada. Today, IBC represents 90% of the private sector property and casualty insurance market in Canada and is influential with all levels of government in forming strategies to protect Canadians on topics ranging from adaptation to severe weather, preparation for earthquake and, of course, sustainable and effective auto insurance.

In the last half-century, IBC’s work has included: • Lobbying provincial governments to promote auto reforms that create affordable and available insurance for consumers.

• Helping resolve serious underinsurance issues through consumer outreach and by working with insurers to ensure inflation increases were allowed in all policies when home prices soared in the ’80s.

• Leading the charge in road safety initiatives, including promoting the use of seatbelts, spearheading the successful lobby for graduated licensing for new drivers, conducting national campaigns to raise awareness of distracted driving and more.

• Creating consumer information centres to answer general questions about insurance. (In 2013, our five regional centres handled over 66,000 inquiries.)

In its early days, IBC focused on developing sophisticated data collection processes and successfully making the case for competition and choice in auto insurance in several provincial campaigns.

Today, IBC’s work reflects the insurance industry’s unique perspective on several big-picture issues affecting Canadians, such as adaptation to severe weather and earthquake preparation. On behalf of its member insurers, IBC is leading the national conversations on these topics, engaging with the broker community and calling for government action to make our communities more resilient.

Over the years we have run multiple awareness campaigns on safety issues including emergency preparedness and injury prevention. For example, this past fall, IBC conducted an interactive community outreach tour in southern Alberta on safety and damage prevention, especially for losses related to severe weather. And we’re continuing to educate consumers about safety, including the risks of distracted driving.

In addition to loss reduction awareness, we reach out to the public in the wake of disaster through our Community Assistance Mobile Pavilion (CAMP). CAMP goes to disaster sites that have significant insured damage—like fire-razed

Slave Lake or the devastated town of Lac-MÊgantic—to answer insurance questions and address concerns of those affected.

IBC has been very active following the flood disaster in southern Alberta last June. From providing advice to consumers about the claims process and working with officials to address insurance issues, to supporting government initiatives to prevent future flood disasters, IBC is deeply involved in helping Albertans rebuild and become more resilient to future weather-related events.

Investigating and combatting insurance crime, which bilks Canadians and insurers millions each year, is another part of IBC’s work. Focusing on organized crime rings, IBC investigators work with member insurers and law enforcement to fight auto theft, staged collisions and other insurance crimes.

This year, IBC and industry leaders helped to start CANATICS, a nonprofit organization that will use the latest technology to analyze pooled auto insurance industry data to help identify fraud. This is the newest addition to our fraud-fighting investigative team and signals a modern approach to crime prevention.

Much of this work has a national scope, but it is reflected in the onthe-ground work we do in regions across Canada.

Auto insurance, for example, is an on-going issue for both the industry and Canadian drivers. IBC works constantly with provincial governments to make sure the system

continued on page 20 The Alberta Broker April - May 2014 19

continued from page 19 works as effectively as possible for policyholders.

Recently, we worked hard on changes to Alberta’s auto insurance premium regulations (file-and-use process) under Bill 39. The revisions reflect a commitment from the Alberta government to minimize rate regulation compliance costs and promote product and service

Did You Know...

The 2014 IBAA convention is all about “Prairie Power & Blazing New Trails” in our industry? By attending, you will have the opportunity to learn more about what industry issues are on the horizon as well as how to grow your business.

We look forward to seeing you in Jasper this year!

There are over 3000 species of mosquitoes? The red bump and itching caused by a mosquito bite is actually an allergic reaction to the mosquito’s saliva. Mosquitoes are found on almost every continent in the world.

innovation in a competitive pricing environment.

This year is a big one for IBC— it’s a chance to reflect on our anniversary, recall key accomplishments and, more importantly, look to the future. This is also an exciting time for our industry. Now more than ever, insurers, brokers and other industry professionals are

poised to demonstrate our value, leadership and commitment to the well-being of Canadians.

We’re proud of what has been achieved over the past 50 years and we’re ready to meet the next challenges ahead on behalf of our members and broker partners. The best is yet to come!

Visit www.ibc.ca for consumer resources, information on P&C industry issues and more.

BILL ADAMS Vice President, Western Canada, Insurance Bureau of Canada

Electric cars are set to race in a formula E series this year? The world’s first fully electric Grand Prix racing series, the FIA Formula E Championship, launches this year. It will pit single-seat electric-powered racers against one another on ten center-city street courses.

It will be interesting to see how electric car results match up against gas powered ones.

Environment Canada reports that extreme weather events that used to happen every 40 years can now be expected to happen every six? This will mean that as an industry we should be talking to each other to see what advances can be made in product, claims handling, interaction with government and consumer education to minimize the impact of weather events.We know they are going to happen it is all a matter of when.

You must be a member in good standing with a provincial brokers association in order to use your CAIB designation? Take a look around the next time you are at an industry event and see how many people have their designation.Those people who do took the time to invest in their education and their career. Great work CAIB graduates!

Sources: IBAA, IBC, Statistics Canada, National Geographic and the Internet.

20 The Alberta Broker April - May 2014

Know E & O Charles W. Phillips, JD

It All Starts With an Application

“What they don’t know won’t hurt them.”

All too often, policyholders follow this popular notion when filling out an application. Sometimes it appears to work. Failing to fully disclose a risk might get the policy written or save them on premium. When the loss occurs, however, the claim will likely be denied or the policy rescinded. As a broker, you don’t want to be caught in the middle.

When the claim is submitted (if not sooner), the carrier is likely to discover the discrepancies in the application and rely on the misrepresentation on the application to exclude coverage or rescind the policy. If the applicant is able to argue that he or she did not participate in the misrepresentation or that you advised him to complete the application in a certain manner, the carrier may lose its ability to deny or rescind and will instead pursue you to pay the loss.

