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WE KNOW
WHAT WE KNOW
You can depend on our 140 years of experience, ďŹ nancial strength, specialized underwriting and claims expertise as we partner with brokers and agents to deliver innovative solutions to target customers. Know more at theguarantee.com
Excellence, Expertise, Experience ... Every time
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ISSUE 3.5
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CONTENTS
plus.google.com/+InsurancebusinessCa facebook.com/IBCanada
UPFRONT 04 Editorial
The broker-MGA relationship
06 Head to head
The Uber risk for brokers
FEATURES
34
SPECIAL OPS
How MGAs can help brokers insure unique risks
COVER STORY
INDUSTRY ICON
12 Intelligence
This month’s big movers and shakers
14 MGA update
18 Opinion
Insuring the sharing economy
FEATURES
42
TRANSPORTATION AND CONSOLIDATION
A look at the varied and ever-changing risks in the transportation sector
FEATURES 36 MGA relationships
Why it pays to have an MGA partner
38 Never say never
No risk is too weird for these underwriters
48 First-class policies
Insuring high-net-worth clients
50 Why go digital?
Inside a new online portal for brokers
64 Expert advice
Prepare your clients for natural disasters
PEOPLE
FEATURES
52
ENGINEERING SOLUTION TO AN INSURANCE CRISIS
Revising Canada’s outdated flood data
2
Cyber risk in the wake of Ashley Madison
Has Allstate gone too far?
Lloyd’s of London chairman John Nelson outlines the company’s ambitious plans for global expansion
20
10 News analysis
16 Technology update
BROKERS ON MGAS
PEOPLE
Why the marine market matters
An MGA bolsters its online presence
24
As MGAs increase their presence in the Canadian insurance marketplace, brokers weigh in on how they’re performing in seven critical areas
08 Statistics
46 Producer profile
Sarah MacKinnon’s next chapter
60 Career path
For Judy Bell, it’s all about giving back
62 Other life
Mary Beth McInnis’ aquatic ballet
INSURANCEBUSINESS.CA CHECK IT OUT ONLINE
www.insurancebusiness.ca
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ENCO
What makes an underwriter stand out in a crowd? In today’s virtual sea of options, we believe “standing out” has a lot to do with relationships— the ones we have with you and those you have with your clients. Thinking outside the box, responding quickly and providing effective long-term solutions for your clients... That’s what gives ENCON a warm glow. Tap into ENCON’s 50+ years of experience in specialty insurance today.
www.encon.ca/outofthebox Professional Liability, Commercial General Liability, Construction and Environmental Insurance Marketed through licensed insurance brokers.
ENCON_InsuranceBusiness_Nov_2015.indd 1 02-03_TOC-SUBBED.indd 3
22/09/2015 1:55:31 PM 9/10/2015 4:46:59 AM
UPFRONT
EDITORIAL
A growing relationship
F
ew things are more important to the success of an independent insurance broker than the relationships they forge with non-broker partners such as managing general agents. The MGA is still a relatively new entity in Canada, but thanks to growing demand and steady progress in the creation of a Canadian MGA association, these organizations are poised to become a big part of broker life. That’s why Insurance Business Canada is seeking to shed light on the country’s burgeoning MGA sector by determining the top qualities an MGA must have in order to deliver value to retail brokers, and highlighting specific companies that truly embody these traits. In our second annual Brokers on MGAs survey, brokers across the country singled out underwriting turnaround times and claims responsiveness as the most important things an MGA can offer. Citing a growing consumer reliance on instantaneous and common-sense results, brokers stressed just how vital a responsive relationship with a knowledgeable underwriter can be.
The relationship between brokers and MGAs is more important than ever – and with many new players, brokers can afford to be particular Unfortunately, MGAs have some work to do when it comes to meeting brokers’ expectations. Brokers commented that a lack of communication on the part of MGAs, as well as deteriorating underwriter relationships, frustrated their ability to work effectively with their own clients. Also lacking were automation and technological offerings from MGAs. In an increasingly online environment, both MGAs and brokers need to invest in customer service technology to satisfy consumer demands and put a polish on their offerings. There are some sunny spots, however. MGAs received outstanding marks in terms of reputation and premium pricing – two important qualities in a new market that is facing some downward pressure on rates. If there is one thing the survey results suggest, however, it’s that the relationship between brokers and MGAs is more important than ever – and with many new players, brokers can afford to be particular. The team at Insurance Business Canada
www.insurancebusiness.ca NOVEMBER/DECEMBER 2015 EDITORIAL Editorial Director Vernon Clement Jones Associate Editor Donald Horne Writers Caitlin Bronson Jill Gregorie Tim Garratt Maryvonne Gray Olivia D’Orazio Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander
CONTRIBUTORS Daniel Mirkovic Stefan Kazakis Dan Waldschmidt Nikki Heald
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
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‘ 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 CMCA AUDITED
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
4
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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 the magazine can accept no responsibility for loss
9/10/2015 4:47:43 AM
When it’s grim, you need Great
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Everything he has worked for is at risk. When a lawsuit puts your client’s name in the headlines, you need to know the carrier you recommended can provide the coverage he needs. To handle claims skillfully, it takes the expertise of specialists who know how to turn grim to great. At Great American, we’re able to see management liability risks, write coverages, and handle claims in a way that gives your clients – and you – greater peace of mind. Our strength of specialization gives us that rare ability. Don’t settle for less. Turn grim to great with Great American.
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Refer to the actual policy for a full description of applicable terms, conditions, limits and exclusions. Coverage is underwritten by Great American Insurance Company– Canadian Branch, a foreign registered insurer in all Canadian provinces and territories. The Great American Insurance Group eagle logo and the word marks Great American®, Great American Insurance Group® and When It’s Grim, You Need Great® are registered service marks of Great American Insurance Company. ©2014-2015 Great American Insurance Company. All rights reserved. Scotia Plaza, Suite 2100 40 King Street West Toronto, Canada M5H 3C2
04-05_Editor's page-SUBBED.indd 5
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UPFRONT
HEAD TO HEAD
How will Uber coverage gaps impact brokers? Uber drivers relying on personal insurance are playing with fire, but brokers who take on these clients could be at risk, too
Paul Armstrong
Michael Brattman
William Steele
President Paul C. Armstrong Insurance Brokers
President Insurance Brokers Association of Ontario
President C.M. Steele Insurance
“A major issue is the accident benefits feature to passengers and the [Uber] driver. There are allowances – you can use your vehicle to give someone a ride, and you might share the cost – but the problem is with how the law might interpret those allowances when it comes to Uber. There are a lot of unknowns, but the insurance industry needs to make people aware. If one of these cases ever got to court and there hadn’t been some dialogue, there could be some really serious issues and a lot of claims paid. There needs to be a test case, but before that ever happens, there’s an overriding duty on the industry to revisit the situation with clients.”
“When it comes to ridesharing services, it’s no secret that there are gaps in coverage within the Ontario auto insurance product. This is an industrywide issue, and all distribution channels are looking for solutions. The IBAO has developed an education webinar on the topic … and speaking notes for our members to use when discussing this issue with clients. Our message to brokers is clear. When reviewing an auto application, always ask: ‘Is this vehicle being used to carry passengers for compensation?’ This is a crucial step brokers must take. No broker wants the ridesharing driver to be covered on their brokerage’s E&O policy.”
“The biggest issue here is on the errors and omissions side, specifically if you know about it. If you don’t, you’re assuming what underwriting information you’ve been given by the client originally or through any reviews of their policies is still accurate. But it’s hard for brokers to ask every client if they’re an Uber driver. If a client joins Uber and has a claim, there are gaps in coverage for passengers and for them because they’re using the car for other than what they’ve declared. I hope a product comes out that fills that gap in coverage. If you get the proper premium for the proper risk, at the end of the day, it’s better for everyone.”
RISKY BUSINESS Most brokers don’t know how many of their clients participate in ridesharing programs such as Uber, mainly because many Uber drivers don’t think – or bother – to update their auto policies. Uber drivers who rely on personal auto insurance are not covered for business use under those policies. Not only are the drivers at risk, but paying passengers also are not covered. For brokers and agents, though, the real danger is in nondisclosure. Failing to inform your inquiring clients of this coverage gap could result in an errors and omissions claim. Help is on the way, however: One of Canada’s largest insurers announced it is looking at creating a policy that would fill coverage gaps for Uber drivers.
