Insurance Business Canada 3.02

WWW.INSURANCEBUSINESS.CA ISSUE 3.2 | $6.95

N O S R E C U D O R S P K R

O W T NE

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MEMBERS OF THE BOARD WHY D&O INSURANCE IS CRITICAL FOR PERSONAL PROTECTION

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INSIDE THE IBAO WHAT THE ORGANIZATION HAS PLANNED FOR THE COMING YEAR

EQUIPMENT BREAKDOWNS HOW TO MAKE SURE YOUR CONSTRUCTION CLIENTS ARE FULLY COVERED

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2015-04-17 10:43 AM 24/04/2015 2:35:29 AM

ISSUE 3.2

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CONTENTS

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30 ON S R E C U D O PR RKS PROTECTING DIRECTORS AND

O W T NE

24

FEATURES

OFFICERS

Without D&O coverage, board members’ personal assets are at stake – here’s how to make sure they’re protected

32

COVER STORY

PEOPLE

INDUSTRY ICON

Debbie Thompson reflects on her ground-breaking tenure as IBAO president

20

The truth about distracted driving

08 Head to head

Are the big banks losing their competitive edge in P&C?

10 News analysis

The growing flood insurance market

12 Intelligence

This month’s big movers and shakers

14 MGA update

Recent acquisitions spell growth for MGAs in 2015

16 Technology update

How cloud computing is being used to help predict weather patterns

18 Opinion

It’s time to hop on the technological bandwagon, says Adam Mitchell

40 The brutal truth FEATURES

Why your business must be accountable

BEYOND THE BOILER

42 3 habits of nimble companies

Equipment breakdown has expanded in the past 10 years – are your construction clients fully protected?

Position your firm to embrace change

48 Expert advice

How you can prepare commercial clients for an earthquake

PEOPLE 34 Producer profile

FEATURES

38

A DIPLOMA AND A JOB: GUARANTEED

A revitalized education program in BC is turning out superstar brokers

2

06 Statistics

FEATURES

PRODUCERS ON NETWORKS

Producers weigh in on how their networks are performing on everything from training and recruitment to customer service

UPFRONT

New IBAO president Michael Brattman outlines the exciting year ahead

45 Other life

Dan Mallory is on top of the world

47 Career path

Lorne Marr’s commitment to lifelong learning

INSURANCEBUSINESS.CA CHECK IT OUT ONLINE

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You can expect more at Trisura.

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UPFRONT

EDITORIAL

Networking for the future

D

uring the first decade of the 2000s, something significant happened in the community of North American property/casualty insurers. Advertising spending among these companies increased – a lot. The goal? To reach the end user.

The ‘direct channel’ trend is certainly not as large in Canada as it is south of the border, but recent expansions by US companies like Allstate and Berkshire Hathaway could soon heat up competition in the personal lines domain. That movement has already provoked the smallest of independent agencies to begin selling commercial insurance to local businesses, where commissions are higher and competition from carriers is still mostly dormant.

[Networks] offer a way for small agencies to thrive while maintaining ownership of their businesses Enter the rise of the independent insurance agency network: groups that band small agencies together to gain access to markets and avoid minimum premium thresholds imposed by carriers. With unique commission- and profit-sharing models, these groups offer a way for small agencies to thrive while maintaining ownership of their businesses.

Over time, networks have evolved to offer other benefits, like education, training and assistance in recruiting fresh talent.

The attractions of these groups have not gone unnoticed by independents. Networks around the country report consistent organic growth that has allowed them to expand to new geographic regions and offer more discounts and benefits. However, networks are not without their detractors. Some agency principals protest unreasonable time commitment requirements, a loss of true independence and increased competition from other agencies as a result of joining a network.

With these considerations in mind, Insurance Business Canada took a deeper look at independent agents’ relationship with networks and alliances. Hundreds of agents across the country, belonging to several different networks – and even some who have resisted the trend – answered our survey. Together, their answers provide a unique insight into what agents most value in a network and where these groups may be coming up short.

The team at Insurance Business Canada

www.insurancebusiness.ca ISSUE 3.2 EDITORIAL Editorial Director Vernon Clement Jones Associate Editor Donald Horne Writers Caitlin Bronson Tim Garratt Maryvonne Gray Olivia D’Orazio Jordan Maxwell Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Ian Fraser Adam Mitchell Stefan Kazakis Graham Winter

ART & PRODUCTION Design Manager Daniel Williams Designer Joenel Salvador Production Manager Alicia Salvati

SALES & MARKETING National Account Manager Eric Langille Associate Publisher Trevor Biggs General Manager, Sales John Mackenzie Marketing and Communications Claudine Ting Project Coordinator Jessica Duce

CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global CEO Mike Shipley Global COO George Walmsley

Traffic Manager Kay Valdez

EDITORIAL INQUIRIES vernon.jones@kmimedia.ca

SUBSCRIPTION INQUIRIES tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca

ADVERTISING INQUIRIES trevor.biggs@kmimedia.ca

‘ KMI Media 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, Sydney, Denver, Auckland, Manila

Insurance Business Canada is part of an international family of B2B publications and websites for the insurance industry INSURANCE BUSINESS AUSTRALIA tim.garratt@keymedia.com.au T +61 2 8437 47OO

INSURANCE BUSINESS AMERICA caitlin.bronson@keymedia.com T +1 720 316 0154

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss

24/04/2015 2:37:50 AM

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UPFRONT

STATISTICS

Driven to distraction

Distracted driving is becoming a huge problem – especially for commercial fleet clients FROM DROWSINESS to text messaging, distracted driving is the leading cause of collisions. Are your commercial clients driving home that message to their fleet drivers?

Fewer accidents result in lower insurance costs, fewer injuries, costly investigations and repair, and less downtime.

To minimize these risks, it’s becoming

increasingly important to implement sound prevention measures and processes for driver safety education.

Safety and cost reduction go hand in hand, and brokers can share these hard numbers with their commercial fleet clients to demonstrate the hazards of distracted driving and the toll they are taking on the nation’s roads.

BY THE NUMBERS Below are some alarming statistics on the impacts of distracted driving

84%

Number of collisions that are caused by driver error

28%

Percentage of commercial truck drivers who have some degree of sleep apnea, which, if left untreated, can lead to serious motor vehicle accidents

3 times

ensure that the vehicle is safe > If they are carrying cargo, they should ensure that

the load is secure > Make sure the route is properly planned out > Pre-set climate control and radio prior to driving > Pre-program the route on GPS devices prior to driving

WHILE DRIVING > Clients should ensure a safe following distance so

they’ll have the time to react if the person in front of them makes a sudden stop or swerves unexpectedly > Do not text, surf the web or read emails > Do not eat, drink or groom > Keep both hands on the wheel for better control and less fatigue > Keep eyes moving, scanning the front, side and back of the vehicle

TOP 3 DRIVER DISTRACTIONS Drivers who are engaged in the following distractions are more likely to be in an accident

$10 billion

Annual economic loss caused by collision-related healthcare costs and lost productivity

1 2 3

70%

Increased likelihood of distracted drivers to be in a crash than attentive drivers

Percentage of Canadians who are very or extremely concerned about truck drivers who are tired from driving long hours

Sources: RSA, CAA, National Highway Traffic Safety Administration, Alberta Transportation, Government of Canada, RCMP

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> Clients should complete a pre-trip inspection to

Source: CAA

93%

Percentage of auto fatalities in the US tied to ‘carelessness’ or ‘inattentiveness’

BEFORE DRIVING

Distraction from Adjusting radio/CD an outside object/ person/event

Other vehicle occupants

Source: CAA/AAA

www.insurancebusiness.ca

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GET THE MESSAGE

WHAT MAKES ACCIDENTS MORE LIKELY? Drivers who are engaged in the following distractions are more likely to be in a crash or near crash event compared with non-distracted drivers: Increased likelihood 25 times

Safety and cost reduction go hand in hand – and RSA’s free Driver Safety Management Package includes everything you need to make sure your clients stay safe on the roads and save money.

RSA’s Driver Safety Management Package offers downloadable documents, including:

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· Driver abstract tolerances · Simplified maintenance plans · A driver employment application form

15 10

By investing a small amount of time in prevention, your clients will save countless hours dealing with the consequences of collisions – and help them save their hard-earned dollars.

5 0

23

Text messaging on a cell phone

5

Talking on a cell phone

3

Reading

3

Applying makeup

9

Reaching for a moving object

3

Dialing on a handheld device Source: RSA/CAA

For more information or risk control advice, contact RSA.

www.insurancebusiness.ca

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24/04/2015 3:29:28 AM

UPFRONT

HEAD TO HEAD

In the long-term, will the big banks lose their competitive edge in P&C? The long-standing ban on selling insurance from bank branches is causing several big Canadian banks to reassess their continued presence in property and casualty insurance

Lee Rogers

President Rogers Insurance “I am not sure we will see a significant reduction in the competitive advantage that banks have in the P&C space. If they remain in the distribution space, I believe we will forever have to compete with the market presence they have today.

Sooner or later, they will find a way to penetrate as many areas of the space as possible and thus will remain a viable competitor for years to come.”

Justin Thouin

Adam Mitchell

Co-founder and CEO Lowest Rates

President Mitchell and Whale Insurance

“What is changing is how Canadians find their insurance provider. As an example of how much of a game-changer this trend could be, in the UK, 65% all of insurance policies are initiated online on personal finance price comparison sites.

So it won’t be long until Canadians flock online to compare insurance rates just like we do right now everyday when we go to sites like Kayak and Expedia to source flights and hotels.”

“I definitely think the banks are losing their competitive edge. As technology became more widely available, less expensive brokers have been making large strides.

At the end of the day, if we can offer a customer portal, the same hours of service and fantastically trained insurance professionals, I don’t think the banks will hold a candle to the wellarmed broker force in five years.”

RBC TO MOVE OUT OF P&C? Royal Bank of Canada is reviewing its domestic property and casualty insurance business, citing difficulties caused by rules that ban banks from selling coverage in branches.

“We’re not sure we’re going to be in the P&C business for the long term,” CEO David McKay recently said.

RBC, Canada’s largest lender by assets, opened its first insurance office near a Toronto bank branch in June 2005 to work around Canadian regulations that prohibit lenders from selling property, casualty and life policies from bank outlets. At the time, the Toronto-based firm set a goal of opening 100 insurance offices adjacent to branches. However, the inability to sell in branches has made distribution of insurance products difficult and costly, McKay said.

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www.insurancebusiness.ca

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property

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When our policyholders feel good about their claims experience, so do we. That’s why we’re committed to providing quick, reliable and caring service, earning a reputation our broker partners have counted on since 1871.

Watch real claims journeys at economicalinsurance.com/stories

The Economical brand includes the following property and casualty insurance companies: Economical Mutual Insurance Company, Perth Insurance Company, Waterloo Insurance Company, The Missisquoi Insurance Company, Federation Insurance Company of Canada. ©2015 Economical Insurance. All rights reserved. Economical® and related trademarks, names and logos are the property of Economical Mutual Insurance Company and are registered and/or used in Canada. All other trademarks are the property of their respective owners.