As a broker, you should take the application process seriously. Here are some common sense tips that might be helpful: • Have the insured complete the application. It makes it much more difficult for claimants to argue that they didn’t know they were supposed disclose certain information, when they have answered the question in their own handwriting.

• Never have the applicant sign a blank application and then fill out the

22 The Alberta Broker April - May 2014

information later. This makes it too convenient for claimants to argue that they were not aware they were supposed to disclose that information.

• Never sign an application for the applicant, even if you have the applicant’s permission. If the carrier requires a signed application, it will be too tempting for the applicant to forget that he gave you permission.

Additionally, if you sign the applicant’s name you probably have just committed forgery.

• Be careful when having the applicant “just sign here” or using one of the “sign here” sticky notes. You want to be able to say that you advised the clamant to read the entire application and to get answers to any questions before signing.

• Never advise applicants to withhold or exclude information. It’s inadvisable to substitute your judgment for the judgment of the underwriter as to what is relevant or important. If it is responsive to the question, have them disclose it.

• It’s not a good idea to pre-populate the application with information you’ve copied from an old application or out of the file. If you do so, you should make sure you’ve reviewed each piece of information with the applicant to confirm the items that might have changed. This is especially true when dealing with items that are likely to fluctuate from year to year (such as payroll, income, sales, value of certain items, number and type of vehicles, etc.)

• Don’t submit an “old application.”

Don’t assume that because you solicited a policy for them last year or even last week that all the information that was accurate in the prior application is still true today. Complete a new application.

• Try not to complete an application over the telephone.

• If you do find yourself reading the questions to the applicant do not

paraphrase, summarize or skip questions. Read every question and input the entire response.

• Advise the applicant to read the application for accuracy before he signs.

• If the carrier requires uploading the application into a computer system, carefully input all the information from the application into the system.

The application process is often a hectic time as policies are about to expire or customers are in a hurry to have some risk protected. Lack of time should never be an excuse to cut corners on risk management. While it might seem like a good idea at the time in order to bring a new account in the door or keep an existing account happy, it won’t seem like a good idea when you’re faced with an errors and omissions claim. What they don’t know won’t hurt them, but it just might hurt you!

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.

Copyright ©2013, Big “I” Advantage, Inc. and Swiss Re Corporate Solutions and/or Westport Insurance Corporation. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission f rom Big “I” Advantage.

For permission or further information, contact Agency E&O Risk Manager, 127 South Peyton Street, Alexandria, VA 22314 or email at info@iiaba.net.

Who? What? Where? Darrell Verbonac

ON THE MOVE Two of Calgary’s better known insurance people decided to pick up stakes and move out to B.C. Al Dadswell, who started up A-WIN Insurance a number of years ago, is stepping down as president of both A-WIN and RV Direct Insurance and heading out to Kelowna where he will open a new A-WIN as a branch partner. Both Al and his business partner Debi Walker sold their shares in A-WIN to Aviva.

Debi will remain with A-WIN in a senior management role. Also B.C. bound is Joe Stark, HUB International’s vice president of the Prairies.

Joe moved to HUB’s Chilliwack office to take an executive position.

Two Calgary insurance industry firms recently moved offices; Lanes Insurance moved within its building in the northeast into much more spacious digs and Crawford and Company Adjusters moved from its 12th Street NE location to new premises in the deep south at 3165114 Avenue SE. NEW ON THE SCENE A new broker operation in town is Pirbright Professions, which opened up in the Marda Loop area.

It is owned by Daffyd Griffith, and assisting him is Barb Taylor, both of whom were previously with JLT Canada. Pirbright is set up to specialize in professional liability, an area in which both Daffyd and Barb have spent many years working.

24 The Alberta Broker April - May 2014

STAFF CHANGES Over at JLT, Calgary-based David Richards was appointed as the CEO for its Canadian operations. In news from BFL Canada, Penny Dyte moved up from being the Calgary regional vice president to being regional vice president of global business. Replacing Penny is Rahim Tejani in the role of managing vice president of the BFL Calgary office.

New staff at BFL include Braden Maser, who was with BKI Insurance, as well as a foursome who came over from Renfrew Insurance: Greg Cortese, Tony Reed, Leslie Desmarais and Desiree Ibanez.

Meanwhile Renfrew added to its staff as Liv Wong from Toole Peet and Catherine Campbell from Marsh Canada recently joined them, while Cheryl Johnson returned to

Renfrew after a hiatus away from the business.

Denys Ohrn, who was with Toole Peet & Co Limited for a number of years, joined Zurich Insurance as a commercial auto specialist.

New staff at Costen & Associates are Peter O’Sullivan, who came to Canada from Ireland where he was with Munster Group Insurance, and Heather Howard, who was with a broker on Vancouver Island.

New additions at Dalton Timmis Insurance are Aleksandra Peszko and Stephanie Mosher.

At Rogers Insurance, Ryan Eisenhut is new—moving to Calgary from Kelowna and joining his sister Jenna at the office. Nanci Klassen came over from Wilson M. Beck Insurance.

Other staff additions around Calgary include Maggie Hooker who is new at Aon after having been with Touchstone Insurance, Wilson Liu at Link Insurance, Kumar Sharma with Lundgren & Young Insurance in the northeast, and Sara Livermore and Larry Arnason at Action Insurance.

Up in Red Deer, the new manager of the HUB Phoenix office is Pam Cameron.