6
www.insurancebusiness.ca
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Berkshire Hathaway Specialty Insurance is pleased to bring underwriting flexibility, claims handling excellence, and financial strength to Canada. Our experienced team in Toronto is committed to providing precisely the coverage you need.
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UPFRONT
STATISTICS
Plain sailing in marine market
North America
6.4%
Global trade is of ever-increasing importance in Canada, and marine insurance could offer unique opportunities for the remainder of 2015 THE GLOBAL marine market is evolving. Diversified risk profiles range from fire and foundering to piracy and cyber, offering brokers an opportunity to grow business. About 90% of world trade is carried by the international shipping industry, according to the International Chamber of Shipping, so marine insurance affects almost every business, both small and large.
42
Number of foreign vessels involved in accidents in Canadian waters
The industry, particularly in North America, is safer than ever today: Industry losses are down 50% since 2005, and the majority of those losses are coming from East Asia. However, increased risks – from sophisticated cyber attacks to disease outbreaks – are presenting this industry with challenges that are as big as its opportunities.
26,900
71%
Number of commercial shipping movements in 2014
Number of those vessels that were involved in collisions
1.5
Number of ships involved in accidents per 1,000 movements
MARINE PREMIUM BY REGION While the Asia/Pacific region is seeing growth, Europe remains by far the largest market for marine insurance premiums. RSA acquired Coast Underwriters in 1997 to become Canada’s largest marine insurer, offering coverage in more than 150 territories, taking on any size of business and complexity. For more information, visit www.rsabroker.ca.
Source: Transportation Safety Board of Canada
THEFT STILL PLAYING MAJOR ROLE The International Union of Marine Insurers rated Ontario as having a high risk of theft and Quebec as an elevated risk; these industries are among the most popular targets 30% 28%
TRANSPORT AND CARGO LEAD PREMIUMS Transport and cargo far outstrip the other types of premiums, including global hull, marine liability and offshore/energy
20% 16%
10%
10%
10%
9%
9% 6%
0%
Food/ drinks
Transport/cargo: 51.9% Global hull: 23.2% Offshore/energy: 18.2% Marine liability: 6.6%
6%
4%
3%
3%
Auto/ Elec Building/ Personal Misc. Home/ Clothing/ Pharma- Alcohol/ Metals parts tronics industrial care garden shoes ceuticals tobacco Source: IUMI Brussels Meeting 2015 Cargo Presentation
8
Source: The Nordic Association of Marine Insures (Cefor)
www.insurancebusiness.ca
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Middle East
3.1%
Europe
52.6%
Asia/Pacific
25%
Latin America
9.8%
Africa
3.0%
Source: Allianz Global Corporate & Specialty Safety and Shipping Review 2015
GROUNDINGS DOWN, BUT COLLISIONS UP
ACCIDENTS DOWN SLIGHTLY
In 2014, collisions increased by 13%, while groundings decreased by 27%; these remain the two biggest causes of shipping accidents, according to the Transportation Safety Board of Canada
In 2014, 301 marine accidents were reported to the Canadian Transport Safety Board, which represents a slight decrease compared to previous years
86 88
Collision Grounding
87
61
Sinking
26
Fire/explosion
35
Capsize 1 0
12
fatalities in 2014
5%
decrease from 2013 total
41
12%
10
3
Other
shipping accidents in 2014
50
29
Unfit
301
54
decrease from 2009-2013 average
3
40% 20
40 2005–2013 average
60 2014
80
100
of accidents happened on cargo vessels
35%
happened aboard fishing vessels Source: Transportation Safety Board of Canada
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UPFRONT
NEWS ANALYSIS
Infidelity, extortion and cyber insurance The Ashley Madison scandal illustrated a dynamic new risk associated with cyber liability – one that could cost both brokers and their clients THIS SUMMER, a group calling itself The Impact Team stole user data from one of the Internet’s most notorious dating websites. Operating under the provocative slogan “Life is short. Have an affair,” AshleyMadison. com is a service designed to enable users to engage in extramarital romances. Though the site was frequently the target of severe moral critiques, users were able to operate under relative anonymity. All of that changed in mid-July when The Impact Team announced it had gained access to 37 million profiles containing such sensitive information as sexual fantasies, credit card data and nude photographs. Hackers demanded that the website close or face the publication of
actually expose a new threat that is growing in frequency and presents new opportunities for brokers to provide related coverage. “Technically speaking, this is actually a case of cyber extortion,” says Brian Rosenbaum, national cyber and privacy practice leader at Aon Risk Services. “Sometimes it’s motivated by political views, and sometimes it’s for financial gain, but either way, it involves someone threatening to release information in order to force a company to do something.” In Ashley Madison’s case, the would-be vigilantes asserted that they were acting in consumers’ defense, as the website’s $19 fee to remove personal data was ineffective and “their purchase details are not removed as promised,
“There’s been a lot of development of malware and intrusion software that make cyber extortion more viable” Brian Rosenbaum, Aon Risk Services the information – something that happened a month later. Avid Life Media, which owns Ashley Madison, was almost immediately hit with a $578 million class-action lawsuit, and CEO Noel Biderman was forced to resign. While the incident and subsequent events seem to mirror recent cybercrimes on organizations like Target and Home Depot, they
10
and include real name and address, which is of course the most important information the users want removed.” While this motive for cyber extortion is highly uncommon, the act itself is seemingly not. Despite a lack of firm statistics – few companies want to admit they’ve been the victim of extortion – anecdotal evidence suggests it’s on the rise.
“Cyber extortion is on the upswing now,” Rosenbaum says. “Years ago it wasn’t a big issue, but there’s been a lot of development of malware and intrusion software that make cyber extortion more viable now.” Even tech companies are vulnerable. Cyber attacks demanding ransom money have hit such savvy organizations as Vimeo, Meetup, Basecamp, Bit.ly and MailChimp. Hackers certainly have the means to release the information, and it often has a devastating impact on the business. In addition to the classaction lawsuit facing Avid Life Media, cyber insurance spectators watched this April as cyber criminals released via WikiLeaks several embarrassing emails from Sony Pictures executives obtained during the 2014 breach of the entertainment company. “Cyber breaches are now not a simple ‘one-time event,’ as many other types of risk can be,” says Jack Elliott-Frey, a broker with cyber insurance specialist SafeOnline. “What we have seen with Sony is the determination by hackers,
www.insurancebusiness.ca
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THE PRICE OF CHEATING Aside from the reputational damages sustained by Ashley Madison in the wake of its July data breach, the financial fallout for the dating site and its users has been severe
$4 billion
The estimated amount Ashley Madison users may be rewarded in damages
$578 million
The amount a class-action lawsuit is seeking from Avid Life Media related to the breach
32 million
The number of users who had their personal information exposed in the attack
$500,000
The amount Avid Life Media is offering as a reward for information regarding the attack
$225
The average value of Bitcoin currency demanded by extortionists in exchange for keeping one user record secret Sources: Krebs on Security, Fortune Magazine, CNN once inside the network, to extract as much information as possible and drip-feed it via the most destructive channels – in this case, the media – over a certain period of time.” Although these hacks are often sustained,
related to extortion, Rosenbaum encourages brokers to help business owners locate suitable cyber coverage that includes protection against this new and emerging risk. “A cyber policy is what we call a cafeteria-
“Cyber breaches are now not a simple ‘one-time event,’ as many other types of risk can be” Jack Elliot-Frey, SafeOnline Elliott-Frey notes that cyber policies should also consider what happens when the attacks finally cease. “It demonstrates the importance of a cyber policy that covers not only preventative techniques,” he says, “but also a post-breach strategy involving IT forensics or other third parties that can assess and help your organization prepare for any further damaging events.” As for the more financially obvious fallout
type policy. It has various insuring agreements that cover different risks,” he says. “Cyber extortion is an insuring agreement, and with this coverage, if somebody infiltrates your system and holds you for ransom, your insurance will pay the ransom and extra expenses needed to terminate the extortion.” Rosenbaum differentiates this from kidnap, ransom and extortion policies, which protect the enterprise itself, but not outside parties
affected by a breach. “In Ashley Madison’s case, the threat was to release customers’ personal information. Kidnap, ransom and extortion would cover the company’s own intellectual property, but a cyber extortion policy would cover the thirdparty information of the insured,” he says. While Rosenbaum acknowledges that “regulatory intervention in the risk transfer consideration is not unprecedented,” he feels that mandating this type of coverage on a widespread basis would be too much of a hurdle since it would be “a monumental task” to delineate which industries are high-risk. Still, while it’s not officially regulated for most enterprises, he sees a need for many private-sector organizations to require a certain baseline of coverage before they enter into an agreement with another entity. “A lot of industries have made this a contractual obligation,” he says. “[They’re] essentially saying, ‘Want to do business with us? Then buy this insurance.’”