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24/04/2015 2:38:54 AM

UPFRONT

NEWS ANALYSIS

Testing the waters of flood risk As flood costs soar into the billions and more residents than ever find themselves taking on flood risk, the introduction of Canada’s first overland water protection policy has paved the way for other offerings HOW MUCH ARE FLOODS COSTING CANADIANS? The 2013 Alberta floods highlighted just how costly flood damage can be. Here, the events are compared in terms of the top five costliest disasters in the country

JUST TWO years ago, most insurance brokers believed they would not live to see a viable offering in the overland flood insurance market. Residents living in flood-prone areas were too few, and potential premiums too high for most customers to afford.

Add to that the outdated and inaccurate maps of flood zones, and Canadian insurance actuaries were loath to take on such risk.

the catastrophic weather that ravaged Alberta and Toronto in 2013, as well as more recent flooding events, insurance companies have begun to assess the viability of a flood product, and a few are now offering broker-distributed solutions to homeowners.

Calgary-based insurance broker Beaufort Group led the way in late 2013, approaching Lloyd’s of London to create policies in time for the 2014 flood season in Canada.

Premiums on Lloyd’s-backed policies ranged from $5,000 to $18,000 – a hefty price tag, to be sure, but one many homeowners considered fair when compared with the hundreds of thousands of dollars flood victims spent repairing damage after the summer storms.

A more comprehensive solution emerged for all Canadians in February of this year.

Aviva Canada announced the industry’s first-ever nationwide overland water protection coverage for residential property owners and tenants.

The coverage – available to Aviva Canada’s personal property insurance policyholders who have sewer back-up protection in place – will be launched in May in Alberta and Ontario; expansion to other provinces is expected throughout 2015. It is open to all properties below the 5% highest risk group

“Our goal is to make this coverage accessible and affordable for the vast majority of our customers”

2013 Alberta 1997 floods Red River flood

$1.5 billion

$1.8 billion

$3.5 billion $3 billion

$5 billion

Sharon Ludlow, Aviva Canada

1998 2011 1996 Quebec, Slave Lake Savuenay Ontario (Alberta) flood and New wildfire Brunswick ice storms Source: Insurance Bureau of Canada

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“The issue from an insurance perspective is that the market for actual flood insurance [was] too small,” said Murray Cameron of Cameron Agencies in Melita, Man. “So the premiums insurance companies would be charging – consumers wouldn’t be buying it because the cost would be too high.”

Theoretically, at least, that was the reason behind the Canadian government’s lead role in flood-related disaster relief.

Now, however, the flood insurance market is blossoming. Thanks in part to

for flooding.

“Tens of thousands of Canadians have suffered losses from water damage in recent years,” says Sharon Ludlow, president of Aviva Canada. “We are excited about bringing this solution to market. Our goal is to make this coverage accessible and affordable for the vast majority of our customers.”

RSA Canada also hinted that it is planning to launch overland flood coverage by the end of the year, inspired in part by Aviva’s move into the space.

www.insurancebusiness.ca

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“We are all looking at flood coverage after the announcement a couple of weeks ago,” says Donna Ince, senior vice president for personal lines, promising more information in the coming months. “We have to look at the insurance cost and definitely look at our data around flood mapping, and we recognize that we will potentially be looking at how those coverages work today.”

Insurers’ interest in the flood market is also attracting developers of ancillary insurance services, like Willis Re. The firm introduced new analytical tools in conjunction with two other reinsurance advisors to support carriers’ ability to properly transfer risk, determine probable maximum loss [PML] figures and underwrite flood insurance products.

Such signs of a newly burgeoning marketplace should please brokers, who will now be able to offer solutions to clients in floodprone areas and take advantage of a new source of potential revenue. The Insurance Bureau of Canada even commended Aviva for its leadership in flood insurance, strongly

attached to its “continued support of the broker channel.”

The market may also open the door to potential liabilities, however. Brokers have expressed worries that the availability of such endorsements may mean an errors and

to flood and drought will at least double by 2030. The estimates suggest that in the next 15 years, the amount of global urban land located in high-frequency flood zones will be 40% - up from 30% in 2000.

“Globally, urban land exposed to both

“We are all looking at flood coverage after the announcement a couple of weeks ago” Donna Ince, RSA Canada omissions risk if they do not remarket clients currently insured with other companies who offer flood coverage.

And because insurer’s methods of flood risk classification are not yet clear, it is nearly impossible to guess at such outcomes.

Such issues will need to be ironed out quickly. A new report from the March edition of Global Environmental Change reveals that the extent to which urban areas are exposed

floods and droughts is expected to increase over 250%,” write research authors Burak Güneralpa, Inci Güneralpa and Ying Liu. And with severe weather events in Canada now expected to take place every six years – as opposed to every 40 years – that drives up both the number of potential victims as well as the number of potential customers.

It seems the flood insurance marketplace can’t develop fast enough.

THE COUNTRY’S FLOODING HOTSPOTS Ontario, Manitoba and Quebec account for more than half of the top 30 most expensive flood disasters in Canadian history

2

3

1

Alberta

British Columbia

Newfoundland

5

Manitoba

7

Ontario

5

Quebec

5

New Brunswick

1

Saskatchewan

Source: Canadian Disaster Database

www.insurancebusiness.ca

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PRODUCTS

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

American International Group [AIG]

NSM Insurance Group

AIG gains a controlling stake in NSM with the aim of diversifying product offerings and expanding market access for consumers

Arthur J. Gallagher

Madison Risk & Insurance Services

Madison specializes in coverage for hospitals and other healthcare facilities and professionals throughout the US.

Desjardins

State Farm Canada

Desjardins acquires State Farm Canada’s property and casualty and life insurance lines, as well as its mutual fund, loan and health insurance companies

Endurance Specialty Holdings Ltd.

Montpelier Re Holdings Ltd.

Failing to acquire Aspen Insurance Holdings Ltd., the Bermudabased reinsurer bought Montpelier for $1.83 billion instead

Hamilton Insurance Group (“Hamilton”)

Sportscover Underwriting Limited (“Sportscover”)

Hamilton CEO hopes that establishing a presence with Lloyd’s will be a “key strategic initiative.”

Hub International

Cortex Financial

Hub subsidiary Hub Financial acquires assets of Ontario MGA to expand reach to Canadian advisors and brokers who seek multi-fund insurance while remaining independent

Totten Insurance Group

National Brokerage Services [NBS]

This strategic acquisition expands Totten Group’s footprint in the Canadian marketplace

Travelers

J. Malucelli

Travelers now owns 95% of J. Malucelli’s property casualty business headquartered in Sao Paulo, Brazil.

Guy Carpenter unveils new flood model

Guy Carpenter & Company, a subsidiary of global reinsurance leader Marsh & McLennan Companies, has revealed its G-CAT Canada flood model. Dubbed “the first ever probabilistic flood model for Canada,” this model will allow insurers to more easily evaluate flood exposure risks and forecast the financial cost of possible flood scenarios.

“To produce this state-of-the-art flood model for the Canadian insurance market, Guy Carpenter collaborated with experts in hydrological and hydraulic modeling to produce simulations for hurricane, rainfall and river flow flooding catastrophes,” said CEO Donald Callahan.

Underwriting group launches anti-spam insurance policy

Co-operators acquires Premier group

The Co-operators has acquired the Premier group of companies, one of Canada’s leading full-service managing underwriting agencies. The move, which sees The Co-operators jump into the increasingly competitive waters of high-stakes industry acquisitions, positions the insurer to do more business with independent brokers. Premier has more than 100 employees in five offices in Canada and the US, and administers more than 80,000 insurance policies. The move should broaden The Co-operators’ offerings and acts as a hopeful sign that Canada could have a place outside the industry’s consumer direct model.

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An underwriting group affiliated with Lloyd’s and other leading insurers recently announced the launch of a new product designed to protect Canadian businesses against anti-spamming exposures. Trinity Underwriting Managers is working with insurance carriers to offer coverage for costs and fines arising from anti-spamming legislation, which in some cases can amount to as much as $10 million. Trinity Underwriting says it considers anti-spamming risk to fall in the errors and omissions category, and it will not insure companies that deliberately violate antispamming regulations.

www.insurancebusiness.ca

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PEOPLE

PEOPLE Intact Insurance releases Lifestyle Advantage

Intact Insurance has released Lifestyle Advantage, a new product that assists consumers with home insurance coverage. In the case of total loss of home or partial loss of property, clients can choose how they’d prefer to rebuild – whether by reconstructing the same home or downsizing and pocketing the leftover money. “In speaking with experienced homeowners, they advised us that freedom of choice and simplicity were important benefits,” said JeanFrançois Blais, President of Intact Insurance.

Berkshire Hathaway introduces D&O products to Canada

Just a few months after Warren Buffett announced Berkshire Hathaway Specialty’s expansion into the Canadian insurance market, the company is introducing Canadian editions of its directors & officers policies. The Executive First D&O policy addresses risks such as securities class actions, shareholder derivative actions and government investigations. The Side A DIC D&O policy comple­ ments Executive First with a so-called ‘safety net’ for individual executives involved in D&O claims in which the company cannot indemnify them and in which the underlying D&O policy does not respond.

CAA to offer coverage for high-net-worth Canadians

The Canadian Automobile Association, representing more than 6 million members throughout Canada, has announced it will offer a tailored insurance solution for high-net-worth clients called CAA Distinct. This customized coverage will include several features that have been specially designed for this demographic, including protection for pricey real estate, luxury vehicles and valuable collectible items such as expensive artwork. CAA Distinct will be offered through a partnership with ACE Private Risk Services, which operates under ACE Group, a leader in insurance proection for high-networth individuals.

NAME

LEAVING

JOINING

NEW POSITION

Alexander Adeyinka

Rogers Communications

CANATICS

Chief privacy officer and general counsel

Eric Bissonnette

Applied Systems

FIRST Insurance Funding of Canada

Vice president of sales

Justin Kelly

N/A

Zurich Canada Commercial

AVP and national underwriting director – international

Benoit Lamontagne

RSA

Zurich Canada Commercial

Regional vice president – Québec

Michael Macaluso

N/A

CARSTAR

President

Mario Silvestre

RSA

CANATICS

VP, analytics and operations

Lydia Wong

Envision Financial Credit Union

FIRST Insurance Funding of Canada

Relationship manager

Swiss Re Canada appoints president and CEO

Swiss Re has appointed Veronica Scotti as president and CEO of Swiss Re Canada. Scotti had previously served as a client executive in Swiss Re’s Armonk, N.Y., office, and will replace Sharon Ludlow, who became president of Aviva Canada in 2014. Scotti will operate from Swiss Re’s Toronto office under the guidance of Eric Smith, president and CEO of Swiss Re Americas. “Swiss Re has a strong history in Canada, writing our first business there back in 1911.

Veronica’s appointment underlines our continued commitment to the market,” Smith said. “She has extensive international experience, and I have every confidence that she will maintain and build on our reputation as an industry leader in the country.”

AIG chairman to step down in July

American International Group chairman Robert “Steve” Miller will leave the insurance carrier in July. Miller, who had been acting chairman for five years, joined the AIG Board in 2009 and became chairman in July 2010.