L to R: Amy Foggin, CKR Global Investigations (WICC); Peter Rogers, Rogers Insurance*; Don Tetrault, TMD Adjusters; Julia Marshall, Gold Key Insurance**; Fran Schmuck, FKS Adjusters; Kennedy Lightly, Johnson’s Insurance; Michelle Hammel, Intact; Jim Sinclair, Sinclair Golf Tournament*; Suzanne MacPherson, Intact; Bruce Rabic of Rogers Insurance*; Tim Gayle, Marsh Canada. *Members of Sinclair Golf Tournament committee. **Accepting on behalf of IBAA.

RETIREMENTS Long-time industry veteran Denys Nelson has retired. Denys had been with Church Eaton Insurance for many years. Also, best wishes to Intact underwriter Barb Loewen who recently retired.

APPLAUSE Congratulations to Neil Burns of Intact Insurance on his wedding to Stephanie McIntosh. Stephanie is the daughter of industry veteran Doug McIntosh of Action Insurance, and the newlyweds honeymooned with a trip to Africa.

I also want to mention Anastasia Bucsis, the daughter of Ross and Anita Bucsis of Palliser Insurance, who represented Canada at the Sochi Olympics in speed skating.

This was Anastasia’s second Olympics, as she also participated in Vancouver in 2010. Both Ross and Anita travelled to Sochi to cheer on Anastasia and her Canadian teammates.

Kudos to the companies and individuals who were honoured at the 2014 WICC Gold Flame Awards luncheon on January 23, 2014 (pictured above right).

DARRELL VERBONAC, FCIP, CRM Regional Business Development Manager Intact Insurance Company darrell.verbonac@intact.net The Alberta Broker April - May 2014 25

2014 IBAA Convention 2014 IBAA Convention Guide

26 The Alberta Broker April - May 2014

2014 IBAA Convention – The SPEAKERS

Arlene Dickinson is one of Canada’s most renowned entrepreneurs and investors.

Her keynotes draw on her experience as a judge on Dragon’s Den and CEO of powerhouse marketing firm Venture Communications. Born in South Africa and raised in Alberta, she is “Prairie Power” personified.

Damage Control Industry Research on Best Practices for Preventing Damage f rom Water, Tornadoes and Wildfire.

Paul Kovacs is founder and executive director of the Institute for Catastrophic Loss Reduction (ICLR) at Western University, president and CEO of Property and Casualty Insurance Compensation Corporation (PACICC), and adjunct research professor, Economics, University of Western Ontario. Join Paul for an overview of insurance industry research on best practices to protect new and existing homes in Canada from natural hazards. His talk will include the risk of loss and damage from basement flooding, tornadoes, and interface wildfires.

The Seven Deadly Wastes Going Lean—Trimming the Fat and Increasing Capacity Create more time for producers to sell by detecting and correcting operational inefficiencies, i.e., the seven deadly wastes.

Learn how capacity will drive customer relationships and energize staff. This informative and inter-active workshopstyle examination of how lean methodology can be effectively applied to the insurance industry will be lead by Sean H. Mulcair.

Sean has been working in the insurance industry for over 20 years. He is an established lecturer at McGill University, teaching in the Risk Management department since 1996. He was also appointed Quebec’s Best Practices Champion by IBAC in 2006 and currently works alongside provincial associations in bringing this informative topic to brokers. Sean is also a Lean-certified facilitator.

Power Lunch The decisions of Alberta’s law and policymakers have a tremendous impact on insurance brokers, their industry partners and insurance consumers. The Honourable Doug Horner, Treasury Board president and Minister of Finance, and the Honourable Ken Hughes, Minister of Municipal Affairs will be speaking at Monday’s lunch on issues such as: • 2013 flood recovery and ongoing mitigation and resiliency work • Status of the DRP program and interaction with insurance • Ongoing auto insurance changes • Property insurance marketplace issues • Progress of results-based budgeting • General regulatory issues • Governance of AIC and licensing of agents

Colin Simpson

Richard King

Tim Scurry

Telematics: Giving Brokers the Competitive Edge Telematics—the “next big thing” to hit the P&C insurance industry. Brokers have the opportunity to take a leadership position in this evolutionary, revolutionary way of putting consumers in the premium calculation driver’s seat. Join Colin Simpson, Richard King and Tim Scurry for a two-part update on the evolution of telematics in Canada and discussion on how one British broker aims to give brokers the competitive edge here in Canada.

The Alberta Broker April - May 2014 27

2014 IBAA Convention – The EVENTS

Peace Hills Party Catch up with old friends and make new ones at what is the official, unofficial kickoff to the IBAA convention.

AGM

Attend the IBAA annual general meeting and find out what issues are impacting brokers in Alberta and across the country. Be an active participant in voting for your IBAA leaders and on association business.

Hospitality Night Connect with industry partners and peers in a relaxed, social atmosphere. After all, this business is about relationships (and fun)!

President’s Gala Congratulate and appreciate Gord Cowan for his commitment to serve and advocate for the insurance broker profession with an evening of fine dining and entertainment.

Golf Tournament Break out the plaid and enjoy a round of “friendly competition” on one of Canada’s, and the world’s, most beautiful golf courses.

Trade Show This is a one-stop-shop of organizations who serve insurance brokers and their clients. Make the most of this opportunity find out what’s new in their world and to let them know how they can help you in yours.

28 The Alberta Broker April - May 2014

The Moose Is Back!

Back by popular demand … the crew from Crawford Adjusters will be concocting this convention elixir, known for its delicious taste (and considerable kick!).

This year, the Moose makes its appearance at Hospitality Night.

continued on page 30

2014 IBAA Convention – The ENTERTAINMENT High Tea & Cowboy Poetry

You read that right! Worlds

collide when non-golfers saddle

up (raise their pinkies) and explore

the world of cowboy poetry,

western history, oral storytelling,

and iambic pentameter with award

winning cowboy poet Doris Daley.