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PRODUCTS
UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
AmTrust Financial Services
Republic Companies and Republic Insurance Holdings
AmTrust will shell out approximately US$233 million in a series of payments to acquire the Texas-based insurer
Arthur J. Gallagher
North Alabama Insurance
With the acquisition, Gallagher gains a larger footprint in the South Central US and in the commercial auto space
BB&T IHC International
Miller Insurance Services
BB&T acquired a 19.9% stake in the specialist wholesale insurance broker, which operates globally and is a top five Lloyd’s broker
Intact Insurance
Comerco Services
Intact hopes the purchase of Montreal-based Comerco Services will allow it to expand its offerings and gain deeper insight into a new market
Sun Life
Assurant
Sun Life Financial’s Toronto arm will acquire the employee benefits business of the US insurer in a deal worth US$975 million
Suramericana SA
RSA’s Latin American operations
UK-based insurance company RSA sold its Latin American operations to Suramericana SA for around US$619 million in order to focus attention on operations in the UK, Canada, Scandinavia and Ireland
XL Group
Allied International Holdings and T.H.E. Insurance Company
The deal represents XL Group’s entrance into a highly coveted US niche of outdoor entertainment specialty insurance
Unconventional app could reduce claims
A child pedestrian is injured or killed every three hours in Canada, but Sweden’s If Insurance has developed a tool that might halt this alarming trend. In an app called Slow Down GPS, the navigator’s voice switches to a child’s anytime the vehicle is in proximity to an area where children might be present, including schools, parks and day-care centers. The designers hope the child’s narration will elicit the caretaking instinct in drivers, who will then subconsciously slow down and drive more carefully.
Insurer responds to city’s coverage gap
Chubb and ACE share post-merger executive picks
Philadelphia-based insurer ACE, which is buying New Jersey-based Chubb Corp. for $28 billion, has named 16 executives from Chubb and 18 from ACE to top management positions. In areas where ACE is placing a Chubb executive in charge, an ACE manager will act as deputy, and vice versa. Harold L. Morrison Jr. of Chubb will be the senior vice president and president of field operations of the North American Insurance division of the new Chubb Group. Ellen J. Moore will serve as regional executive officer of Canada for Chubb, while Andy Hollenberg will act as regional chief operating officer for ACE.
12
Officials in Halifax have announced a new product on that will help its residents obtain group liability insurance for community events. Offered via Aon Risk Solutions, the Citizen Event Insurance Program [CEIP] that provides coverage for such gatherings as ice cream socials, sports leagues, tournaments and such nonprofit fundraisers as polar bear swims. CEIP includes $2 million in commercial general liability; premiums are determined by the size, scope and nature of the activities.
www.insurancebusiness.ca
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PEOPLE
PEOPLE New coverage addresses US-Canada risks
Aviva Canada has launched crossborder insurance coverage for all lines of business, including domiciled Canadian companies with US plated vehicles. The solution will allow brokers access to US resources while allowing them to remain operational in Canada. “We can offer property, liability and automobile coverage for US entity companies,” said Aviva executive director Joe Vachon. “Our underwriters are on the ground in Canada, and they’re the ones making selection and pricing decisions because we provide the capacity.”
Broker to offer online camera policies
Front Row Insurance Brokers has launched an online camera insurance program designed to allow photographers to access quick quotes and process policy documents in less than five minutes. “Visitors to the site can sleep easy knowing they can pick up a gig and be out the door safely within minutes with their gear covered, general liability in place, and their office contents, laptops and library stock covered at no extra cost,” said David Hamilton, president of Front Row. Hamilton believes that savings will typically average 30%.
Acquisition to expand offerings at dealerships
Industrial Alliance Insurance and Financial Services has agreed to purchase Ontario-based CTL Corp., a private credit lender with a loan portfolio exceeding $100 million. CTL operates through a network of Canadian car dealers; this acquisition will expand the insurance products offered at dealerships, allowing consumers to purchase an array of insurance products when acquiring a vehicle. This could have an adverse effect on broker business, as the dealer’s insurance representatives may beat other insurance professionals to the punch.
NAME
LEAVING
JOINING
NEW POSITION
Chaman Aggarwal
XL Catlin
Berkshire Hathaway Specialty Insurance
Vice president, property underwriting officer
Heather Masterson
Totten Insurance Group
Travelers Canada
COO
Bertil Olsson
Marsh & McLennan Companies
Oil Insurance
CEO
Fred Plant
N/A
ClaimsPro
President
David Price
Beazley
Endeavour Insurance Services
Divisional director
Thomas Fuhrman
Delta Risk
Marsh LLC
Managing director for cybersecurity consulting
ACE names EVP of its new Chubb Group
ACE has announced its newest senior leadership selection, appointing Juan C. Andrade to the position of executive vice president of the new Chubb Group. Andrade had previously acted as executive vice president of personal lines for ACE Group and chief operating officer of ACE Overseas General. In addition to this role, Andrade will also serve as president of the international non-life insurance division, which will include Chubb’s retail broker operations and its wholesale market distribution. Andrade will move into his new position after ACE’s acquisition of Chubb has been finalized, which is expected to happen in the first quarter of 2016.
Zurich appoints new CEO in North America
Zurich Insurance Group has appointed Paul Horgan as CEO of Global Corporate in North America [GCiNA], a leadership role that places him in charge of all Zurich Global Corporate business in the US and Canada. Horgan is now responsible for the direction and management of GCiNA, which boasted gross written premiums and policy fees of $3.7 billion in 2014. Horgan initially arrived at the company in 2007 as chief underwriting officer, and was promoted to head of group reinsurance in 2012. He has also served in senior roles at Liberty Mutual Insurance Company.
www.insurancebusiness.ca
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13
9/10/2015 4:50:03 AM
UPFRONT
MGA UPDATE
Partnership key to ‘staying ahead’ A top MGA has partnered with an online brokerage, believing it’s the next step in reaching new clients
well with its role as a niche underwriter, as Bullfrog’s online platform expands offerings to clients who wouldn’t receive service otherwise. “We’ve seen a number of successes that don’t fit the traditional rating matrix, but we’ve been able to work with Bullfrog on accounts that are outside the box,” McDermott says. Bullfrog also benefits from the partnership with South Western, which expands the brokerage’s reach through the underwriter’s backers.
“Most business owners and professionals just don’t have time to meet during work hours”
Even though online brokerage Bullfrog Insurance just arrived on the scene earlier this year, it has already partnered with such reputable names as Aviva Canada and Northbridge Insurance. Now the brokerage can add MGA South Western Group to the list. The specialty underwriter decided to collaborate with Bullfrog because of its innovative business model, which the brokerage claims
NEWS BRIEFS
makes it the sole online-only provider of small business and commercial coverage in Canada. “Most business owners and professionals just don’t have time to meet during work hours, and as a result, a lot of online transactions are made between 8:00 and 10:00 at night,” says Michael McDermott, director of underwriting for South Western Group. South Western believes this flexibility aligns
Partnership yields strategic broker solutions
First Insurance Funding of Canada, a provider of payment solutions for the insurance industry, has partnered with MGA and wholesaler Evolution Insurance to introduce Evolution Insurance to its First Connect product. This solution allows the insurer to provide commercial brokers with convenient payment options such as pay in full, easy monthly payments and credit cards with competitive rates. The alliance benefits brokers by helping them increase retention, convert business more seamlessly and optimize cash flow.