He was previously the chief executive of Delphi Corp, a manufacturer of automotive parts. AIG’s corporate governance guidelines do recommend a non-executive chair should not serve for more than five years, and the same source told The Wall Street Journal that there is “no compelling reason to extend” Miller’s chairmanship while the company is stable. He will remain an AIG board member.

www.insurancebusiness.ca

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UPFRONT

MGA UPDATE

Moving and shaking Industry leaders believe that MGAs are poised for expansion and growth in 2015

NOTABLE MGA ENHANCEMENTS Hub acquires MGA Partners Burns & Wilcox Canada acquires Avec Insurance Managers Premier Group grows from a small firm specializing only in yacht insurance to the largest independent MGA in Canada

Phil Baker, the president of Creechurch International Underwriters, has high hopes for MGA activity in the next coming months and years. “I see consolidation remaining [at high levels],” he says. “We’re seeing brokers buying MGAs, we’re seeing insurers buying MGAs, and that certainly changes the dynamic. When an MGA is owned by an insurer, it ceases to be an independent entity and becomes an agent of that insurer.”

These changes bring with them many opportunities. What will determine MGA success is whether they are able to address

NEWS BRIEFS

business demands as needed by their insurer contracts.

Not surprisingly, larger MGAs are in the advantageous position of subsuming the business that small MGAs can’t maintain.

In addition, consolidated MGAs are better poised for success because they are versatile enough to face new regulations with resiliency. Increased regulation also will force MGAs to place a greater emphasis on compliance, creating a better stock of advisors industry-wide.

Beyond the ongoing consolidation of the

MGA acquires Quebec wholesaler

Totten Insurance Group has acquired the shares of National Brokerage Services [NBS], a Montreal, Que.-based commercial insurance wholesaler. Terms of the acquisition were not disclosed. Totten supports more than 2,000 independent brokers throughout Canada, and the NBS acquisition complements Totten Group’s areas of focus, predominately in the business segments of construction, contracting, hospitality, agriculture, restoration and remediation, errors and omissions, directors and officers, and hot works roofing, among others.

14

MGA landscape, Baker sees syndication as one way to keeping his options open while also opening up new business opportunities.

“The thing I’m looking more at for Creechurch is going back to syndication – spreading my insurers amongst several,” he says. “In the past few years – whether it is Lloyd’s or other insurers – it is key to take larger lines, and you start to lose that syndicated risk.

So we’re starting to do that, and we’re finding we can secure a lot more capacity.”

With syndication comes a greater ability to handle larger risk, Baker notes.

“We can put more capacity on the table than – in some cases – some of the larger insurers can, because they are taking a single line, whereas we have a syndicated binding authority that can handle much larger risk,” he says. “It changes the dynamic for certain MGAs – you can look at a much wider scope of business from large to small, as opposed to what MGAs have traditionally done: the small transactional business.”

New product to tackle marine piracy

Specialist lines underwriting agency CFC has announced the launch of a new marine piracy product, which combines technology with what the insurer is calling “a well-rounded policy” to streamline the quoting and buying process. CFC has the capacity to offer limits of up to $20 million, and nil deductibles are offered as standard.

Premiums for a single transit through a high-risk area such as the Gulf of Aden or Gulf of Guinea start at just $800 for a $5 million limit.

www.insurancebusiness.ca

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Q&A

Phil Baker President Creechurch International Underwriters

Currently based in Toronto Became president of Creechurch January 1, 2014 Previous role Executive vice president, Creechurch

The importance of cyber risk protection How significant is the cyber risk to Canadian businesses in 2015?

Certainly, in a general sense, it’s bigger now than it’s ever been and continues to grow. I’ve seen different figures in terms of what the impact of cybercrime is in Canada … as high as $3 billion annually, and that’s only growing. So I think any organization in Canada that has employees or customers, which is pretty much every business, has an exposure to cyber risk.

What are the greatest risks businesses face in cyberspace?

Fines for PCI compliance … can be up to $1 million.

And that’s not necessarily dependent on the size of a business … even small companies can incur massive fines and penalties due to lack of PCI compliance.

Class action suits are on the rise. [They] have been certified in Canada for privacy-related breaches, so the damages are only going to go up, and they’re going to go up exponentially. If a company’s not prepared [and] doesn’t have the security in place to prevent that, and doesn’t have the insurance to transfer that risk, ultimately a company could face bankruptcy.

How well appreciated do you think those risks are by Canadian businesses?

My personal opinion is that there is an under­

Hub acquires Canadian MGA

Hub has acquired the shares of MGA Partners, an Ontariobased MGA. The acquisition broadens Hub’s footprint in Canada’s eastern provinces, as well as its reach to financial advisors and insurance brokers seeking multi-fund insurance and risk solutions while maintaining their independence.

Terms of the acquisition were not disclosed. MGA Partners president Peter B. Lamarche, vice president Patrick Kelly, and vice president and chief compliance officer Miklos Valsamas will join Hub with their staff and continue in their roles.

estimation of the exposure that companies face.

Certainly the buying patterns for cyber insurance lag well behind what similar-sized companies in the United States are buying, based on the information that we have. Companies in Canada need to view insurance as a necessary part of the risk management process.

What general advice would you offer to businesses about protecting themselves against cyber risk?

What we find is that a lot of companies will invest in cyber security and the IT department will say to the CEO, ‘No, we’re good. You don’t need to buy the insurance because we’ve just upgraded all our hardware and software, such that we think we’re protected.’ And my response to that is, if you install a burglar alarm in your home or a fire alarm, you don’t then cancel your burglary and fire insurance. One is risk mitigation, and the other is risk transfer.

To adequately protect yourself, I think you need to consider both aspects. And then, taking it outside of the actual electronic realm … most of the breaches we see relate to either paper files, a lost thumb drive, a lost laptop – not an actual hacking, but human error. Put controls around physical assets that may leave the office that will have sensitive data … [and] don’t assume that, if you’re a small business, you’re immune. Small criminals are targeting small businesses.

Wholesaler snaps up Toronto-based MGA

Burns & Wilcox Canada has acquired Avec Insurance Managers, a Toronto-based MGA that specializes in marine, inland marine and other specialty commercial lines. The company will become part of Burns & Wilcox Canada.

“We found ... Burns & Wilcox Canada to have a similar culture, with passionate and innovative professionals who share an enthusiasm for continuing education, for expanding our business and for investing in our team,” said Stephen Oxley, president of Avec Insurance Managers.

Financial horizons buys MGA

Kitchener-based Financial Horizons, which offers life insurance products and support to more than 9,000 advisors throughout Canada, has acquired Ottawa MGA R.G. Packman and Associates. It will inherit Packman’s advisors’ clients, located throughout Ontario, British Columbia, Quebec and Atlantic Canada. Financial also recently acquired Performance Financial Services, of Saskatchewan, Edmonton’s Belec and Company, Montreal’s Marcolin and Associates, and Victoria, BC’s S&V Planning Corporation.

www.insurancebusiness.ca

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UPFRONT

TECHNOLOGY UPDATE NEWS BRIEFS ACE Group to offer extended coverage to private clients

ACE Group, the property and casualty insurer operating in more than 54 countries, has announced that it is extending privacy and network liability coverage to the Canadian private sector. The company will now offer “full privacy coverage” to organizations, which was once only available through the purchase of a separate stand-alone policy. The protection will include access to ACE’s Data Breach Team, a group of experts who specialize in helping companies recover from cyber crimes, including professionals in law, PR, and information technology.

LexisNexis captures 1 billion miles of telematics

LexisNexis’ UK-based Wunelli has gathered more than 1 billion miles of data on driving behaviours. The endeavor is notable because it is one of the only wide-scale telematics programs to incorporate analytics provided by smartphones, such including the popular iPhone and Android devices. “We’re the only provider who uses smartphone data to actually change insurance premiums,” said David Lukens, LexisNexis director of vertical marketing. Feedback from the UK market has been so positive that LexisNexis plans to expand into the US and Canada soon.

Mobile advertising needs to be holistic

New research indicates that mobile advertising is critical, but an effective strategy requires agencies to view smartphones and tablets as one part of the larger consumer experience. An

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analysis of 1 million phone calls by Marchex found that many demographics are using mobile for the purposes of “click to call,” or connecting the online world to the offline one. Up to 25% of calls, however, result in hang-ups due to long hold times, indicating a need for better processes there.

Google makes a splash in insurance market

Google has partnered with Compare. com and CoverHound to allow shoppers an easier way to compare rates by various providers. The service is initially available only to residents of California, although the tech giant plans to expand throughout North America in the future. Google states that providers cannot pay to rank highly in search results, but do have the option of describing their unique offerings. Many major insurance companies refuse to collaborate with Google, as they feel that Google Compare doesn’t convey comprehensive enough side-by-side comparisons.

Data strategy necessary for all, says Ontario Mutual CEO

Speaking at the 133rd general meeting of the Ontario Mutual Insurance Association [OMIA], CEO John Taylor issued advice to attendees about the critical need of implementing a comprehensive data strategy.

“The future of the North American consumer economy is focused on collecting information about consumers based on their buying patterns and demographic profile,” he said. He referenced telematics and flood insurance as examples of two sectors that have used tech-savvy analytics to enhance offerings and break ground with consumers.

Cloud computing for cloudy days A new technological initiative has profound implications for the insurance industry Even though it’s considered “perhaps the largest external swing factor in business perform­­ance,” one critical variable is often still treated as a constant, if not overlooked entirely: the weather. But IBM is hoping to change that.

The technology manufacturer has formed a strategic new alliance with WSI, the B2B division of The Weather Company, designed to combine unprecedented amounts of data from the Internet of Things and cloud computing with weather forecasting systems in order to better predict meteorological conditions.

This could be a game-changer for the insurance industry. For example, improved weather prediction analytics will provide more advanced notice of impending hail storms, allowing agencies to save some of the $1 billion paid in claims every year by warning clients about incoming storms before they happen.

In fact, brokers who use WSI’s Weather Alert service to text policyholders about impending storms can save up to $25 per client in hail-heavy regions, according to WSI, which adds up to millions of dollars every year.

“We’ve done some tests with hundreds of thousands of policyholders and found that when we send them warning that hail could be hitting their cars in the next half an hour, about 50% take action to protect their vehicles,” says Andy Rice, vice president of products and analytics at WSI. In a broader context, this could help enterprises prevent widespread damage to their

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businesses through such actions as advising that automobiles be placed under cover at a dealership or suggesting that facilities raise the heat in anticipation of a deep freeze.

“While the tendency is to focus on direct property losses, the indirect consequence of business interruption is a huge exposure for many businesses. Lost revenue due to the inability to open, provide services, etc., is in some cases a more significant exposure in

“The indirect consequence of business interruption is a huge exposure ...” terms of financial loss than direct property loss,” says Mark McLaughlin, director of strategy for IBM Global Insurance.

In addition to preemptive notice, insurance companies will be able to use this tech infrastructure to better handle claims and assist with disaster relief.

“They can immediately send text messages saying, we know your neighborhood may have been affected by a tornado. We’ve deposited money into your bank account for a hotel tonight, and we’re setting up operations at the church on Third and Main Street to look at cars and help file claims,” Rice says.

Brokers can then request digital photos of household damage and begin expediting claims immediately.

“It creates really good opportunities to open up these two-way communication portals and increase the company’s ability to react and be on the side of their policyholders,” Rice says.

Q&A

Lorie Phair CEO ingenie Canada

Currently based in Toronto Became CEO of ingenie March 2015 Industry involvement Was chair of the Insurance Institute of Canada’s Academic Council for nine years

A new telematics offering Why did ingenie bring its new technology to Canada?

Because of the similar social and economic problems of the high number of young driver crashes, and a similar high cost of insurance, the UK saw an opportunity to apply a proven model in Canada. The marketplace in Ontario has many similarities to the UK three to four years ago, before the growth of telematics … Given our history, Canada is also pretty open to UK business and UK innovations. So it seemed to be a good place to branch out after the success of the implementation in the UK in 2011.