Doris has been an emcee and

featured performer at every cowboy

festival in Canada as well as several in the United States and is the recipient of many awards and honours in her profession.

Born and raised in Southern Alberta ranch country, Doris writes cowboy poetry that celebrates the humour, history and way of life of the West. Her great grandfather came west with the North West Mounted Police in the 1870s; her family has been ranching in the Alberta foothills for five generations.

Doris will be also be MC at the president’s ball.

There’s an App for That!

Download the IBAA

Convention Guide for

easy access to all the

information you might

want to know about convention at just the touch of a button.

Get info about the program schedule, specific events, dress codes, speakers, sponsors, exhibitors and much more.

The app is compatible with Apple and Android devices. Windows Phone 7 and Blackberry users can access the same information via our mobile site at m.guidebook.com.

To get the guide, choose one of the methods below: 1. Download ‘Guidebook’ from the Apple App Store or the Android Marketplace 2. Visit http://guidebook.com/getit from your phone’s browser 3. Scan this with your QR-Code reader * From the Guidebook application, tap “Download Guides” then “Redeem Code”. Enter the code mhkuofxa and the guide will download to your device!

30 The Alberta Broker April - May 2014

Johnny Bagpipes Johnston What do you get when high-energy comedy meets the Bagpipes? You get Johnny Bagpipes Johnston—a mixture

of great comedy with a twist of rock n’

roll bagpipes! More than just plaid,

Johnny delivers his hilarious comedy

performance with a Scottish twist that

bowls audiences over.

From appearances at Caesars

Palace and the Freemont Street Experience in Las Vegas, to opening shows for Wide Mouth Mason, Kansas, 54/40 and Rich

Little, Johnny serves up good natured laughs for audiences from all walks of life … including insurance brokers!

continued on page 32

2014 IBAA Convention – The EXIBITORS AMI Autoglas Insurance ..... 14 Applied Systems Canada ... 48 April ........................... 25 & 26 Aurora Underwriting Services .............................. 19 Belfor .................................. 50 BlueC 802 Inc.- blueButler.. 56 BMO Bank of Montreal ....... 34 Brovada Technologies ...... 29 Burns & Wilcox Canada ..... 23 Canadian Hail Repair ........ 51 Cambrian Special Risks Insurance Services ............. 9 Carstar Collision & Glass ... 63 CSIO .................................... 54 Chubb Insurance ................. 53 Chutter Underwriting Services ....... 44 Creechurch International Underwriters ..................... 47 Crystal Glass ..................... 39 CSN Collision & Glass ........ 2 Custom Software Solutions ............ 45 DAS Canada ...................... 42 Disaster Recovery Program 67 DKI Canada Ltd ................... 22 Echelon Insurance .............. 15 Economical Insurance ........ 37 Elliot .................................... 59 Encon .................................... 41 First General Services ............. 13 First Insurance Funding ................ 60 Frank Cowan Company ..................... 31 General Insurance OmbudService ......... 8 Granite Claims Solutions .......................... 5 Guarantee Company of North America ......... 64 Guardian Risk Managers .................................. 12 Hagerty Insurance .................................................. 32 Hansen Software ........................................................ 62 IFS Financial Services .................................................... 40 Independent Broker Resources Inc ..................................... 66 IFS Insurance Premium Financing ........................................ 40 32 The Alberta Broker April - May 2014

IBRI Independent Broker Resources Inc ..................... 66 Informco .............................. 58 IBAA Professional Delelopment .. 70 Insurance Bureau of Canada .................. 27 & 28 K&K Insurance Canada ...,... 7 Keal Technology.................. 52 National Brokerage Services .............................. 35 NautiMax ............................. 68 OPTA Information Services ................................ 6 PAL Insurance Brokers Canada .................. 36 Paul Davis Systems Canada .................................. 4 Peace Hills Insurance ........ 30 Peak Installations ............... 17 Pembridge ............................ 1 Plus Underwriting Managers ............................ 65 Policy Works ......................... 3 Portage la Prairie Mutual Insurance .............. 20 Powersoft ........................... 16 Premier Marine .................. 61 Professional Young Insurance Brokers ............... 69 Servicemaster .................... 18 SGI Canada ............................. 10 South Western Group ............... 57 Sports & Fitness Insurance Canada ............................ 21 SUM Insurance ..................................... 49 Swiss Re Corporate Solutions .................. 24 SPECS Limited .............................................. 38 Totten Insurance Group ..................................... 55 TIC Travel Insurance Coordinators ........................ 46 Wawanesa Insurance ................................................. 33 Winmar .......................................................................... 43 Zywave ................................................................................ 11

2014 IBAA Convention 4:00 p.m.

Come join us in the Great Hall for POETRY and HIGH TEA with Doris Daley, Cowboy Poet and our resident convention emcee.

Sunday, May 4 10:00 a.m.

GOLF TOURNAMENT—Shotgun Start

7:00 p.m.

PEACE HILLS PARTY Pyramid Room, lower level Monday, May 5 7:30 – 9:00 a.m.

BREAKFAST BUFFET Beauvert Ballroom 9:00 – 10:00 a.m.

KEYNOTE: Leadership and Strategic Marketing Arlene Dickinson Mary Schaffer Ballroom 10:30 – 11:30 a.m.

INDUSTRY RESEARCH on Best Practices for Preventing Damage from Water, Tornadoes and Wildfire” Paul Kovacs, Executive Director, Institute for Catastrophic Loss Reduction Mary Schaffer Ballroom 11:30 a.m. – 12:30 p.m.

LUNCH Remarks by The Honourable Doug Horner, President of Treasury Board and Minister of Finance , and The Honourable Ken Hughes, Minister of Municipal Affairs Beauvert Ballroom 12:30 – 3:30 p.m.