14
“South Western Group brought Lloyd’s to the table,” says Bullfrog CEO and president Sam Natur. “Lloyd’s is keen on this partnership because they’re a global player in markets worldwide, and they’re learning that this is a fantastic way to access the self-serve demographic.” The Guarantee Company of North America also recently partnered with the insurer, hoping it could provide a “faster and simpler way” for companies to obtain business insurance that is suited to their particular needs. “Small business owners today are part of a very competitive marketplace and struggle to find time to get the insurance they need without being tied up in a rather consuming process,” said Glenn Woodard, national vice president of corporate insurance for The Guarantee.
South Western Group offers specialty products
South Western Group has launched two new specialty coverages. Its security services product was designed for the growing security business market, and includes failure to perform and no general aggregate, along with optional coverages such as a privacy breach event expenses coverage rider. Its tattoo & body piercing, permanent makeup and tattoo removal product provides liability coverage for tattoo artists, body piercers and pigment lightening removal specialists, with competitive premiums and limits up to $5 million.
www.insurancebusiness.ca
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Q&A
Mark Woodall
The growing presence of MGAs in Canada
President and CEO SPECIAL RISK INSURANCE MANAGERS
Fast fact Alongside Grant Kimball of Angus Miller Insurance, Woodall is working on establishing Canada’s first MGA association
How big of a force are MGAs in Canada? There are a lot fewer insurers today than there were 10 years ago, and a lot more MGAs. MGAs are writing over $1 billion of business now in Canada, and growing significantly. The majority of us are seeing double-digit growth on a monthly basis. We’re seeing are a lot of mainstream insurers using MGAs because of stagnant growth through the organic market. They’re looking at different ways of increasing their growth. If they appoint a number of new brokers, their costs in training and development of a retail broker are open-ended. If they use an MGA for distribution of their products, their acquisition costs are fixed at the commission levels. So it gives a lot of the insurers cost certainty for acquisition of new business. Many of the MGAs also have more experience at the underwriting level than a lot of the companies have, especially in specific lines of business. I’ve been approached by a typical insurer that focuses mainly on property, but is looking to balance their portfolio with liability products, but doesn’t have the in-house expertise to write it. So they’ve approached us to write it on their behalf … utilizing our level of expertise.
What are the key misconceptions about MGAs? For the longest time, we were the markets that the mainstream markets wouldn’t touch because it was perceived that our business was all of the less-thandesirable business. Many of the MGA markets now are distributing mainstream products.
MGA develops commercial crime insurance
ENCON has launched two crime insurance solutions to help protect organizations against fraud or theft. The commercial crime insurance stand-alone policy is available for all businesses, including retail, restaurants, government agencies, media and nonprofit organizations. The commercial crime insurance endorsement supplements existing D&O coverage, and includes blanket coverage for all employees, coverage for worker theft, an expanded designation of ‘employee’ and the option to add computer fraud or funds transfer fraud coverage.
The whole perception of what an MGA is is rapidly changing in today’s marketplace. What we’re seeing is the insurers coming to us. We’ve been approached by more insurers in the first eight months of this year than we have probably collectively in the past five years.
Can you update us on the progress in establishing Canada’s MGA association? We’re well off the ground! There are only 93 MGAs in Canada … we’re hoping by year-end, we’ll have 20 to 25 MGAs as part of our association. We’ve got a number signed up already. What we’re doing here is creating a division within [the American Association of Managing General Agents]. If we got 25 to 30 MGAs to commit to membership in the first year, it still doesn’t give us enough money in dues to be able to really establish our own organization. So what we’ve done is we’ve become part of the AAMGA, but we have our own Canadian distinction and flavour. We’re going to be part of the AAMGA meetings, but we’ll have our own meeting dealing strictly with Canadian issues and working with the Canadian group. In a recent meeting we were at with the AAMGA, a number of the Canadian MGAs were able to establish relationships and are now doing business with some of the US members. It’s turning out to be financially rewarding. A lot of the problems that we’re experiencing here, they’ve experienced previously. And even though we’re in a different country, they’re able to provide us a great deal of benefit and assistance going forward.
Totten CEO tapped by Travelers Canada
After Brigid Murphy announced she was stepping down as Travelers Canada’s CEO, the insurance giant made several executive moves, including poaching Heather Masterson from Totten Insurance Group. Masterson, who had been serving as president and CEO of the MGA, now acts as COO of Travelers Canada. “I am looking forward to working with Heather, who brings substantial experience and strong relationships in the Canadian brokerage community,” said newly appointed Travelers CEO Duane Sanders.
MGA creates renewable energy program
SUM Insurance has developed a renewable energy insurance program that leverages its underwriters’ experience to cover renewable energy installations. The monoline solution addresses such needs as transit, installation and operation; target markets include onshore and offshore wind, photovoltaic cells and active solar, and marine renewables, as well as other options such as marine and/or transit or construction ‘all risks.’ Premiums start at $5,000, and the ‘all risks’ blanket cover ensures there are no gaps in protection.
www.insurancebusiness.ca
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UPFRONT
TECHNOLOGY UPDATE NEWS BRIEFS The ‘multi-billiondollar niche’ agents may be missing
As Fortune 500 companies and other enterprises across North America devote increasingly large amounts of their tech budgets to cloud computing, it’s becoming more and more clear that the cloud is here to stay. Currently, however, no coverage exists that protects the consumers of these services. Two trailblazers at a new provider called Cloudsurance are working with Lloyd’s of London to develop this coverage, recognizing that some cloud operators have signed hundreds of millions of customers and have no policies in place to protect them.
Insurers start investing in ridesharing companies
Debate over how much insurance coverage drivers with ridesharing companies need has been a major speed bump in the growth of firms like Uber and Lyft. However, several carriers have recently made moves to support this success. China Life Insurance Co. and China Taiping Insurance are two of Uber’s newest investors. A leaked presentation given to prospective investors revealed the two companies have helped Uber access nearly $50 billion in venture capital. Uber expects to grow that already sizeable amount with an initial public offering in the next two years.
New auto feature the secret to lowering claims? The Insurance Institute for Highway Safety [IIHS], a research-based organization dedicated to advancing automobile safety standards, has released findings indicating that a new
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technology could be instrumental in reducing the severity of auto collisions. The test examined whether collisionavoidance systems on luxury vehicles – in this case, an alert to brake or an automatic brake – were effective in preventing front-end collisions. The results were promising: IIHS awarded its highest-possible ‘superior’ rating to 14 out of the 19 models tested.
Canadian insurer to develop Uber product Intact Financial Corporation [IFC] has announced that it is partnering with Uber Canada to develop customized insurance policies for drivers of the rapidly growing ridesharing service. While no details about the product are available yet, the coverage will be distributed by IFC’s distributor, Intact Insurance, as well as its digital insurer, belairdirect. In addition, as part of this ‘cooperative agreement,’ IFC and Uber are collaborating with insurance regulators and government officials in provinces where the service currently operates.
Brokers hopeful for access to Airbnb tax records
Brokers concerned about the coverage gaps inherent in such ‘sharing economy’ services as Airbnb might be relieved to know that some provinces are at least one step closer to a solution. This week, Tourism Vancouver announced that is in discussions with Airbnb to begin taxing transactions in a similar manner to hotel rooms. Many brokers welcome this proposal, as it will grant officials access to details about who is using the service and their transactions, allowing authorities to ensure that homeowners have adequate insurance coverage needed to rent out their homes.