How does it work?

Once [a customer has] decided to purchase … we then ship them a smart box, which they plug into their OBD port, and as long as that customer has driven a specific or minimum number of kilometres, we then capture their driving data 10 times a second. We’re building up a picture of … essentially, how smoothly they drive.

Then, via our [smartphone] app, we provide them with feedback and a driving score every 10 days, along with Twitterstyle messages on how to improve. If they drive well, they can save up to 25% off their initial insurance costs. That’s a key difference with the ingenie offering – our good driver discounts, [which] we provide throughout the year via billing adjustments every three months. Again unique to ingenie, they don’t have to wait till renewal to really reap the benefits of their good driving, and that’s important if you want to influence driving behaviour.

What have the results been in the UK? Are you expecting similar in Canada?

[The ingenie Young Driver Report] was prepared in the UK just this past November, and it provides a lot of data on the impact ingenie is having on road safety in the UK. [There’s been a] 21 % reduction in dangerous driving incidents among ingenie customers in 2013 and 2014. We’ve seen that ingenie customers are 40% less likely to be involved in an accident in their first six months on the road compared to the national average. The cost of insurance for young people has dropped significantly over the past couple of years, largely driven by telematics.

The UK Government is currently consulting with a select group of insurance brands, including ingenie, into the impact of telematics and their impact on road safety. The fact that it has this much recognition from government is really testament to the great work the private sector has done in tackling the social and economic problems with young drivers. We like to believe we’re going to have the same type of impact here in Canada.

www.insurancebusiness.ca

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email insurancebusiness@kmimedia.ca

Wanna make a bet?

Are you banking on the idea that today’s technology will eventually disappear? You might want to rethink that gamble, writes Adam Mitchell WE’RE BOOKIES. That’s what we do with insurance, after all. We take educated guesses to place financial bets for people. Every day you either write new policies or renew old ones for people and businesses and, en masse, you’re betting that only a few of them will pay out.

The other bet many brokers are making at the moment is that this Internet thing is a fad. They are actively betting that email will soon go the way of the beta tape and we will be back to carbon copy paper, face-to-face meetings and hanging our hats on ‘quality underwriting.’

I have news for you: Most brokers are making bad bets and pointing their businesses in the wrong direction. If you think this toothpaste will go back in the tube, you’re wrong. People across the globe, both young and old, are becoming addicted to the wonderful online world, and if you’re not in that space, you soon won’t exist to your clients or prospects.

To take it one step further, if you don’t exist on a cell phone, mobile or responsive web presence, you don’t matter to anyone under the age of 18. That might be a bold, sweeping statement but I, for one, would bet it’s closer to truth than fiction.

All of the smart money in insurance has and continues to invest in digital technology, from marketing and communication to efficiency and optimization tools. One broker launched an even better product, blending fleet insurance rates with usage for a pricing advantage. Another broker built an online user portal where large fleets can add and remove vehicles and drivers, and now that

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broker has a competitive advantage to win business.

Intact announced it is investing heavily in opening a digital center that will house user experience and digital analytics specialists, project managers, front-end developers, research and development teams, and other experts – proof that they’re making digital a

adept at finding useful information on the fly – the back button on a web browser is all too easy to push, and Uncle Google is always there for them.

If you don’t start paying attention to your customers and communicating with them in the ways they want, you will lose engagement, and eventually, they will take a look around and find someone better to do business with.

Using technology to the best of your ability means supporting – and often working with – customer-focused tools. Take the automobile industry, for example. Have you seen how quickly it’s changing? Hyundai has a fully automated vehicle that can be driven on highways. BMW is piloting a car that balances both the ultimate driving machine capabilities and the enjoyment of driving with the idiot-proof accident. These are not Jetsons-like predictions of what’s to come, light years away. No, this is a couple of iPhone updates away; it’s happening now.

Business advisor, consultant and author

Look where the smart money is going, and make smarter bets. Stop resting on your legacy laurels and how business used to operate three generations ago – ‘in the good old days’ core part of their business.

Look where the smart money is going, and make smarter bets. Stop resting on your legacy laurels and how business used to operate three generations ago – ‘in the good old days.’ Your customers and prospects are now: Connected: Via the Internet, they are operating 24/7, and it’s assumed that you are, too.

Mobile: There are about 30 million people in Canada, and that means there are some 30 million cell phones in Canada, too. Mobile will make up 50% of your web traffic – assuming you have web traffic, that is.

Social: Customers trust the feedback and ratings from friends and contacts.

If you don’t satisfy these traits, your customers and prospects will go elsewhere.

They know they have options, and they are

John Spence said the equation for business excellence involves a combination of talent, culture, extreme customer focus and disciplined execution. If you haven’t yet adopted technology, now is the time to start.

All of us have had great experiences doing business with certain companies, and easy-to-use technology can help you get more of those great experiences for your clients. Whether you are disciplined enough to make the smart bet and actually use the technology available to you … well, that’s your bet to place.

Adam Mitchell is a third-generation insurance broker and is president of the family-run Mitchell & Whale Insurance Brokers.

www.insurancebusiness.ca

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FEATURES

INDUSTRY ICON

LIVING THE DREAM Like most brokers, Debbie Thompson never thought she’d go into insurance – but the unfortunate end of one dream led her to a passion for another INSURANCE WAS not always at the top Debbie Thompson’s list of career choices.

Rather, her plan was to graduate from her time on CityTV’s Boogie and move to New York City to dance on Broadway.

But when a terrible injury cut that dream short, Thompson found herself working at Citadel Assurance straight after high school.

“Like most of my peers or colleagues, we all do the same thing – just sell into insurance,” she says.

That injury, however, would take Thompson to the top of insurance – from broker to president of the Insurance Brokers Association of Ontario and beyond.

Climbing the ladder Thompson began to get serious about the business while vacationing in the Bahamas, where she met a broker from Gellatly Insurance, who encouraged her to obtain her broker license. For a few years, Thompson moved from Gellatly to HK&B (now HKMB HUB International) to RKS Insurance (which was later purchased by Sinclair-Cockburn Financial Group).

Over her 30-year tenure, Thompson rose through the ranks to become a partner at Sinclair-Cockburn. But in 2010, the company was purchased by Hub International.

“That purchase led to me having to sell my partnership, and I was out of a job,” Thompson says. “During this time, I was

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volunteering with IBAO, and it was through my connections at IBAO that I met Peter Blodgett and Judy Bell.”

Blodgett and Bell had opened a new brokerage just outside of Toronto called Beyond Insurance in 2008 – and they wanted Thompson to join their team. “[Blodgett] said, ‘I don’t want you to make any sudden moves. I want you to think about an opportunity that I have for

would be satisfied there,” she admits. “But what it’s allowed me to do is … leverage my experience to help them get into another space that they weren’t tapping into, which is the commercial lines space.”

Association involvement Thompson came to the IBAO in 2005 as the territory director for the GTA and inspired her many peers and colleagues.

“The landscape is changing, albeit a little slowly, but it is changing. It’s ironic because our industry is made up primarily of women, but not always at the executive level. That tide is starting to change, and women are being seen more as leaders” you with Beyond Insurance,’” Thompson remembers.

Thompson, however, had just been with a major player, and Beyond Insurance was a small brokerage in the Durham region, just outside the city.

While Thompson, who lives in Durham, says the idea of working in her home community was appealing, she still had her reservations.

“I’ve got to say, at first I wondered if I

“She is passionate about the industry, and she passes that passion on to anyone she meets,” says Nadia Sartor, the head of broker relations for the IBAO. Thompson says her work with the IBAO, in turn, made her even more excited about insurance.

“I think volunteering with our brokers’ association was a pinnacle for me,” she says.

“The people I met and the experiences I gained really led me to believe in our broker system.”

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PROFILE Name: Debbie Thompson, CAIB CRM Company: Beyond Insurance Brokers Title: Director of business development and managing partner Age: 50 something!

Years in the industry: 30 Career highlight: Becoming president of Insurance Brokers Association of Ontario and joining Beyond Insurance Career lowlight: No career lowlights, just lessons learned

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FEATURES

INDUSTRY ICON

In 2013, the same year she became a managing partner at Beyond Insurance, Thompson reached another pinnacle of her career: becoming president of the nearly century-old IBAO – a position only three women before her have held.

“When I first started, there was still very much a glass ceiling,” Thompson says. “For the longest time, the IBAO board – and not just the IBAO board, but many other boards in our industry – were made up of men.”

There were only three women on the

“Before we’d say, ‘In 20 years from now…’ but now it’s in five years,” Thompson says. “So we have to make sure we’re providing a value proposition in that space and giving a great customer experience even though there’s not much human interaction.”

The strength of the broker distribution channel is an issue that Thompson is currently addressing in her work with Beyond, and one that she highlighted during her tenure as IBAO president.

“We have to make sure we’re providing a value proposition in [the online] space and giving a great customer experience even though there’s not much human interaction” IBAO board when Thompson started in 2005. Now, there are seven – including two on the executive team.

“The landscape is changing, albeit a little slowly, but it is changing,” Thompson says.

“It’s ironic because our industry is made up primarily of women, but not always at the executive level. That tide is starting to change, and women are being seen more as leaders.”

Sartor says Thompson’s passion has spread through the industry like wildfire.

“It was a positive time,” Sartor says.

“Debbie was not the first woman, but she was definitely the first black woman, and that speaks volume for the association. She enjoys great credibility within the industry itself. It was a positive thing for the association.”

Looking to the future Thompson again has the opportunity to lead as managing partner for Beyond, which is made up of seven female brokers. She also uses her tech-savvy to move the brokerage forward.

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“Being able to stand before the membership in 2013 as president and deliver a message that I strongly believe in – our distribution channel – was probably the highlight of my career, and a personal achievement,” Thompson says.

“I’ve always been passionate about it, and being able to do that – it felt great.”

Thompson is also passionate about her three children, whom she raised as a single mother.

“Raising my three children has been my greatest achievement – seeing them become young adults and having a vision and very strong core values, and doing well,” she says.

Now that her kids are grown, Thompson is excited to inspire other young people via a new board she’s sitting on that will help develop youth entrepreneurship. “[Today’s youth] live in a country where they can do whatever they want, dream as big as they can,” she says. “If you can inspire one person to dream, then you have done your job.”

DEBBIE THOMPSON’S CAREER PATH 2014 Became chairman of the board for the IBAO 2013 Was voted president of the IBAO 2013 Became managing partner at Beyond Insurance 2011 Sold her partnership in Sinclair-Cockburn and joined Beyond Insurance as director of business bevelopment 2010 Sinclair-Cockburn purchased

by Hub International 2005 Named territory director for the Insurance Brokers Association of Ontario, representing the GTA 2002 Named affiliate president for the Insurance Brokers of Toronto Region 1982 Joined HK&B, which is now known as HKMB Hub International 1980 Moved to Gellatly Insurance Brokers 1978 Joined Citadel Assurance after graduating high school

www.mpamag.com

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FEATURES

COVER STORY: PRODUCERS ON NETWORKS

Z

N O S R E C U D O S R P RK

O W T NE

and s o r p t the

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ng

i of join s n o c

u s abo r e c u d d pro to say e k s a d s sines at they ha u B e nc wh Insura rk. Here’s o a netw

THE ADVANTAGES of joining with other brokerages are legion. Producers get more and better buying power and better rates, as well as access to more carriers, allowing them to remain local while offering the benefits of a larger agency. But are the advantages worth it? We surveyed producers to find out if joining a network had benefitted their businesses – and the results showed that most brokerages seem to find real advantages in doing so.