AGM Mary Schaffer Ballroom

34 The Alberta Broker April - May 2014

SCHEDULE of EVENTS 4:00 – 7:00 p.m.

PHOTOS Great Hall (weather permitting, on the balcony) 6:00 – 7:00 p.m.

PRESIDENT’S CHAMPAGNE RECEPTION Great Hall

Noon – 5:30 p.m.

TRADE SHOW with Strolling Lunch and entertainment Beauvert Ballroom, Mary Schaffer Ballroom & Great Hall

6:00 – 10:00 p.m.

HOSPITALITY NIGHT Great Hall & Moose`s Nook

5:30 p.m.

PRIZE DRAWS Great Hall

7:00 – 9:30 a.m.

BREAKFAST Beauvert Ballroom

Wednesday, May 7

7:00 – 9:00 p.m.

PRESIDENT’S DINNER Beauvert Ballroom 9:00 – 10:00 p.m.

PRESIDENT’S GALA Entertainment — Johnny “Bagpipes” Johnston Beauvert Ballroom Tuesday, May 6 7:30 – 9:00 a.m.

BREAKFAST BUFFET Great Hall & Moose’s Nook 8:30 – 10:00 a.m.

THE SEVEN DEADLY WASTES. Going Lean—Trimming the Fat and Increasing Capacity. Sean Mulcair, CEO, Gradient Solutions. Pyramid Room, Lower Level 10:30 – Noon TELEMATICS: Giving Brokers the Competitive Edge Colin Simpson, Richard King and Tim Scurry Pyramid Room, Lower Level

The Alberta Broker April - May 2014 35

Legal-Ease

Shelley L. Miller and Terry J. Williams

Precious Gems Paul and Judy Bronfman are very wealthy people who own and enjoy many of the beautiful things that wealth allows.

36 The Alberta Broker April - May 2014

Wealthy Clients Sue Broker After Jewel Theft

Paul is CEO/chairman of William F. White, a company that provides large trucks and heavy equipment for film and television production. He is also the sole shareholder and CEO/Chairman of Comweb, a company valued at close to $100 million. Judy is Paul’s wife. Her father developed a large and prosperous lighting company in the United States and she grew up surrounded by comfort and luxury.

The Bronfmans live in a very large, expensive home in the exclusive neighbourhood of Forest Hill in central Toronto.

The home itself covers 20,000 square feet, plus swimming pool and cabana.

They own a large comfortable cottage on a lake north of Toronto. They also own an array of expensive luxury cars, boats and other toys consistent with their financial status.

On November 8, 2008, Paul and Judy Bronfman \ returned to their home after a family dinner with Judy’s father. Upon entering they discovered with horror that a break-in had occurred. A 310 lb. safe stored in a closet on an upper floor had been removed, jettisoned from a balcony into the garden and spirited away. The safe contained family mementos, expensive jewellery and $50,000 in cash.

The police were summoned immediately and suspected an inside job. However, the thieves were never apprehended and none of the safe’s

contents was ever recovered. Within hours of the break-in the Bronfmans contacted their insurance broker, David Goldsmith (“Goldsmith”), of BFL Canada Risk and Insurance Services Inc. (“BFL”). They were ultimately informed

by Goldsmith that there was a coverage limit for jewellery of only $10,000 under their private collection policy and $10,000 under their homeowners policy.

The Bronfmans’ policies on their residence and cottage had originally been handled by Seymour Alper Inc., an insurance broker with offices in Montreal. In 1998, Seymour Alper had arranged for the Bronfmans’ residence to be insured by Chubb Insurance Company of Canada for almost $4 million plus contents coverage of close to $2 million. This was described as Deluxe Coverage in the Chubb Masterpiece policy. In a covering letter that accompanied the initial policy, Seymour Alper advised that additional insurance could be obtained for “valuable articles … for more than the limits in the policy.”

In a subsequent covering letter accompanying one of the renewals, Seymour Alper referred to a “Jewellery Coverage Enhancement” and advised, among other things, that for the additional premium of $175 it added a blanket amount of $10,000. However, Paul Bronfman testified that he never specifically discussed this Jewellery Coverage Enhancement with Seymour Alper, nor was he ever made aware that the coverage limits on jewellery in the Jewellery Coverage Enhancement was all that was available. Instead, he believed that the extensive Deluxe Contents coverage also applied to the jewellery and all other valuables in their home.

In 2004, Paul Bronfman decided that it would make sense for all of his insurance needs to be handled by one insurance broker in Toronto. He turned to BFL and Goldsmith for this purpose.

BFL was the existing broker for Paul’s companies. BFL’s promotional material was tendered as evidence at trial and stated that it is the broker’s role “to be alert to any issue affecting the client’s risk profile” and to provide “proactive insight, vision and advice aimed at reducing the client’s total cost of risk.”

By the time BFL took over, it appears that the policies on the Bronfmans’ residence and cottage had been moved

by Seymour Alper to AIG. On January 18, 2005, the Bronfmans received copies of two endorsements from AIG along with a covering letter from Goldsmith which stated that he would be contacting them to review the coverage for both their house and cottage prior to the anniversary date of April 1st. However, Goldsmith did not meet with the Bronfmans or undertake the promised review and discussion with them concerning their home insurance needs. Under a covering letter dated March 24, 2005, Goldsmith

sent copies of the 2005 policies issued

by AIG to the Bronfmans. The covering letter stated, among other things, “Please

review the documents and of course call me if you have any questions.”

continued on page 38

The Alberta Broker April - May 2014 37

continued from page 37 The documents themselves included a declaration page for the private collection policy which referred to “blanket items,” including jewellery, as having a limit of $10,000. However, contents coverage for the Bronfmans’ residence was noted as being $2,428,733. The Bronfmans received similar policies and covering letters in subsequent years. Paul Bronfman testified that throughout this time he believed their contents insurance also applied to any jewellery in their home.