Has Allstate gone too far? Could a new patent lead consumers to reject usage-based insurance once and for all? Whereas brokers once heralded telematics as a consumer-friendly product instrumental to client acquisition, a new development has some questioning that original assessment. Allstate has been awarded a ‘trafficbased driving analysis’ patent that allows the company to employ invasive techniques to collect distracted driving data, according to the Chicago Tribune. Sensors, cameras and other technology would be able to capture such information as pets in the vehicle and phone usage, as well as physical conditions like eye and head movement and vocal patterns. While this seems troubling in and of itself, the patent also includes a provision that allows information to be obtained from nearby vehicles as well, which some critics have compared to profit-focused espionage. It’s still unclear if this product could be developed, and if so, whether it would make it to Canadian markets – but brokers have mixed feelings about the development. Jeff Tallon, a compliance analyst at an insurance company, is slightly unnerved by certain components of the patent, but feels the technology is a natural progression from what is already fundamentally embedded into Canadian life. “These ‘intrusions’ already exist in different formats,” he says. “Your cell phone can track your location, the number of texts you send, where you make phone calls, how often, to whom, etc. There are vast reservoirs of human behaviour already being captured and stored
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in myriad forms.” Echoing that sentiment, Thom Young, CEO of Lundgren & Young Insurance, feels brokers should not be particularly concerned by the Allstate patent since insurance customers are not as guarded as many believe. “The truth is, few give a damn about privacy if sharing their personal habits with an insurer will produce a discount for them, but they’re not so happy if it produces a surcharge,” Young says. “From the broker’s perspective, as long as they have a competitive product to match with Allstate’s offering, it won’t cause any shortcomings in their dealings with clients.”
“There are vast reservoirs of human behaviour already being captured and stored in myriad forms” In addition, Canada has the distinct advantage of witnessing how the product fares south of the border before considering whether it is viable or not. “Canadians will shy away initially until more information is revealed,” says Paul Armstrong of Ontario-based Paul C. Armstrong Insurance. “This is evident in our office, where the black box has been shunned by more than have accepted it.” In the end, consumers will dictate their own comfort boundaries, and any other appraisals until then are merely speculation. “As far as information gathered because one is travelling alongside a vehicle with sensors, I question how that can be used against any driver/owner,” Armstrong says. “However, if insurers impose these surveillances for their betterment, consumers will have to decide if they are acceptable and how they will react to them.”
Q&A
Michael Bruch Head of emerging trends/ESG business services ALLIANZ GLOBAL CORPORATE & SPECIALTY
Fast fact Allianz Global Corporate & Specialty is the Allianz Group’s dedicated carrier for corporate and specialty insurance business, focusing on large corporate and individual risks, often with multinational or specialist exposures
The implications of 3D printing What are the new risks created by 3D printing? I wouldn’t say it’s a complete new risk landscape that we’re facing. We have seen some of those risks already in, let’s say, the music world with Napster, etc. With this digitalization, there’s a higher risk of piracy, counterfeiting and intellectual property theft. The next big category, I would say, is the supply chain risk. When you go through the supply chain, it’s much more difficult with 3D printed products to track and trace back where in the digitalized manufacturing process a fault occurred and who, at the end of the day, is liable for that. And that is, of course, a big issue for insurers. But there are always two sides of the coin. It might, in terms of business interruption claims, be beneficial for a company to invest in its own 3D printer and print 3D spare parts. Also, regular product testing is a big issue. You have new techniques, new material, ink technologies that might cause latent defects. And then there’s the cyber risk. As soon as you are connecting manufacturing processes to the Internet, your production process can be closed down by external hackers. Lastly, there’s a security issue. You might have heard about people who have printed their own weapons. This is, of course, an issue.
What advice would you offer to brokers with clients who will potentially be exposed as a result of these new risks? 3D printing enables manufacturers to personalize or customize products, and that raises the question of whether each individual product will need testing. It’s a question of where you start and stop with testing of 3D printed products, and what you change in terms of quality control and quality management. Also, regulations can change quite quickly, and the manufacturer has to make sure that they’re complying with those changing regulations. And cyber risk is a big topic. Clients have to make sure that the data flow throughout the whole value chain is highly secured. As 3D printing digitalizes all steps and reduces significantly the time from first idea until a market-ready product, hackers can easily jeopardize the innovative strength and business success of companies with stolen software or proprietary blueprints.
What’s next in this area? I think the whole topic of risk management quality, including supply chain management, will be high on the radar of manufacturers. Also, 4D printing is the next step. The fourth dimension will be materials that actually transform or change their properties according to external stimuli. If you have a sports shoe, for example, it might work [one way] when you are running on concrete, and then when you are playing basketball, the material changes by supporting your ankles more. Water pipes also could be printed in a way so they expand or shrink, depending on the water flow.
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email insurancebusiness@kmimedia.ca
Adapting to the sharing economy Home-sharing services such as Airbnb aren’t going anywhere – and the insurance industry needs to accept that, writes Daniel Mirkovic COMPANIES LIKE Airbnb and Uber are disrupting the travel industry and changing the worldwide economy. Whether you agree with their tactics or not, they (and many other companies like them) are increasing in popularity. So why are most insurance providers not adapting their policies to properly meet the needs of people participating in the sharing economy? Think insurance policies are not being adapted because demand is low? Think again. Globally, more than 40 million people have stayed at accommodations booked through Airbnb since August 2008. Here in Canada, Airbnb has more than 20,000 active listings. The number of listings increases each month, which should be no surprise given the high cost of real estate in most major cities. Income from Airbnb rentals can help homeowners make mortgage payments, fund vacations or cover other expenses. Could it be due to the fact that insurance protection is already available elsewhere? That’s unlikely, since few insurance providers currently offer coverage to those participating in home-sharing programs. And while Airbnb has a host guarantee, this clause seems to only protect against intentional damage caused by a guest staying in the home, rather than accidental damage caused by a guest – nor does it cover valuable items such as jewellery, artwork or collectibles. Is the industry reluctant to delve into these services because the risks are difficult to identify? That really doesn’t seem to be the problem. A quick online search reveals three common concerns among insurance providers. The first involves how guests are
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screened. The second is regarding what parts of the home are being rented – is it just a room or the entire property? Finally, insurance providers are concerned with the potential municipal and/or condominium bylaw restrictions. Do similar concerns not exist with boarders or those renting basement suites? Most insurance providers seem to write homes with basement suites, even if the suites are illegal. What’s more, few insurers inquire about how tenants or boarders were screened. So what’s the real reason why Canadian insurance providers aren’t adapting to this
proof, is denying the claim really the best way to handle the situation? Wouldn’t it be better to collect the right premium for the risk, thereby removing any incentive for the policyholder to lie when filing a claim? Those policyholders who are honest about their participation in home-sharing programs often struggle to find providers willing to offer them home insurance. As a result, they have to buy special risk or commercial insurance. Or worse yet, they go without insurance altogether. In either of these situations, both the industry and the public lose. Insurance providers lose potential business and waste resources on invalid claims. Policyholders are motivated to lie or are forced to pay more for the insurance protection they need. Wouldn’t it be better for insurance providers to adapt? For insurance providers seeking to make the change, perhaps start by looking at your approach for homes with basement suites. Typically, an additional premium is charged for the additional risk associated with a basement suite. Consider charging the same premium for those participating in home-sharing programs or, if you believe there is a greater risk associated
“Insurance providers also should recognize that they might already be covering losses related to home-sharing programs” growing service? The most likely explanation is that these companies are too busy working on more important initiatives. This is understandable, as all companies must prioritize what they do. If this is the case, though, it’s important that insurers advise their policyholders of exclusions relating to participation in home-sharing programs. Insurance providers also should recognize that they might already be covering losses related to home-sharing programs. For example, what’s to stop a policyholder from stating a loss was caused by a family member instead of a paying guest? How would the handling adjuster prove the policyholder’s statement is false? Even if the adjuster had
with home-sharing programs, increase the charge. Next, consider introducing an underwriting guideline that limits the number of short-term rentals allowed each month. As the portfolio matures, adjust your pricing and guidelines. While it’s easier said than done, the best solution is for the insurance industry to adapt to this trend and begin offering proper protection. After all, the sharing economy is here to stay. Daniel Mirkovic has worked in the insurance industry for 18 years. He is currently the president of Square One, a Vancouver-based company that specializes in home insurance.