In our survey, we organized the advantages offered by networks into nine broad categories, then asked producers to rate them by importance on a 1-10 scale (10 being most important). Those categories were: • Training and education • Marketing • Commission and profit share

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• Access to more companies and products • Customer service support • Claims support • Access to niche and nontraditional markets • Administrative support • Recruitment of talent Respondents also rated networks’ performance in those areas on a 1-5 scale (1 being poor and 5 being excellent).

The good news is that most brokerages felt their networks were doing at least a satisfactory job in all of the above categories. The not-so-good news is that networks didn’t seem to be blowing producers away in any one category. Here’s how they stacked up.

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TRAINING AND EDUCATION Importance to producers Network performance

invaluable.

Networks’ performance in marketing, however, was rated as satisfactory at best. Survey respondents rated networks at 3.19 out of 5 in effectiveness at marketing assistance – just a shade better than fair.

1st 1st

Survey respondents felt that the greatest advantage offered by networks was the opportunity for training and education, rating that category’s importance at 7.09 out of 10. Respondents also felt that networks were doing fairly well at training and education, rating networks’ performance in the category at 3.56 out of 5, the highest rating awarded.

Producers appreciated the educational opportunities offered by networks, as well as the opportunities afforded to interact with other producers. One respondent said that education and networking were his top priorities when choosing a network, while another said that he appreciated the chance to “meet other brokers [and] talk about different experiences.”

COMMISSIONS AND PROFIT SHARE Importance to producers 3rd Network performance 4th Commissions and profit share fell right behind marketing as a vital benefit of network membership – respondents rated its importance at 6.15 out of 10. Network profitsharing arrangements can mean more revenue for brokerages, and that’s always a good thing.

So how are networks doing in this area? Well, according to survey respondents, the answer seems to be a rather lukewarm “OK.” While networks didn’t get a negative rating when it came to their commission and profit-sharing arrangements, they only managed 3.11 out of 5 – once again, just a hair above fair.

MARKETING Importance to producers Network performance

2nd 3rd

ACCESS TO MORE COMPANIES AND PRODUCTS

Producers also felt the marketing advantages offered by networks were important, rating them at 6.3 out of 10. Several respondents commented that the marketing assistance they received from their networks was

Importance to producers 4th Network performance 2nd

WHAT DO PRODUCERS LOOK FOR IN A NETWORK?

7.09

Training and education

6.3

Marketing Commissions and profit share

6.15

Access to more companies and products

6.12 5.59

Customer service support

4.44

Claims support Access to niche and nontraditional markets

3.25

Administrative support

3.24 2.52

Recruitment of talent 0

1

2

3

4

5

6

7

8

9

10

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FEATURES

COVER STORY: PRODUCERS ON NETWORKS HOW WOULD YOU RATE YOUR NETWORK’S PERFORMANCE IN THESE AREAS? 5 4 3 2 1 0

“[Producers] need to look at the pros and cons: What am I getting by joining this network?

What am I getting in terms of additional markets, additional commissions, protection?”

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3.56

3.26

Training and education

Marketing

3.07

3.19

3.11

2.96

2.92

2.84

Commissions Access to more Customer service Claims support Access to niche Administrative and profit share companies and support and nontraditionsupport their products al markets

Access to more companies and products was neck and neck with commissions and profit share in terms of importance to producers; at 6.12 out of 10, it came very close to tying for third place. That’s not a bug surprise – market access can expand an established agency’s reach, or give a much-needed boost to a fledgling agency.

While market access wasn’t the most important network benefit in the minds of most respondents, they still felt it was still an important piece of the puzzle.

Indeed, many said market access was a vital factor in deciding whether to join a network. One respondent – who wasn’t currently a network member – cited “a good working relationship with your underwriter and a good product for a good rate” as the most important factor he’d consider in looking for a network.

The good news is that networks seem to be doing fairly well when it comes to market access; producers

WHY JOIN A NETWORK? So you’re an independent broker who’s quite happy with your situation. Why join a network?

In a word: access. Network membership can get independent brokerages access to carriers and products they simply wouldn’t have otherwise. In order to work with a brokerage, a carrier might expect that player to be able to show a large amount of written premium in a given year. It’s easy for a large brokerage to hit that number with multiple carriers, but often a smaller brokerage isn’t going to be able to generate that kind of volume with five or six different carriers.

When you’re part of a network, however, your brokerage is one of several working toward that goal. Network membership allows smaller brokerages to work together to gain the clout that will give them access to the full range of products provided by large manufacturers.

2.73 Recruitment of talent

rated their networks’ performance at an average of 3.26 out of 5. The number isn’t stellar, but it seems to reflect producers’ general confidence in their networks’ abilities to expand access to different companies and a wide array of products.

CUSTOMER SERVICE SUPPORT Importance to producers Network performance

5th 6th

While customer service support wasn’t unimportant to producers, they didn’t feel it was as vital as benefits like training or access to products. Respondents rated its importance at just 5.59 out of 10. That’s probably a good thing, since most respondents didn’t seem to feel their networks focused on customer service; network performance was rated just 2.96 out of 5 – not terrible, but also not stellar.

But customer service support isn’t necessarily the point of network membership. Ultimately, many respondents felt that the responsibility for providing good customer service lies with the individual producer.

CLAIMS SUPPORT Importance to producers Network performance

6th 8th

The bad news is that most producers felt networks were just okay when it came to claims support, scoring their performance at 2.84 out of a possible 5. The good news is that claims support didn’t seem to be a priority for most producers; respondents rated its importance at just 4.44 out of a possible 10.

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ACCESS TO NICHE AND NONTRADITIONAL MARKETS Importance to producers Network performance

ADMINISTRATIVE SUPPORT

7th 5th

Access to niche and nontraditional markets was another selling point for networks, although not as important to producers as some other factors. Survey respondents ranked its importance at 3.25 out of 10.

Several respondents did highlight the category’s importance to them, however; one even said that just the “knowledge of niche markets” offered by his network was helpful. Getting that knowledge and access gives brokerages the opportunity to bring in business they otherwise couldn’t, notes Debbie Thompson, past president of the IBAO and director of business development for Beyond Insurance Brokers.

“When we recognize that we can’t be everything to everyone, that’s when we become an expert in our own niche,” Thompson says. “We can then build a network of various niches that we can tap into – connecting with those who are doing what you want to do, and building together.”

But going through a network has very tangible benefits for clients, says Andrew Caldwell, president of Smart Choice, a well-established network in the US. “That route allows them to get that carrier [for customers] who come in once or twice a month,” he says.

Networks seem to be decent at providing that access – respondents rated their performance at 3.07 out of 5.

NETWORK MEMBERS’ ANNUAL PREMIUM VOLUME

Importance to producers 8th Network performance 7th Producers didn’t feel administrative support was a particularly vital consideration when it came to picking a network; they rated its importance at just 3.24 out of 10. Most, however, seemed to think networks were doing a decent – if not spectacular – job in that area; respondents rated network performance at 2.92 out of a possible 5.

RECRUITMENT OF TALENT Importance to producers 9th Network performance 9th Recruitment was considered the least vital benefit of joining a network. Producers who responded to the survey rated its importance at just 2.52 out of a possible 10. And most producers felt that networks were performing solidly but a bit underwhelmingly on that front, rating their performance at 2.73 out of 5.

While recruitment may not be the main reason to join a network, membership can look attractive to producers looking to join a firm.

“In the independent insurance world, there’s a lot of turnover,” Caldwell says. By showing you have the expanded access to products, companies and training opportunities afforded by a network, your agency can be more attractive to prospective hires.

“It just looks better, especially to a producer who

NETWORK NONMEMBERS’ ANNUAL PREMIUM VOLUME

Under $1 million 25.71%

Under $1 million 42.11%

$1 million–$10 million 48.57%

$1 million–$10 million 36.84%

More than $10 million 25.71%

More than $10 million 26.32%

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FEATURES

COVER STORY: PRODUCERS ON NETWORKS WHY NOT JOIN A NETWORK?

We asked survey respondents who weren’t network members what was keeping them from joining.

Here’s what they had to say:

63.64% Time commitment

36.36% Don’t meet requirements

27.27% Sharing of clients

18.18% Cost/loss of commissions

18.18%

Loss of independence

9.09% Negative past experience

The good news is that most brokerages felt their networks were doing at least a satisfactory job in all categories. The bad news is that networks don’t seem to be blowing producers away in any one category may be getting paid on commission,” he says.

WHY NOT JOIN A NETWORK? So with all the benefits of joining a network, what’s keeping some brokerages from taking the plunge?

We asked producers who weren’t network members to tell us why they were hesitant to join. The overwhelming majority – 64% – said they thought joining a network would involve too great a time commitment. A substantial minority of 36% felt they didn’t meet the requirements to join, while about 27% didn’t like the idea of sharing clients. About 18% feared loss of clients or commission, and an identical percentage feared the loss of independence. Tellingly, however, just 9% were put off by a negative past experience with a network.

Respondents’ biggest worry – time commitment – isn’t as big a factor as many think it will be. Different networks may require attendance at meetings or training, but most don’t require inordinate amounts of their members’ time.

It is true that many producers may not meet the requirements of every network. Networks want to work with profitable brokerages, and the best will be choosy about who they bring on. It’s important, says Thompson, to be “your own brand ambassador.”

“You’ll never have to sell yourself harder than when you are trying to convince your network to take

WHAT IS A NETWORK? Networks can take many different forms, but they usually boil down to a number of brokerages under one ‘master’ code.

Because of its size, the network gives member brokerages access to more companies and products, increasing their potential to do business. Networks also may negotiate with carriers for higher commissions.

Beyond providing access to markets, networks’ offerings can vary widely. Some may offer just the bare bones – increased market access and profit-sharing. Others may also provide members with perks like an agency management system, training opportunities and marketing assistance.

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WHICH NETWORK? So you’re convinced a network is right for you. But how do you choose, and how do you go about joining?

Check out your options. Research the networks operating in your province. Find out what markets they’ll open to you, what profit-sharing arrangements they have and what their requirements for membership are.

Talk to members. Ask them about their experiences as members of the network. Let them know they should be frank about those experiences – good and bad.

Be prepared. Most networks are going to have an application process. Many of them may want to look at your books. No network wants to partner with a failing agency. a chance on you,” she says. “You have to make it easy for them to want to work with you by putting yourself out front and being comfortable with being your own biggest cheerleader.”

But brokers have to be choosy as well, says Caldwell. “Shop around. Do your research,” he says.

“Make sure you’re doing your due diligence, because no matter what organization you go with, you’re signing a contract. I think, so often, [brokerages] rush into the first thing to come along, and they get sold on the potential benefits. There’s this honeymoon period – but then they find themselves in a contract.

[Producers] need to look at the pros and cons: What am I getting by joining this network? What am I getting in terms of additional markets, additional commissions, protection? Those things need to be considered before you sign on that dotted line with anyone.”

Thompson offers another, equally fundamental reason for considering the partnership. “There is power in nurturing relationships,” she says. “No matter how much you can’t stand networking – we know how manufactured and awkward it can be – do it anyway.