Paul stated that he paid little or no attention to the covering letters, viewing them as generic form letters and that he relied on Goldsmith to alert him to any problems or gaps in their coverage.

When the Bronfmans sought to recover compensation for the theft of their jewellery, their claim was denied

by AIG except for the limit of $20,000 under their policies. This represented only a tiny fraction of the actual value of the stolen jewellery. The Bronfmans subsequently changed insurance brokers and sued BFL. James Earl Bonnay (“Bonnay”) was qualified as an expert at trial to provide an opinion on the standard of care to be expected of an insurance broker. Bonnay had been a broker for over 50 years, had taught courses for new brokers and had been involved in the disciplinary arm of the Registered Insurance Brokers of Ontario. In Bonnay’s opinion, Goldsmith fell below the standard to be expected of him in the following respects: a) He made unjustified assumptions as to what the Bronfmans needed and wanted based upon the previous Seymour Alper policies; b) He failed to meet with the Bronfmans to review in detail their personal insurance needs when he assumed responsibility for them; c) He failed to attend at the Bronfmans’ home to gain a full appreciation of the property and lifestyle considerations, which would affect their insurance needs; 38 The Alberta Broker April - May 2014

d) He failed to advise them with respect to existing gaps in their coverage, including the specific low and inadequate limits on coverage for jewellery; e) He failed to advise them that additional insurance to provide coverage for their jewellery was available or to make any recommendations to them with respect to adequate coverage for jewellery or the other valuable items in their home.

The trial judge accepted Bonnay’s opinion and held that whatever Seymour Alper may have provided

or done in the past was of marginal relevance. When Goldsmith took over, he was obliged to conduct a thorough review of the Bronfmans’ insurance needs. In addition, it could be inferred that the insurance needs of clients like the Bronfmans would change and shift over time and periodic updates should also have been conducted. Given the Bronfmans’ circumstances, the trial judge rejected the argument that a form letter could discharge BFL’s duty of care. The Bronfmans were very wealthy people and the inadequate coverage for jewellery was among the gaps that

continued on page 40

The Alberta Broker April - May 2014 21

The trial judge accepted Paul Bronfman’s testimony that if it had been made clear to him that the jewellery and other valuables in the safe were subject to such very low limits of coverage, he would have instructed BFL to procure additional insurance coverage and paid all additional premiums necessary to do so. Further, if BFL had explained the availability of excess insurance and the wisdom of getting it, and the Bronfmans had rejected such a recommendation, it would be prudent for the broker to document that decision. The trial judge observed

continued from page 38 should have been reviewed with them

by Goldsmith. The covering letters did not eliminate that obligation.

The trial judge concluded that Goldsmith and BFL had failed to meet the standard of care expected of an insurance broker in the circumstances.

The trial judge rejected BFL’s argument that the Bronfmans were partially liable for their own loss by failing to read their policies and the accompanying covering letters.

Goldsmith was the insurance professional and it was his duty to make such investigations that would have permitted him to discover an obvious coverage gap of this nature and to ensure the Bronfmans were aware of it and provided with appropriate recommendations to remedy it.

that the Bronfmans could well afford to pay the additional premiums required and the jewellery was of such a value as to make insurance of that nature the sensible, reasonable thing to obtain.

The total value of the stolen jewellery was assessed at $2,332,535 and the Bronfmans were awarded judgment for that amount, less some minor deductions.

SHELLEY L. MILLER, Q.C. and TERRY J. WILLIAMS are lawyers with Dentons Canada LLP and practice in the professional liability insurance area. terry.williams@dentons.com shelley.miller@dentons.com

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PYIB Perspective Jonathan Brown

Step Out of the Comfort Zone I

am often asked what I think about how things are done and what things should be changed in order to move forward with making brokers more efficient and streamlining the way that we do business. However, ideas are only as good as their implementation and sometimes “how we have always done it� seems to get in the way of good constructive change. We live in a world of tremendous change, and doing things the way we have always done it will see us left behind as the way consumers shop and purchase evolves.

The current decline in the baby boomer generation will continue over the coming years, leaving the brokers who have adapted their marketing strategies to meet the wants of the new generation in the lead. As this shift in buying habits takes place, there is tremendous opportunity for the brokers who get ahead of the curve to be extremely profitable as they take advantage of new methods of marketing and interacting with their clientele.

42 The Alberta Broker April - May 2014

In order to be able to make this shift in market approach, the brokerage will need to be well organized and focused on utilizing technology to its advantage.

It will greatly benefit the brokerage to invest in good technical and marketing training for its brokers and to place greater emphasis on perception positioning within its targeted demographic. Using things like Facebook, Twitter, and LinkedIn can allow us to control the perception of the client and generate good will for our business by being a constant source of positive promotion. These platforms are starting to be put to good use by some brokerages, and they are beginning to reap the rewards of their efforts.

In today’s marketplace, consumer’s consider more than price when they purchase their coverage. Studies have shown that more and more consumers are beginning to value what a business stands for, and what it is involved in, when making their buying decisions, and placing less emphasis solely on price considerations. This is great news for the brokerages that are willing to become more involved with community support and development activities and then take advantage of the ability to use social media and the Internet to let clients and the community at large know what they are doing and why they are great places to do business.

We have known for a long time that our best customers are the ones who are not making their purchases based merely on price, and as brokers we have long prided ourselves on being the best choice for consumers because of the personal service that we can provide and the ability to provide multiple options to them. However, if the clients are not aware of what we can do and that we are a good choice to provide the solutions that they need, all of the advantages of the brokerage are lost and we revert back to being price competitive only. We will see our clients leave for very small reductions

in premium and the new business that we need being taken by the lowest bidder.