www.insurancebusiness.ca
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SWGINS.COM Your specialty insurance provider
Contact us: Quotes@swgins.com Fax: 1-877-FAX-2-SWG (1-877-329-2794) Phone: 1-866-SWG-LINE (1-866-794-5463)
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PEOPLE
INDUSTRY ICON
A WORLD VISION John Nelson, chairman of Lloyd’s of London, discusses the company’s grand plans to increase its global footprint IN 1688, Edward Lloyd ran a coffeehouse on Tower Street in London. It became a bustling address, frequented by those whose business was connected to the ships, and was soon known as the place to buy marine insurance. Today, Lloyd’s name is synonymous with insurance around the globe. It’s the world’s leading market for specialist insurance. It has 94 syndicates, managed by 57 managing agents, and more than 200 different brokers bringing in business from over 200 countries and territories. Despite technology leading all industries down a path toward increasing automation, Lloyd’s chairman John Nelson was keen to impress upon attendees at an industry event earlier this year in Auckland, New Zealand, that Lloyd’s has no shortage of manpower. “I have heard it said that there are no real underwriters anymore – just computers, churning out off-the-shelf products,” Nelson said. “Well, in the case of Lloyd’s, nothing could be further from the truth. We have a growing global marketplace full of expert underwriters – more than we’ve ever had – writing the most innovative and specialist products going. We have a worldclass reputation built on being flexible and responsive to our clients’ needs and our first-class knowledge of the changing risk landscape.”
Strategy In May 2012, UK Prime Minister David Cameron attended the company’s worldfamous Lime Street premises to assist Nelson in launching Vision 2025, a strategy for the development of the Lloyd’s market
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that aims to make it the global centre for specialist insurance and reinsurance. Plans to make Lloyd’s mirror the geographic origin of the market’s business and capital read every bit as ambitious as its endeavours to develop in high-growth economies. The ambitious plan involves global expansion – Southeast Asia, China, Eastern Europe and Latin America are all poised to become key to Lloyd’s business. It also includes the goal of being globally diverse in its capital base, as well as being a diverse market by gender, age and ethnicity. Speaking about Vision 2025, Nelson says that while the plan is still in its early days, Lloyd’s has made “good progress” in working toward its objectives. “Bottom line, I would say that Vision 2025 has very much been embraced, and it’s very much being executed,” he says.
Diversity Nelson believes that, in terms of gender diversity, Lloyd’s has made great progress. “Without wishing to overplay it, we have the first female chief executive, Inga Beale, we’ve ever had in Lloyd’s. She wasn’t selected because she was a female. She was selected because she was the best candidate. But I think it was a sign of the times that we had a female candidate who was the best candidate.” Nelson says that while gender diversity moves along, nationality diversity remains a challenge. He says nationality diversity is “very, very important because, if you have true nationality diversity in the Lloyd’s market worldwide, you get much more input in terms of local culture and customs [and] understanding new local risks and new markets.”
“In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively…it’s going to be tough” JOHN NELSON ON THE IMPACT OF ALTERNATIVE CAPITAL “[We] do have some concerns about the concentration of alternative capital, focusing on a few specific areas – both geographic and in terms of peak risks. We need to try to harness capital on a broader basis, particularly to assist the industry in driving forward into new markets and new products. “This will require sophisticated, knowledgeable and long-term investors. And they will need to be supported by the continuous development of analytical resources and techniques. A lot of work is already being done on this within Lloyd’s – and it needs to be. “As we continue to grow globally, and alternative capital floods into the market, there are going to be many issues that we have to navigate.”
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PROFILE Name: John Nelson Company: Lloyd’s of London Title: Chairman Age: 68 Became chairman of Lloyd’s: October 2011 Previous organizations: Kleinwort Benson, Lazard, Credit Suisse First Boston Europe
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PEOPLE
INDUSTRY ICON LLOYD’S BY THE NUMBERS Nelson points to the banking industry in London in the 1980s as an example of a sector that successfully involved huge national diversity in business. He says that diversity was what really drove London to becoming the financial intermediation centre of the world. “I think we have the same opportunity in Lloyd’s in the London insurance market. You’re seeing greater diversity now, but there’s quite a way to go.”
Innovation Nelson shared with Auckland event attendees the startling statistic, from a recent study by The London Market Group, that only 10% of the corporate risk map is covered by insurance. “What does this tell us? It tells us that in the same way there is a physical world out there needing coverage, there is a panoply of new, emerging risks demanding innovative solutions,” he said. He refers to cyber, supply chain and reputation as being niche classes of
“It’s not just a cost thing,” he continues. “It’s making it more user friendly and, as we grow overseas, making it easier for stakeholders to plug and play.”
Outlook Asked about the global outlook for the industry, Nelson says, “In the short term, obviously there’s a glut of capital, very low interest rates, people competing aggressively … it’s going to be tough. It’s going to be very tough.” His advice for dealing with fierce competition is simple: “Innovate to compete.” When it comes to talking about the long-term outlook for specialist insurance, Nelson is much more optimistic. “If you look at Lloyd’s market, we think our addressable market at the moment, in annual terms, is around $600 billion. We think that, in 2025, that number will be around $2 trillion.” He says China, India, Brazil, Mexico and
“We like to think we’re in the vanguard of innovation, and it’s very important we are” business that are in high demand, adding that “the bespoke, imaginative and intellectual challenges they represent offset the commoditization of more traditional coverage.” Speaking specifically about Lloyd’s, he says, “We like to think we’re in the vanguard of innovation, and it’s very important we are.” Nelson also says it’s absolutely vital to make back-office platforms more efficient and user-friendly. “I would say the insurance industry, generally, is behind the rest of global industry in terms of embracing technology to improve their platforms, and that would be true of Lloyd’s as well,” he says. “I think, though, now that the market has smelled the coffee, they understand they need to do it, and we’re doing that.
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Turkey will form the majority of global GDP, and those countries are currently among the least insured in the world. He also says that, according to Lloyd’s figures, a 1% rise in insurance penetration translates into a 13% reduction in uninsured losses, a 22% reduction in taxpayers’ contribution following a disaster and increased investment equivalent to 2% of national GDP. “The amount of risk that’s being created in these countries is prodigious,” he says. “Governments know … they need to close the insurance gap just to make sure that the economies are sustainable. There is a real correlation between good insurance, diversified insurance and economic performance.”
Lloyd’s covers almost 70% of the airline industry, 70% of the pharmaceutical industry and well over 55% of the telecom industry globally
Lloyd’s provides insurance to 100% of the Dow Jones Index and 94% of the FTSE 100
Approximately 60% of Lloyd’s business is direct insurance, and around 37% is reinsurance
In 1973, Liliana Archibald became Lloyd’s first female broker
The Lloyd’s building on Lime Street in London was officially opened by Queen Elizabeth II in 1986. It contains 33,510 cubic metres of concrete, 30,000 square metres of stainless steel cladding and 12,000 square metres of glass
www.insurancebusiness.ca
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FEATURES
COVER STORY: BROKERS ON MGAs
We asked brokers around the country to share what they love – and what they don’t – about MGAs
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FAST UNDERWRITING and claims responsiveness are what brokers are looking for in a managing general agency, according to Insurance Business Canada’s annual Brokers on MGAs survey. Hundreds of brokers across the country responded to rate their MGAs on seven criteria: MGA reputation Premium pricing Range of carriers Underwriting responsiveness/turnaround time Claims responsiveness/turnaround time Automation Marketing support Brokers ranked each category’s importance on a scale from 1 (unimportant) to 10 (vital). They also rated their MGAs’ performance in each category on a scale from 1 (poor) to 10 (excellent). So how did things shake out? Brokers were most concerned about underwriting and claims responsiveness; those two categories were their top priorities by a significant margin. However, MGAs’ performance in those areas doesn’t seem to be living up to broker expectations; MGAs overall rated just 7.52 out of 10 in underwriting responsiveness and 7.45 in claims responsiveness. In fact, brokers seem to think MGAs could stand to improve in just about every area. MGAs only broke an 8 in one category – reputation – and didn’t even rate an aggregate 7 out of 10 in automation or marketing support. The biggest issue seems to be a lack of responsiveness. Over and over, survey respondents complained that their MGAs responded slowly to inquiries, didn’t answer emails in a timely fashion or just plain didn’t communicate well. “We spend a lot of time following up on terms and endorsements, and it would be nice to have an MGA communicating effectively so that we’re not left unsure of what is
BROKER PRIORITIES We asked brokers to rank the following aspects of the MGA relationship on a scale from 1 (unimportant) to 10 (vital). These were their priorities: Underwriting responsiveness/ turnaround time Claims responsiveness/ turnaround time
9.41 9.14 8.76 8.68 8.09 7.39 7.35
MGA reputation Premium pricing Range of carriers offered Automation Marketing support 0
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4
6
8
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AVERAGE MGA PERFORMANCE Our survey respondents also rated their own MGAs’ performance on a scale of 1 (poor) to 10 (excellent). Here’s how MGAs performed overall:
8.20 7.90 7.78 7.52 7.45 6.86 6.75
MGA reputation Premium pricing Range of carriers offered Underwriting responsiveness/ turnaround time Claims responsiveness/ turnaround time Automation Marketing support 0
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happening during the marketing process,” one respondent complained. That’s not to say there were no standouts, however. Overall, MGAs generally performed better this year than they did on 2014’s survey. And some MGAs truly stood out; in each category, we’ve singled out the ‘five-star MGAs’ that got
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6
8
10
excellent ratings from brokers. Only MGAs that received consistently excellent ratings from brokers earned the designation; in one category (automation), only two MGAs achieved five-star status. And only one company (Cambrian Special Risks) achieved five-star status across every category.