Our business is all about building relationships.”

www.insurancebusiness.ca

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24/04/2015 3:02:04 AM

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24/04/2015 3:02:09 AM

FEATURES

D&O

Protecting directors and officers from personal liabilities Directors should be protected by indemnity agreements in their corporate bylaws, but that’s only the first line of defense, as Ian Fraser explains 30

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PEOPLE SERVE on boards of directors for a variety of reasons, including an altruistic desire to give back, to assist with career and personal development, and to supplement income. By taking on a director or officer role, they agree to exercise due diligence in overseeing the organization they serve and act in its best interest. Yet both new and seasoned board members are often not fully aware of the personal risks they are exposed to by taking on these responsibilities.

Corporate governance is evolving at a rapid pace. Organizations are seeing a significant increase in governance requirements related to disclosure, the scope and timing of communication to shareholders and other stakeholders, and increased audit requirements. At the same time, litigation trends are on the rise, increasing board members’ exposure to legal and financial risk.

Securities class action lawsuits, breach of contract, wrongful termination and discrimination lawsuits are just some examples of claims that could expose directors and officers – and potentially their personal assets – to litigation. What directors and officers must ask themselves is, what’s standing between their personal assets and litigation?

Directors should generally be protected by way of indemnity agreements in their corporate bylaws. But what happens if indemnification from their company becomes unavailable, either because of a corporate insolvency or a court order prohibiting the company from indemnifying? If such a situation arises, there is no longer a corporate balance sheet standing in the wing to protect them, and that leaves directors personally liable to cover their losses.

The directors & officers (D&O) insurance policy is the second line of defense. Not only does it provide protection for directors beyond corporate indemnification, it also provides protection for directors from instances where no indemnification is provided or available. The D&O policy is

D&O: TOP FIVE THINGS TO REMEMBER

1

Governance requirements are increasing and litigation trends are on the rise, leaving board members at risk of personal liability.

2 3 4 5

The first line of defense against personal liability is an indemnity agreement.

The second line of defense is a solid D&O insurance policy.

It is critical to put a well-constructed risk management framework in place.

Brokers needs to stay on top of the D&O market, which sees daily changes in exposures, regulatory requirements and coverage.

“For smaller organizations that do not have a risk management team in place, this process is even more challenging” critical because it’s generally the last line of defense shielding personal wealth.

If the courts deem directors personally liable, absent of a D&O policy or corporate indemnification, they can go after every single asset that those directors hold in their names – a house, retirement funds, cash accounts or stocks – which could ultimately wipe out an individual’s personal wealth.

It is incumbent on directors and officers to ensure proper protection is in place, starting

with a well-constructed risk management framework that includes, amongst many things, ironclad indemnity agreements and a comprehensive D&O insurance policy. The larger the organization, the more robust this risk management program should be. For smaller organizations that do not have a risk management team in place, this process is even more challenging.

As part of their risk management framework, organizations should consider an element of independence on the board of directors, along with well-documented corporate policies addressing everything from disclosure to insider trading of securities for public companies. Ensuring annual employee and executive attestation to such policies further de-levers operational and financial risk for the organization and its directors and officers.

An insurance broker plays a significant role in educating stakeholders (senior executives, risk managers, directors and officers) on how to protect themselves.

Client education is more critical than ever.

The D&O insurance market is one of the most fluid and dynamic segments within the industry. The exposures, regulatory and legal requirements change daily, as does the coverage itself. Brokers need to stay on top of this market day in and day out in order to offer sound advice on the best policy to cover the specific needs of each board of directors within an organization’s financial realities.

Ian Fraser is national director of ProFin at RSA Insurance, and is responsible for strategy and profitability for all professional and management liability lines of business written in Canada.

Fraser joined RSA in 2012 and has extensive experience in financial and professional lines of business in some of the largest insurance companies in Canada. He specializes in directors & officers liability, employment practices liability, fiduciary liability, fidelity and crime, and professional liability.

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FEATURES

EQUIPMENT BREAKDOWN INSURANCE

BEYOND THE BOILER Breakdowns are inevitable, especially on a construction site. But are your clients prepared for them? Michel Rivard explains how breakdowns, cost overruns and delays can be mitigated through the right insurance product DURING CONSTRUCTION, equipment is hard at work, and that requires boiler and machinery coverage (better known today as equipment breakdown coverage). Given the growth of construction in Canada in the industrial and commercial sectors – not to mention condominiums – the industry has seen a number of new additions to equipment breakdown coverage over the past

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10 years. But construction clients routinely undervalue or forget elements when securing basic coverage.

“A new building’s electrical system, heating, air conditioning and other major equipment may be operating for months during construction – not to mention the lighting and electricity necessary for the contractors’ tools,” says Michel Rivard, the assistant vice

president of equipment breakdown insurance at Sovereign General Insurance Company.

Rivard points out that there are some equipment breakdown coverage extensions that brokers should consider adding to their clients’ property policy.

Equipment breakdown coverage “Equipment breakdown insurance provides

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“By adding all those coverage extensions that go beyond traditional boiler coverage, you will protect your client for many perils that are missing in the property insurance policy” Michel Rivard, Sovereign General Insurance Company the wording,” Rivard says, “which is any equipment owned, leased, operated or controlled by the insured installed as part of the project and which will form a permanent part of the finished project [boilers, pressure vessels, mechanical and electrical equipment].”

Testing and commissioning

coverage for exposures that are normally excluded from property insurance policies,” Rivard says, such as electricity during all phases of project construction, as well as the use of the building’s HVAC system.

“It is essential to add this coverage to any construction project in order to avoid a serious lack of protection.”

Today, brokers have new opportunities to add equipment breakdown coverage via endorsement or packaging (including exposures not previously promoted). “In Sovereign’s policy, for example, electrical arcing is covered, as well as a breakdown to any insured equipment defined in

Because building equipment must be tested before the project is turned over to the owner, this endorsement includes loss or damage caused by an equipment breakdown during a testing period of five days. After the testing period, commissioning period will be available for 30 days, Rivard says.

“The purpose of the 30 days is for attaining specification requirements and for the training of operations personnel,” he adds.

“It is the period of time that begins with the introduction of electricity, fuel, flammable or combustible solids, liquid or gas, and steam – or water in the case of a hydroelectric facility.”

At that point, coverage under testing and commissioning endorsement has ceased, and without equipment breakdown insurance, ensuing equipment damages due to a breakdown will not be insured.

“Take, for example, the construction of a four-storey residential condo building,” Rivard says. “Heating and air conditioning are tested, commissioned and put to use far in advance of turnover. This is necessary to provide contractors and subcontractors an environment in which other interior components, finishing and furnishings can be installed. Equipment breakdown coverage is needed to insure any breakdown to installed insured equipment while the remaining work at the project site is being performed.”

Delayed start-up rental income This endorsement provides coverage for the loss of rental income resulting from a delay in the completion of the project beyond the scheduled date of completion resulting from direct physical loss of or damage to the project by an equipment breakdown during the policy term.

“Due to the breakdown, the opening of the project can be delayed for many months,” Rivard says. “This coverage will provide the loss of rental income not earned during the additional and unexpected period of construction.”

Soft costs Some delay costs can be difficult to quantify, which is where the soft costs coverage comes into play, Rivard says.

“This endorsement will pay for costs or additional expenses resulting from a delay in a project completion due to a breakdown of … insured equipment,” he says. “These costs could be financial costs, additional interest expenses, leasing and marketing expenses, legal and accounting expenses, or miscellaneous carrying costs.”

Extra expenses Extra expense will cover fees for temporary rental of equipment or temporary replacement of the damaged equipment – for example, the rental expenses for an emergency generator to provide electricity following a breakdown of the main electrical panel.

“By adding all those coverage extensions that go beyond traditional boiler coverage, you will protect your client for many perils that are missing in the property insurance policy,” Rivard says.

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PEOPLE

PRODUCER PROFILE

What’s next for the IBAO Michael Brattman is looking to add a technological flare to the insurance industry while lobbying for and against new regulations during his tenure as IBAO president FROM MOWING the lawns of his mentor to becoming the president of the Insurance Brokers Association of Ontario, Michael Brattman has come a long way. But he’s been all about insurance since he was young.

Growing up in Waterloo, Ont., Brattman learned the importance of drive, relationships and loyalty at an early age, but it wasn’t until he met John McLennan that he realized his future was in insurance.

“He was a mentor to me, and he had a brokerage. He was supportive of me and wanted me to get a broker’s license, get a summer job in insurance,” Brattman recalls, adding that he once mowed McLennan’s grass to get his foot in the door.

“He was always big on engaging people,” Brattman says. “He was always out there, building relationships,

interacting with people and [finding] out what was important to them. He was never afraid to ask for the money. It was one of those things that helped me at a young age, just watching him, seeing how it’s done.”

That hustle and need to prove himself served Brattman well as he began to pursue his career. After graduating from Huron College, he began his climb up the ladder, beginning at Manulife Financial as a life and health underwriter in 1989.

After two years with Manulife and a brief stint in Toronto as a project manager for Traders General Insurance, he went on to become the vice president of his mentor’s insurance company, The McLennan Group, in 1992 and stayed there for 15 years.

“The evolving customer, investing in the future ... and collaboration are the issues I’ve been talking to members about”

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When McLennan sold the business in 2007, Brattman became the vice president of personal insurance at Cowan Insurance Group and stayed for six years before taking his current position: partner and vice president of personal lines at Erb and Erb Insurance Brokers.

IBAO vision Brattman’s decorated resume earned him a spot on the board at the IBAO, where he eventually moved into the president’s seat.

“I was on the board for two years and put my name forward to be an executive,” he says. “You serve as second vice president, then first vice president. Now I’m the president, and the following year I’ll be chair.”

During his time as president, Brattman plans to keep moving forward while stepping up his game by leading the organization through a tremendous period of change and legislation.

“It’s going to be an exciting year,” he says. “I’m looking at recognizing that things continue to change in the industry and [breaking] it into three categories.

The evolving customer, investing in the future – both people and technology – and collaboration are the issues that I’ve been talking to members about.”

He’s already gotten off to a pretty good start in 2015. In January, the IBAO signed a partnership deal with E-SignLive by Silanis, which offers brokers tailored pricing for an electronic signature solution.

“Our partnership with e-SignLive is a secure step in the right direction for our industry when it comes to supporting brokers in servicing clients in today’s electronic environment,” Traci Boland, IBAO’s vice president, said in a press release.

What’s more, Brattman was a big part of the organization’s move to introduce a new telematics program called FleetAdvisor, which has helped fleet managers reduce operational risks and costs, as well as improve vehicle maintenance. It also includes a provision of an overall driving score for every drive to

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PEOPLE

PRODUCER PROFILE

“[Clients] have access to info immediately, so if you don’t respond, they will simply find someone else”

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assess and improve fleet safety.

“This will not only enable fleet managers to better control their business risk within their fleets, but also offer our member brokers a value added product to support their commercial clients,” Brattman says. “It’s important we stay on top on that.”

Brattman’s goal as the organization’s president is to strengthen the collaboration between IBAO members as they line up to compete against direct brokers and banks. Being able to establish communication beyond traditional 9-to-5 hours is an example of this, he says.

“Our customers want 24-hour service, [but] traditionally we have been in a model where we haven’t changed the way we’ve sold insurance over the last few decades,” he says. “When you talk about selling insurance, it has to change, but it also has remain the same. We’re still accountable to clients.