We often say that what makes brokers better to deal with is that we fit the policy to the client, and not the client to the policy. We need to keep this principle in mind and look to fit the brokerage to the client base that we desire, not try to adapt the client to the way we have always done it.

I believe that with a dedicated approach to improving the perception of our brokerages within our communities, and with an emphasis on utilizing technology to reach the

new generation of consumer, we can turn what is seen as a negative market into a positive and profitable opportunity.

Remember, while people say that they are shopping based on premiums, often what they are really saying is that they are not satisfied with where they are now and are looking for a broker with whom they can feel comfortable. This means that the lowest price does not always win, and the broker who provides the most comfortable buying and service experience will gain and retain their business.

JONATHAN BROWN Director at Large for PYIB jonathan@hcibrokers.com

The Alberta Broker April - May 2014

43

Viewpoint

Ken Myers

Blanket Appeal Brand symbols have always been important to businesses and organizations. The name logotype, while injecting the enterprise with a distinct identity and character, is often supplemented by a brand symbol for extra dimension and emphasis: the elegant simplicity of Mac’s Apple, the power of Merrill Lynch’s bull, the agile aggressiveness of Jaguar’s cat, the empathetic appeal of the World Wildlife Association’s endangered panda. Such symbols provide depth and meaning to a brand, setting the tone for what the customer should expect from it.

The magenta BIP blanket has been a vital part of the insurance broker brand for many years now. 2014 marks the 25th anniversary of the Broker Identity Program (BIP), and our blanket is key to how the brand effectively communicates its importance to politicians and the public. Around the world, IBAC’s broker brand symbolism is recognized by other national broker groups as one of the most developed and comprehensive programs in the industry.

An extrapolation of our humanistic BIPPER or “blanket man” logo, the BIP blanket is a metaphor for comfort, protection and caring. It carries an implied promise that a broker will take care of customers and look after their best interests—an expression of

44 The Alberta Broker April - May 2014

a sacred trust between broker and client.

Time and time again, our research has told us that consumers interpret the BIP magenta blanket exactly as intended. It reminds them that they are protected and will be supported and comforted in times of trouble by their insurance broker—next to no cynicism or rejection of any sort.

While brand symbols are not new, brand symbols that are particularly relevant to the sponsoring business or organization are not as commonplace. The famous Starbucks “Siren” for example is well recognized, but do people connect it to the seafaring history of coffee, interpret it as an inspirational (even seductive) muse, a storyteller or invitation from the brand to explore and connect with others? Possibly not.

Such a well-understood and relevant asset as the BIP blanket is incredibly important to the overall reputation and credibility of our profession. IBAC incorporates it into its advocacy and marketing efforts as an investment in the perpetuation and growth of the broker brand. Brokers, brokerages and broker associations each make use of the blanket in various ways. Tens of thousands of blankets have been donated to national organizations such as the Canadian Ski Patrol

and, at the grass roots level, community centers and shelters, blood banks and the like are grateful recipients of this most welcome item.

The goodwill and positive association of our magenta BIP blanket with the broker brand story will carry forward for years to come, adding an extra measure of popularity to the protection and coverage that brokers have provided Canadians for generations.

With the seemingly more impersonal service that many people feel they receive these days in every quarter, a good reserve fund of blankets in your community will help underscore the broker’s commitment to customer well-being.

KEN MYERS, B. COMM., FCIP, CAIB President, Insurance Brokers Association of Canada

Commercial Break Karen MacWilliam

Uncivil Authority

Are losses Due to Evacuation Orders Covered?

The insured operated a resort outside of Kelowna, B.C. An evacuation order because of forest fires in the area was given July 21, 2009, and lifted two days later. There were cancelled bookings and empty suites, exceeding $460,000 for the following four weeks.

The insurer paid for only two days of lost income.

W

e tend to gloss over the “civil authority” clause found in a commercial or personal property policy. The intent is to cover the extra expenses (or additional living expenses in the case of a homeowner’s policy) or loss of business income that result from lack of access to insured property due to an order of civil authority.

During the flooding in Southern Alberta in June 2013, some overzealous insurers denied claims because of interpretations of the words “neighbouring premises.”

The applicable clause stated: “This form … is extended to insure the loss of ‘Business Income’ suffered by the Insured during the period of time, not exceeding two weeks, while access to the ‘premises’ is prohibited by order of civil authority, but only when such order is given as a direct result of damage to neighbouring premises by a peril insured against under this Form.”

An area was evacuated by presiding officials because of imminent flooding.

Insured policyholders had purchased flood coverage and access to their business was denied because of the 46 The Alberta Broker April - May 2014

evacuation order. The insurer denied coverage for loss of business income because—wait for it—there was no flood damage to the building NEXT DOOR. What?

The interpretation was that unless the building next door had actual flood damage, the loss of income during the evacuation order was not insured.

My interpretation of the intent of coverage has always been that if the insureds get ordered out because of the potentially imminent happening of an insured peril, they have coverage.

Apparently, this is not the case.

Further, in Strata Plan KAS3058 and 0739152 B.C. Ltd. v. St. Paul Fire and Marine Insurance Company (2013 BCSC 2197), the B.C. Supreme Court tackled the same issue.

In this case, the policy stated: “We will pay your actual loss of revenue when a civil authority denies access to an insured location as a direct result of physical loss or damage by a covered cause of loss to property not at an insured location. We will pay for loss of revenue for up to four consecutive weeks while access to an insured location is denied.”

“Without direct damage to insured property or damage to property in the area, the evacuation order itself doesn’t trigger coverage.”