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FEATURES
COVER STORY: BROKERS ON MGAs it at an 8 or a 9. Not a single respondent rated its importance below a 5. Unfortunately, brokers didn’t feel MGAs were quite living up to expectations here. While MGAs scored a relatively respectable 7.52 out of 10 in the category, that’s still only the thirdhighest aggregate score. And 14% of MGAs scored a 5 or lower in the category. Brokers complained that even those MGAs that performed well in other areas had problems with underwriting responsiveness. “Overall I feel they do a good job, but depending on the underwriting workload, sometimes their responses to inquiries and turnaround are not the best,” said one broker. Another complained that his MGA had trouble “maintaining sufficient underwriting support.” Still, it wasn’t all bad news. Eight MGAs wowed brokers in this category, receiving consistently excellent scores. “They have underwriters that are actually willing to underwrite and not try to fit only square pegs in square holes,” raved one broker about five-star MGA Beacon Underwriting.
UNDERWRITING RESPONSIVENESS
Importance to brokers: 1st Average MGA performance: 3rd FIVE-STAR MGAs
ABEX Affiliated Brokers Anderson McTague & Associates Angus Miller Insurance Beacon Underwriting Cambrian Special Risks Chutter Underwriting Special Risk Insurance Managers SUM Insurance
Average MGA performance: 7.52
“Sometimes their responses to inquiries and turnaround are not the best”
Brokers attached the most importance to underwriting responsiveness and turnaround time, rating it at an average of 9.41 out of 10. The agreement among brokers on the importance of this category was overwhelming; nearly 63% of survey respondents rated it at a 10 – absolutely vital – and another third rated
HAS PERFORMANCE IMPROVED SINCE LAST YEAR? In general, it appears that MGAs have stepped up their game since last year’s survey, achieving higher results in almost every category 10 9 8 7 6 5
Underwriting Claims responsiveness/ responsiveness/ turnaround time turnaround time
MGA reputation
Premium pricing 2014
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2015
Range of carriers offered
Automation
Marketing support
CLAIMS RESPONSIVENESS
Importance to brokers: 2nd Average MGA performance: 4th FIVE-STAR MGAs
ABEX Affiliated Brokers Anderson McTague & Associates Angus Miller Insurance Beacon Underwriting Cambrian Special Risks Chutter Underwriting ENCON Special Risk Insurance Managers
Average MGA performance: 7.45 Claims responsiveness was nearly as important to brokers as underwriting, scoring an average of 9.14 out of 10. More than 90% of survey respondents rated claims responsiveness at an 8, 9 or 10 – 54% rated it at a 10 – and no one felt it was unimportant. In fact, only one broker rated claims responsiveness below a 5 in importance. Again, as a whole, MGAs didn’t exactly blow anyone out of the water with their performance, but they got a respectable aggregate score of 7.45. Brokers noted problems with turnaround time or lack of communication on the part of several MGAs when it came to claims. “[They need] better claims service and the ability to respond quickly,” said one broker. Another complained that his MGA needed to “create their own internal claim department rather than using claim companies.” Still, several MGAs did impress their brokers in this area, and eight did well enough to achieve five-star status.
www.insurancebusiness.ca
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Two Brands, One Approach! Deep expertise, creative solutions and unique products delivered with exceptional service from engaged staff in a cando culture, offering both underwriting and claim services, a cross-Canada footprint, and a one-stop-shop experience!
Can-Sure Underwriting Can-Sure specializes in bespoke underwriting of commercial and personal risk placements. Our experienced underwriters will tailor coverage to suit your customer’s specific needs. Can-Sure offers expertise in the following lines and segments of insurance: Property (All Classes Standard and Non) Casualty (CGL, XS, Umbrella, Wrap-up) Builders Risk (COC and Blanket) Trucking (Cargo and Warehousing) Contractors Equipment (All Types) Vacant Risks Professional Services (A&E, Medmal, Tech, Misc.) Pollution Liability (CPL, Sites, Trucking) Manufacturing and Fabrication Oil & Gas Contractors and Consultants
Hospitality “Great Outdoors” Resorts and Lodges Recreational Risks Guides & Outfitters High Value Homeowners Hard to Place Homeowners Bed & Breakfast or Home-stay Rental or Seasonal Dwellings Management Liability (D&O) Welding Contractors
www.can-sure.com
Beacon Underwriting Beacon specializes in package insurance products designed to meet your customer’s specific insurance needs. Our experienced underwriters and claims staff support fast, efficient, and comprehensive insurance placements that you can rely upon. Beacon offers expertise in the following insurance products: Boats and Personal Watercraft RideSmart Motorcycle Program (in BC) ATVs, Snowmobiles, Dirt Bikes Commercial Marine (Hull and P&I) Marina Operators
Special Events (Festivals, Weddings, etc.) Small Vendors (Public Market Vendors) Mobile Homes Hole-In-One Coverage Contents-In-Storage Coverage
www.beacon724.com
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FEATURES
COVER STORY: BROKERS ON MGAs MGA REPUTATION
PREMIUM PRICING
Importance to brokers: 2nd
Importance to brokers: 4th
Average MGA performance: 1st
Average MGA performance: 2nd
FIVE-STAR MGAs
FIVE-STAR MGAs
A.M. Fredericks Underwriting Management ABEX Affiliated Brokers Anderson McTague & Associates Angus Miller Insurance April Canada Beacon Burns & Wilcox Cambrian Special Risks Can-Sure Underwriting Chutter Underwriting ENCON Premier Canada South Western Group Special Risk Insurance Managers SUM Insurance Totten Insurance Group
ABEX Affiliated Brokers Anderson McTague & Associates Angus Miller Insurance Beacon Underwriting Cambrian Special Risks Can-Sure Underwriting Chutter Underwriting ENCON Special Risk Insurance Managers SUM Insurance
Average MGA performance: 8.20 MGAs notched their best performance in this category, averaging 8.20 out of 10. And while MGAs’ reputation wasn’t at the top of brokers’ list of priorities, they still felt it was important, rating it at 8.76 out of 10, making it the third priority behind underwriting and claims responsiveness. Brokers clearly recognized that a good reputation means a lot for an MGA; 60% of survey respondents rated the importance of an MGA’s reputation at a 9 or 10, and no one said it was unimportant. And MGAs performed quite well here – 76% of respondents gave them an 8, 9 or 10. What’s more, a whopping 18 MGAs achieved five-star status, more than in any other category.