“We have to be open to all those avenues,” he continues. “Social media is important now. [Clients] have access to info immediately, so if you don’t respond, they will simply find someone else. They’re that much more knowledgeable as consumers, so we have to be able to handle that.”

That will be all the more important as regulatory changes threaten to impact future growth.

Bill C-15, which deals with anti-fraud and auto insurance rates, is a big one for Brattman. “I think Bill C-15 will be key to determine what the year looks like,” he says. “The government is committed to 15% rate holdback before August 2015. We’ve seen our carriers take a rate decrease and [there is] pressure to take more. I don’t think there’s room for it, so we’ll see if there will be further rate reduction. As much as we’d like our customers to have the lowest possible insurance, at some point there isn’t any more room in terms of losses.”

In recent weeks, Brattman – along with a number of large players in the financial industry – has spoken out against the Liberal government’s Ontario Registered Pension Program, a Liberal government plan that could negatively affect small and medium-

IBAO JUMPS INTO TELEMATICS

Telematics – the joint science of telecommunications and informatics applied in wireless technologies and computational systems – has gained plenty of traction in insurance circles. GPS navigation, integrated hands-free cell phones, wireless safety communications and automatic driving assistance systems are all covered under the telematics umbrella.

In January, the IBAO announced a program called FleetAdvisor, which uses telematics devices installed in commercial vehicles to allow fleet managers to effectively manage fleet risk and reduce operating costs. The product ensures that the data is owned by the consumer, but with the fleet manager’s consent, brokers will have viewing access.

Unica Insurance recently publicly endorsed the telematics system.

“The IBAO is very pleased with Unica’s decision to endorse FleetAdvisor, and we congratulate them on leveraging this advanced technology to the benefit of their policyholders and brokers,” Brattman says. “Unica’s decision reinforces their position as a strong supporter of the broker channel.” sized businesses.

He’s also planning to advocate for regulatory changes like a flood insurance plan that includes protection for sewer backup and storm coverage.

Overall, 2015 is shaping up to be an interesting year for Brattman and the IBAO. “There’s never a dull moment,” he says. “It should be an exciting year for us. If we can collaborate effectively, we’ll [have] a leg up against the competition.”

www.insurancebusiness.ca

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24/04/2015 2:45:38 AM

MORE THAN READY THE NEW GENERATION OF INSURANCE The BCIT General Insurance and Risk Management program prepares students with robust business training, 8 of 10 CIP courses, and a full CRM designation.

Learn more today.

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FEATURES

EDUCATION

A DIPLOMA AND A JOB: GUARANTEED The BCIT insurance broker program is turning out some of the hottest young guns today – but that success story almost didn’t happen until one man made it his personal passion. Donald Horne reports FIVE YEARS ago, the British Columbia Institute of Technology diploma program for brokers looked like a dead duck.

“We started with a total of 18 students, and the school was going to close the program down because it wasn’t viable,” says Shaun Sinclair, one of the teachers and the driving force behind BCIT’s insurance broker program. “I had a one-year contract that stated I had to have 20 people a year or

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I was going to be out of a job. So I started working on it.”

This year, Sinclair has 42 students already signed up for next year’s course in September.

“We do a BBA [Bachelor of Business Administration] in three years, as opposed to four like a normal school,” Sinclair says.

“The first year is almost all business training, the second is almost all insurance and risk

BY THE NUMBERS BCIT graduates have a number of careers to choose from in the insurance industry

WHERE ARE THE GRADUATES OF BCIT GOING? Brokers 37% Underwriters 33% Claims, MGAs and other related fields 37%

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management, and the third year is a BBA.” And if you already have a degree, you can skip the first year and do the program in eight and a half months, says Sinclair.

Those coming to the program are between the ages of 22 and 27, usually have a degree, and have held a job but aren’t happy where they are. They quickly learn that a new career will be waiting for them once they obtain their degree.

“They come to us to get a career,” Sinclair says, “and in insurance, the opportunities are limitless. In the school of business, we have accounting, finance, insurance and risk management. There are 300 accountants for maybe 150 jobs, 200 finance guys for maybe 90 jobs, and I’ve got 20-40 insurance students for about 300 jobs. Everybody who comes to the program gets 100% placement.”

One graduate, Rachel Cheong of CMW Insurance Services in Vancouver, is still singing the praises of BCIT. “This program is tailored to ready students for the workforce. It has equipped me with the technical skills, knowledge and connections to help jump-start my career,” says Cheong, a national CIP award winner who graduated the program two years ago. “If you are fresh out of school and still looking, try walking down the insurance path! It has many different routes you can take in the course of your career.”

Sinclair’s resume extends across the

“In insurance, the opportunities are limitless. ... Everybody who comes to the program gets 100% placement” SELLING INSURANCE AS A JOB

Recent BCIT graduate Rachel Cheong, already an award-winner

breadth of the insurance industry – he spent some 20 years in claims, then did a stint on the broker side as a claims advocate and took a role as a risk manager before discovering his calling as a teacher.

“I’ve always loved teaching,” Sinclair says.

“I’ve probably been teaching at the institute for 20 years, and I’ve [had] this gig with BCIT for about five years ago now, and it’s

Cold calling, knocking on doors – that is the mindset Shaun Sinclair encounters among twenty­ somethings when he goes canvassing for students.

“That is my job – to tell people they don’t have to sell car insurance or life insurance,” he says, addressing the stereotype many hold about the insurance industry. “Every time I have an info session in trying to get people to join the industry, I ask them, ‘What do you think you will do if you work in insurance?’ And without fail, 90% of the time, they say life or car insurance. And we don’t even touch life insurance!”

The curriculum at the British Columbia Institute of Technology is part of a diploma program for insurance brokers, preparing them for the realities of the industry. Students manage a virtual stock portfolio, create mock insurance policies and become familiar with automobile, property, personal and general liability insurance coverage issues.

Graduates go on to work in various roles at financial institutions, investment banks and insurance corporations.

“Once I start talking about loss adjustment and some of the interesting things they can do in commercial underwriting, and some of the commercial broking stuff they can do that is just amazing, they all change their minds, and I can sign people fairly quickly,” Sinclair says. “It is just a matter of spending an hour with people and telling them how great the industry is.” just been fantastic.”

What is most gratifying for Sinclair is going to industry events and seeing former students shine in their new jobs.

“You see kids who didn’t know a thing about insurance two years ago, and [they’re] now talking about running accounts with a total insured value of $2 million,” he smiles.

“That part is really amazing.”

www.insurancebusiness.ca

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FEATURES

STRATEGY

The brutal truth Stefan Kazakis explains why you need to be accountable for your business and how you are responsible for getting it back on track I AM OFTEN asked the question, “How can I keep both myself and my team accountable?”

Here are my top tips for keeping yourself and your team on the path to success, which will transform your business into a ‘diamond business’.

As you know, running a small business isn’t easy, but if it were, everyone would be doing it. Business owners of today need to be more flexible and plan for the unexpected, set boundaries for their business and home life to ensure efficiency in both areas at the right times, and create a support network around them.

Unfortunately, many business owners choose to operate in an environment of blame and lack of trust, and with a victim mentality.

Keeping a positive mind requires more energy and effort, which is why many business owners decide that blaming everything from the economy to their lack of good customers is the reason for their poor performance.

Stop and think about your business. Do you and your team members have a positive or negative mind? If the answer is positive, you

get a gold star. If the answer is negative, you need to make some decisions about what you are going to do about that. And remember, you need brutal truth. You can pretend you are positive if you like, but the only person you will be fooling is yourself, and that doesn’t help you a whole lot.

Running a business where everyone is accountable can be fun and full of positives, as long as you learn a few fundamentals around mindset, critical thinking and planning.

It all starts with clarity Clarity comes when you feel you are winning.

Clarity is not about dollars and cents, and it’s not about how many clients you have. It’s not about your marketing or your cash flow or your balance sheet. All this stuff comes later.

Clarity is about the DNA of your business.

It’s about what drives you and the people around you. It’s the heart and soul of why you go into the office every day and the promise you make to your customers. It’s an unshakeable confidence about who you are and why you do what you do for those

“Go slow to go fast. Sometimes you must go two steps backward to go four steps forward, but you must see the opportunities before you and not just the costs” 40

that you choose to do it for. If you don’t have confidence, trust, self-discipline and someone to keep you accountable, you can’t expect others to.

You’re enrolled or you’re not; you’re serving a purpose or you’re not; you’re maximizing your opportunities or you’re not. You’re at your personal best or you’re not. It’s an ethos, and it’s a culture for you and your business.

Are you clear on what your number-one big outcome is? The quality of the decisions you strategically make will determine the direction of your business. What is your number-one big outcome? For me, it is to

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Being in growth mode means having a strategic plan that is the basis for all the decisions you make.

Go slow to go fast. Sometimes you must go two steps backward to go four steps forward, but you must see the opportunities before you and not just the costs. Focus on the cost of opportunity, not the cost of growth, and be prepared and strategic to take a short-term hit for long-term gain. Business is demanding. It always has been, and it always will be.

Every plan A should have a plan B

provide a better quality of life for my clients.

Notice that it is not based on the dollars and cents; it’s more than that. What is it that you are in business to provide?

Then ask yourself, are you growing or dying? One question I always ask business owners that I meet is, “Are you in maintenance mode or growth mode?” Which of these two do you connect with?

You must look in the mirror and make a conscious choice about this because they are two different mindsets, and whichever approach you take will affect each and every decision you make in your business. If you’re

not clear about which mode you are in, you could be headed for trouble.

You may think you should be in maintenance mode, treading carefully and being conservative until you can get back on your feet, and then you can worry about growth.

But let me tell you something right now: You should always be in growth mode. That’s right, always.

To be in growth mode means you are focused on the future. You should have threeto five-year goals as well as shorter-term targets to ensure you’re on track to the greater destination.

Having decided that you are in growth mode, you must always ensure that every plan A always has a plan B. I always say, “Every problem I am experiencing today started out as a great idea!”

So, when things start to go pear-shaped and your business appears to be going off track, do you start making decisions in a blind panic just to get out of the current mess? This is a great way to relieve the stress of running a business, because if you keep doing this, fairly soon you won’t have a business left to worry about.

Just as important as using your plan to guide your decisions and growth is having a plan B for everything you do. We all know that despite best efforts and careful planning things still go wrong from time to time. All businesses hit speed bumps. It’s inevitable. So whenever you make an important decision in your business, make sure you have a backup plan as well.

When the opportunity moves from the head to the heart, you will move forward.

When you fully own and take responsibility for what you are doing, and when you are totally committed, good things will start to happen.

Stefan Kazakis is a business strategist, soughtafter presenter and speaker and author of the new book From Deadwood to Diamonds (Major Street Publishing, $29.95). For more information, visit www.stefankazakis.com or email info@ stefankazakis.com.

www.insurancebusiness.ca

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FEATURES

EMBRACING CHANGE

The three habits of nimble, agile companies Does change ever ‘just happen’? Not necessarily, says author Graham Winter. He outlines how businesses can regain control over change readiness and agility

ONE OF Australia’s top corporate leaders bemoaned recently how her organization’s change agenda had been hijacked by what she called “project management specialists masquerading as experts in people change.”

She continued: “They think everything can be boxed into a project with neat milestones and end dates. Just when they think the change has finished, that’s when the real transition actually begins. We then get to pick up the pieces!”