The court stated: “… coverage is only provided for the loss of revenue that occurs when a civil authority denies access, and while it continues to do so, for up to four consecutive weeks. The policy excludes coverage for subsequent or consequential losses that occur after access by a civil authority is no longer denied, in this case, after the evacuation order was lifted.”

Take note that Madam Justice Fleming relied only upon the words in the contract and did not read in any additional intent. We thank the courts for helping us do our jobs better.

In both cases, I think the insureds sustained losses because of evacuation orders given as a result of imminent loss in the area occasioned by an insured peril. That’s why the coverage is there—there is no other reason for the income loss.

Evacuation orders are not given to spare property; they exist to save lives.

But without direct damage to insured property or damage to property in the area, the evacuation order itself doesn’t trigger coverage.

Consider the parallels in personal lines. The triggering event is “access prohibited as a direct result of damage to neighbouring premises by a peril not otherwise excluded.”

So, no coverage for a flood. Many insurers have “mass evacuation” coverage, but most wordings exclude flood, earthquake, war, terrorism and nuclear incidents. I look out the window at the “snowmaggedon” in my Nova Scotia front yard and cynically think that if I was sent to a warming centre, my hotel bill or loss of business income would be excluded, too.

Suggestions

1

Even if your commercial clients are not at direct risk for flooding, they may sustain indirect losses. Examine existing coverage if income loss because of evacuation is a possibility.

Understand that most policy wordings will not be triggered by the evacuation order but by an order combined with damage to an adjacent property.

Get the insurer’s interpretation of “neighbouring premises.” The wording used in the legal case discussed here required only an order and damage at premises not insured.

I believe that there is a special place in hell for whoever directed the adjuster to interpret “neighbouring” as meaning only the building next door.

Orders from local authorities are in place so that first responders don’t need people’s dental records to identify them.

I would suggest amending wordings to state that an evacuation order given because of “the imminent likelihood of damage of the type insured against” triggers coverage.

That would be civil.

2 3

KAREN MacWILLIAM is an insurance and risk management consultant karen_macwilliam@telus.net The Alberta Broker April - May 2014

47

Professional Development

Did you know that in Canada …

• On average, 61% of global users check Facebook at least once a day. In the U.S., 70% of them do. In Canada, it’s 74%.

• More than 8 million Canadians are on LinkedIn—that’s 23% of our population.

• Canada has just over 10 million Twitter accounts.

While less than 1 in 5 Internet users surveyed said they were on Twitter in the last month, the numbers grew by 80% in 2011–2012. (source: AKA New Media)

48 The Alberta Broker April - May 2014

Diana Dai

We came back from the 2014 PD Conference digitally refreshed. I’d like to share what I learned from AKA New Media, the team that presented Digital Marketing Success: Finding Your Focus, Building Your Plan & Moving Forward in the Digital World.

A digital strategy is the who, what, when and where of listening and responding to customers, bridging brand experiences, iterating offerings and collecting and activating consumer relationships in order to accomplish actionable and measurable objectives. Can you say that without taking a breath?

Developing a digital strategy is a four-step process.

1. Objectives & Goals Surprise! The digital strategy begins with goal-setting. What is the purpose of the digital strategy, that is, what do you want to achieve through this process? What are your expected returns?

You need to identify your key audience (existing and/or potential clients) and decide how to communicate your brand with them: What sort of “voice” do you want to have? What do you want them to think about you? What is the background and perception of your brand? Finally, you need to

determine how to measure success — Is it the number of “likes” and “followers,” or how your website ranks in search engine performance? Make sure your goals are SMART (S-Specific, M-Measurable, A-Attainable, R-Relevant, T-Time-bound).

2. Plan & Create The creation stage is purely focused around campaign formalization.

First, take an inventory of existing business channels and content. Do you have a business (not personal) Facebook page, a Twitter account or a LinkedIn business page? Have you joined groups on LinkedIn? Do you use email marketing, rely on your website or blog on insurance issues?

Do you post YouTube videos? If so, do you continually update? Have you considered Google Adwords and Facebook ads? Does the content and method of delivery (channel) respond to what your clients and potential clients want to hear from you, where they want to hear it and how they want to interact with you? Does your current digital strategy reach your target audiences (who)? Once these are determined, you can design and build the campaign elements, channels and measurements that will work for you.

Objectives & Goals Measure & Analyze

Plan & Create

Implement & Execute 3. Implement & Execute The implementation focuses on the delivery of the campaign. Start with building the engagement timeline: When will you post to your social networks? Did you know that the life-span of a Twitter post is 5–25 minutes and that many will be at work and miss Twitter and LinkedIn posts if you update material only on weekdays? Use hash tags for key words to integrate your Tweet with other posts on the topic but don’t use

more than two per post. How many times a month will you blog?

Consistent frequency is important.

Can you handle the schedule? Make a content calendar to put your ideas into action. Cross promote your digital content. Be sure to monitor performance by sampling progress throughout a campaign and optimizing the campaign message. For evaluation purposes, record information through each campaign step.

4. Measure & Analyze Evaluation improves the effectiveness of future campaigns and strategies by becoming the key building block in planning them. The evaluation of a digital strategy, including tracking your reTweets, mentions, likes, etc., is imperative to learn the lessons of the campaign. Google Analytics may be well suited for a yearly analysis.

While this article focuses most on digital strategy, I will be sharing more on digital tactics in the near future. In the meantime, if you wish to obtain a copy of the AKA New Media’s Digital Strategies Activity Booklet, jot me a line at ddai@ibaa.ca.

Check out upcoming IBAA courses on the next page.

DIANA DAI Director of Professional Development, IB AA ddai@ibaa.ca

The Alberta Broker April - May 2014

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50 The Alberta Broker April - May 2014