‘change should be managed by experts’ approach in the way that they infuse the capabilities and habits of adaptability and change resilience directly into front-line leaders and teams.

Three habits stand out in this approach, and they offer businesses an opportunity to regain leadership over the whole area of change readiness and agility.

A new approach

Most agile and adaptive organizations are arranged in a network of nimble, connected teams because this is the most responsive and flexible way to organise people and resources. To create this network demands a commitment to the value and philosophy of ‘one team’ and the access to shared tools to equip team leaders to lead, build and connect their teams.

A practical example is the Think

Over the past two years, while researching and writing the recently published First Be Nimble and working with a number of fast-moving enterprises, it became clear to me that the most nimble organizations don’t even talk about change management, let alone create a separate team to lead it.

These agile leading-edge enterprises are a generation ahead of the conventional

42

Habit 1: Foster nimble, connected teams

One Team model that was originally developed in Australia and is now widely used because of its engagingly simple model and tools to guide everyone, from the CEO to the front line.

It is based on five core principles:

 Share the big picture (get above the agendas

of the ‘experts in silos’)  Share the reality (open, robust conversations

where people call it as it is)  Share the air (effective performance

partnerships between functions)  Share the load (plan and prioritize the

resource allocations collaboratively)  Share the wins and losses

(infuse a debrief-learn-adapt cycle)

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Nimble organizations are that ones that are constantly in transition: ending something, exploring opportunities and embracing the new The Think One Team model focuses on accessible and shared tools for team leaders to use in three core activities: Aligning their teams (within and with other teams) Collaborating on problems and opportunities Learning on the run

doing so, put the power to learn and adapt into the hands of front-line teams rather than a separate change department.

This is in stark contrast to the world of change management project plans, which certainly have their place in planning the technical aspects of change but simply can’t cope with the impacts of disruptive change on people.

Habit 2: Relentless debriefing While conventional change management diligently maps its change plans and ‘stage-gate’ reviews, the nimble and adaptive organization infuses intensive, relentless debriefing of tasks and people processes into the operating rhythm of every team.

Skilfully led ‘action debriefs’ develop resilience moment by moment and, in

Habit 3: Let go – welcome the squirm Nimble organizations the ones that are constantly in transition: ending something, explor­ i ng opportunities and embracing the new. In a nutshell, they are good at letting go and they know that endings make you squirm.

How do they learn to ‘welcome the

squirm’? First, their leaders are trained to not rescue people, which means adapting their language and, instead of asking, “How do I make people comfortable?”, asking, “What is the optimum stretch that this team can handle?’’

Second, their day-to-day operating rhythm is built around collaborative problem-solving and debriefing practices so they learn and adapt together, not to the beat of a change management drum.

Challenge the current reliance on broadbased engagement measures that can limit the acceptance of ‘squirm’ as valid to organizational growth. It’s important to become more specific about measuring (quantitatively and qualitatively) what’s happening inside and between those nimble teams in real time as they experience the emotional rollercoaster that is disruptive change.

First be nimble The vast majority of agile and adaptive organizations have leadership teams that promote a one-team philosophy and are organized into networks of nimble, connected teams.

The leaders of those teams are equipped with the tools, skills and support to guide their teams to align, collaborate, debrief, learn and adapt on the run. Instead of resistance, they welcome the squirm that comes from new experiences and, tellingly, they are a generation ahead of the mainstream, who still sit like experts in silos waiting for the change management team to tell them when it’s time to move.

The organizations that best adapt to change aren’t those who manage through it, but rather those who first develop the resilience and adaptability to handle whatever the world throws at them.

Graham Winter is the author of “Think One Team” and “First Be Nimble” (Jossey Bass), and director of Think One Team International. Contact him at thinkoneteam. com or graham@thinkoneteam.com.

www.insurancebusiness.ca

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Canada’s Online News Source and Community for Life and Health Insurance Professionals

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Read up on trends and economic events that FREE E-NEWSLETTER! affect your business Expert Advice and Strategy Insights Learn about what makes a success-driven practice from the best and brightest minds in the industry Industry-leading Special Reports & Analysis Read up on trends and economic events that Up-close Personal affect yourand business

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email insurancebusiness@kmimedia.ca

HITTING HIS PEAK “The greatest outcome [of] having climbed all these mountains … is the high level of confidence that my three kids have attained that has served them so well in their development in life”

DAN MALLORY runs Mallory Insurance in Barrie, Ont. – a family business started by his father way back in 1949.

Mallory carried on the family business, but he also established his own family tradition. His first ‘serious’ climb, with his wife, was Pico Bolivar in Venezuela – all 4,978 meters of it. “We had no experience, but our guide made it sound like everyone did it – like it was a nice hike,” Mallory says. The reality was difficult conditions and extreme vertical exposure, but the couple

1951 Born

made it to the top. The idea to go on to conquer further high peaks – and include the pair’s three children in the experience – was thus born. Since then Mallory has conquered the highest peak on every continent of the world (the ‘Seven Summits’) with one or more members of his family.

In 2008, Mallory, with his two sons and daughter, became part of the first and only family of four in the world to successfully reach the summit of Everest. His daughter, Laura, is the youngest Canadian female to summit Everest.

9

Years to complete ‘Seven Summits’

8,848 m

Highest altitude reached (Everest)

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THE CHOICE IS YOURS WITH

MAGAZINE-EMAG

WEBSITE-ENEWSLETTER-MULTIMEDIA

Insurance Business magazine features a series of industry reports recognizing the achievements of key individuals and businesses as well as providing the latest in business best practice. Access every emag from our website or download on your iPad from the iTunes store for access anywhere, anytime.

Insurance Business has an online industry hub committed to delivering the latest industry news, opinion and analysis for today’s sophisticated insurance professional. Subscribe to the exclusive e-newsletter and get up-to-the-minute insurance news delivered to your inbox daily.

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PEOPLE

CAREER PATH

LIFELONG LEARNER

His commitment to acquiring knowledge in a number of different areas has put Lorne Marr of LSM Insurance on the path to success 2008 2004

STARTS LSM INSURANCE WITH HIS WIFE

SETS UP MGA “It was an important step in the growth of our company. We act as a middleman of sorts between insurance professionals and the insurance industry. It’s been good for our business and our outreach in meeting brokers and learning more about the inner workings of the industry”

Marr says being business partners with his wife, Chantal, was a natural fit “ She’s pretty personable, does well with social media and really cares about the clients she works with, so it made sense for us to work together. Today, we have one of the top sites in the country and devote a great deal of effort into social media, which has really propelled our business forward”

“The move for me was just about being independent, and selling more products beyond what my 1998 MOVES TO company had to offer. I took all the CLARICA INSURANCE experiences I’d had working with [MetLife] and used them at Clarica”

He doesn’t offer financial planning, but Marr says getting his CFP designation was all about a commitment to lifelong learning “I’ve always been in favour of learning and getting better. I wanted to use the skills I learned to offer more to my clients. I think it’s important for insurance professionals to be mindful of all sectors that correlate to their practices, and to the industry”

2000

BECOMES A REGISTERED CFP

1994

WINS ROOKIE BROKER OF THE YEAR

1993

JOINS MET LIFE Marr cut his teeth in the industry as a broker at MetLife “It was my first look at working in the industry, and I was young. It took a lot of networking, cold calls and really pounding the pavement to grow my client base. But ultimately, it paid off. I was only 24 when I started, so it took that effort to really get my foot in the door” Marr began his pursuit of prominence in the insurance industry in an unlikely place – with a degree in political science “I was interested in political science, but more from the business perspective. I’ve always been interested in politics, and the decisions of government impact what happens in the business world. I enrolled with the intent of learning all I could, and it served me well”

Marr counts winning this award early in his career as a pivotal moment for his future success “I never thought that I would get an award just a year into the industry, but all the efforts I made in my first year really helped to launch my career and really gave me the confidence to go further”

1991 FOCUSES ON BUSINESS

1987

STUDIES POLITICAL SCIENCE

After his undergraduate studies, Marr turned his attention to business, earning an MBA “I’m constantly learning, and I think it’s pivotal for insurance professionals to continue to learn and grow, even if the skills are not something you necessarily want to pursue as a career. You should be eclectic and learn to do everything. My MBA really opened my eyes to those possibilities”

www.insurancebusiness.ca

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d

FEATURES

EXPERT ADVICE 3 EARTHQUAKE DON’TS

GETTING YOUR COMMERCIAL CLIENTS EARTHQUAKEREADY AN EARTHQUAKE can be a scary experience for all clients. In the last issue, I went over how brokers can help their personal insurance clients prepare for an earthquake. Now I’ll cover how you can help prepare your commercial clients for a shake-up, too.

In British Columbia and the Ontario-Quebec corridor, the risk of an earthquake is a significant one. As a broker, you understand your clients and have a professional relationship with them.

Brokers are perfectly positioned to help their customers with disaster planning, as they know the risks their customers face and can help ensure that business loss is mitigated and that their business is operational again quickly.

Brokers should work with their clients to help them have a robust business continuity plan in place before an earthquake happens, which can greatly reduce their risks and losses.

Brokers also can ensure that their clients carry adequate coverage – especially adequate limits on business interruption and property.

Preparing employees Part of educating your clients is ensuring that they are prepared to educate their employees and staff. Employees are a critical asset, par-

48

ticularly for local businesses, which need to remain open after a disaster to help their community to recover quickly.

These tips can help prepare your clients’ employees for an earthquake: It’s important for employees to ensure that they are ready if an earthquake strikes either while they’re at home or at work. If the workforce is not prepared for a disaster at home, they will be unable to return to their jobs, causing a longer disruption to the business.

If an earthquake strikes during office hours, employees should take shelter under a table or desk. If there isn’t one nearby, try to get under a table rather than running. It’s important to stay put, cover your face and head with your arms, and crouch in an inside corner of the room you are in.

Taking the elevator when an earthquake hits? Employees should press the buttons for each floor and get off at the first stop.

If the elevator stops between floors, use the emergency phone or any other means to call for help. One fear when stuck in an elevator during an earthquake is that the elevator cables will snap. As there are mul-

Don’t stand in a doorway Doorways are no stronger than the rest of the building. They also cannot protect you from falling or flying objects.

Don’t run outside Trying to run during an earthquake is dangerous. The ground is moving, which can cause you to fall and hurt yourself on debris or glass on the ground. At the same time, glass, bricks and other building materials may be falling.

Don’t follow the ‘triangle of life’ method The triangle of life is a controversial theory about how to survive a major earthquake.

This method advises against taking shelter under a table, and has been discredited by many leading experts.

tiple cables and counter-balances designed to prevent that, this is not likely to happen.

Protecting your head is crucial. If you or your employees are in a parkade on foot, crouch down against a solid wall or pillar, and protect your head with your briefcase, shopping bag or anything else at hand. If you’re still in the car, stop where you are and get down as low as possible. The safest part of your car in the event of an earthquake is below the level of your dashboard, particularly if debris begins to fall.

As a broker, you are in an ideal position to help your commercial clients prepare not only their business, but also their employees, for an earthquake. For more information on how you can help your clients get ready for an earthquake, visit www.rsabroker.ca/campaign-page/ climate-smart.

Nadya Rahim is the commercial insurance underwriting director at Canadian Northern Shield, part of the RSA Group.

www.insurancebusiness.ca

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