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MGAs also did fairly well when it came to premium pricing, scoring 7.90 out of 10. That still fell below broker expectations, however; brokers rated the category’s importance at an average of 8.68 out of 10. More than 85% of survey respondents rated premium pricing at an 8, 9 or 10, and nearly a third rated it at a full 10. Just 6.7% of survey respondents rated their MGA at a 5 or lower when it came to premium pricing, and 10 MGAs did well enough to achieve five-star status. “I’m very pleased with the service and abilities of the staff and management,” said one broker of five-star MGA Anderson McTague & Associates. “They offer a very well-priced product.”
“I’m very pleased with the service and abilities of the staff and management”
Average MGA performance: 7.90
EXPECTATION VERSUS PERFORMANCE So how did brokers’ evaluations of MGAs’ performance measure up to what brokers said was most important to them? Overall, it seems MGAs are still falling a bit short, particularly in some key areas Underwriting responsiveness/ turnaround time
9.41
7.52
Claims responsiveness/ turnaround time
9.14
7.45 8.76 8.20
MGA reputation Premium pricing
8.68 7.90
Range of carriers offered
8.09 7.78
Automation
7.39
6.86
Marketing support
6.75 0
2
4
Importance to brokers
7.35
6
8
10
MGA performance
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FEATURES
COVER STORY: BROKERS ON MGAs RANGE OF CARRIERS
Importance to brokers: 5th Average MGA performance: 3rd FIVE-STAR MGAs
Anderson McTague & Associates Beacon Burns & Wilcox Cambrian Special Risks Can-Sure Underwriting Chutter Underwriting Special Risk Insurance Managers
Average MGA performance: 7.78 While having access to a range of carriers wasn’t the most important factor to brokers when looking for an MGA, they still assigned it a relatively high priority, rating it at an average of 8.09 out of 10. In fact, more than 41% of brokers rated this category at a 9 or 10 – effectively making the range of carriers available a vital consideration when choosing an MGA. Only a single survey respondent said the category was completely unimportant. According to brokers, MGAs are doing all right when it comes to this category – but just all right. MGAs averaged 7.78 out of 10 when it came to the range of carriers they offered – not a bad score, but one that shows definite room for improvement. Fewer carriers means fewer products available to brokers – and brokers are painfully aware of it. Again and again, our survey respondents said their MGAs don’t give them access to enough products, or enough information about those products. Still, it’s not all bad news for MGAs on this front. More than 55% of respondents rated their MGAs at an 8, 9 or 10 in the category, and eight MGAs fared well enough to earn five-star status.
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ROOM FOR IMPROVEMENT We asked brokers to tell us how their MGAs could improve. Here’s what they had to say:
“More office visits to explain products” “Faster turnaround on queries for customers” “Some lines still have a very small capacity, and it is surprising to us considering the class of business is good standard business” “Quicker response times and a wider range of targets” “They need to understand that they are an MGA, not an insurer” “Offer a contingent bonus payment plan” “Turnaround is becoming a problem for both renewals and quotes” “Performance is not the problem. Generally, the split in commission and policy fees are” “Sometimes there’s more delay in responding to emails and new quotes than usual”
AUTOMATION
Importance to brokers: 6th Average MGA performance: 6th FIVE-STAR MGAs
Angus Miller Insurance Cambrian Special Risks
Average MGA performance: 6.86 MGAs’ automation capabilities weren’t nearly as important to brokers as things like underwriting responsiveness and turnaround time. Still, brokers felt automation was relatively important, rating it at an average of 7.39 out of 10. That number might not seem to reflect a particularly high priority, but it doesn’t tell the whole story. More than half of the brokers surveyed rated automation’s importance at an 8, 9 or 10 – and 18% of survey respondents said it was vital. Just 7.8% of respondents rated the category below a 5 in importance, and only four brokers said it wasn’t important at all. Unfortunately, MGAs did not fare particularly well in this category. Brokers rated their MGAs’ automation capabilities at just 6.86 out of 10 – MGAs’ second-lowest overall score. And more than 21% of survey respondents rated their MGAs’ performance at a 5 or below. Even more damning, just two MGAs performed well enough to earn five-star status – Angus Miller Insurance, which achieved five-star status in six out of seven categories, and Cambrian Special Risks, which swept the survey with five stars in every category.
“Broker relations could be better dealt with. The underwriters are pleasant enough, but the relationship isn’t taken into consideration”
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FEATURES
COVER STORY: BROKERS ON MGAs
MARKETING SUPPORT
Importance to brokers: 7th Average MGA performance: 7th FIVE-STAR MGAs
Angus Miller Insurance Cambrian Special Risks Special Risk Insurance Managers
Average MGA performance: 6.75
“It would be nice to have an MGA communicating effectively so that we’re not left unsure of what is happening” Marketing support was the least important category to brokers, who gave it an average rating of 7.35 out of 10. However, more than 51% of survey respondents rated the importance of marketing support at an 8, 9 or 10, and nearly 20% rated its importance at 10. Only 8% of brokers rated marketing support below a 5, and just three survey respondents said it
wasn’t important at all. That’s why it’s a little disconcerting to see subpar performance from MGAs on that front. Brokers rated their MGAs at an average of just 6.75 out of 10. Fewer survey respondents rated their MGAs at a 10 in this category than in any other, and just three MGAs did well enough overall to earn fivestar status.
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SPECIAL PROMOTIONAL FEATURE
MGAs
Special ops Just as the Navy SEALS are sent in for special operations, so too should brokers look to MGA specialist claims teams when handling niche coverages KNOWLEDGE AND expertise are words thrown around in the insurance industry – but when it comes to handling claims that involve niche products like professional liability and E&O coverages, they take on a whole new meaning. “Really, what you are buying at the end of the day when you buy a policy is the claims expertise,” says Kate Harley, head of claims with ENCON. “And if you are good at it, then the client sees the value in that MGA.” ENCON is a bit of a rare bird in the Canadian MGA landscape, with a full-service claims team that has been in place for almost 40 years. It is that experience that both brokers and clients have come to appreciate, Harley says. “When the client interacts with the MGA’s claims team, and sees firsthand the kind of experience they bring to the table, then the client says to the broker, ‘You’re a great broker because you’ve recommended this type of insurance provider who has knowledge of my kind of specialized business operation.’” A claims team with this type of exper ience has connections: for adjusting, legal and what Harley calls the technical network.
“I mean ‘experts’ when I talk about the technical network,” she says, “because we know the experts in those special niche fields, and we are able to bring them to bear to assist and defend our insurers in a claim.” Part of that level of expertise in the field of professional liability is understanding the emotion that comes into play when there is a claim, says ENCON president Jean Laurin, as opposed to the usual run-of-the-mill claims you find in standard property and general liability insurance products. “In some of our specialty products like D&O and E&O, there is a very personal nature that comes with those claims,” Laurin says. “So we’ve developed, over the years, a very solid approach to holding the hand of the insureds during what is a traumatic process – whether you are being sued by someone who is questioning your competence, or if, as a director, you are facing allegations of a personal nature.”
Assembling the team ENCON’s book includes a wide range of professionals; policies cover everything from large, publicly traded companies
“We’ve developed, over the years, a very solid approach to holding the hand of the insureds during what is a traumatic process” Jean Laurin, ENCON
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down to sole proprietorships. “We have to adapt to the situation, whether it is the individual or the complexities of working with a larger firm, such as the CFO of a large firm wanting to know what is happening with the claim, as well as the individuals who are involved,” Harley says. Having a large claims team requires, of course, a lot of lawyers – but it also requires a number of people who are native to the various industries being insured. “That is something that we can do as an MGA is populate the claims side of our operations with people who have an engineering background or a legal background,” Harley says. “We hire a lot of lawyers to come work in-house with us, because in the specialty area – unlike the property and
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HOW TIMES HAVE CHANGED
“It is the brokers who have a broader view of what goes on in the marketplace, and are best able to sell to their clients the value of being with an MGA” David Cook, ENCON the general liability area – most of your business in claims is litigation-based.” Having that legal expertise is crucial, as ENCON’s legal team can explain the process to the client while partnering with outside counsel in directing the litigation. “All that adds up to us knowing what does work, what doesn’t work, what can cause challenges and how we can protect
the client from that,” Harley says. This goes a long way to nurturing the broker relationship, says David Cook, ENCON’s chief underwriting officer. “That relationship is paramount to us. It is the brokers who have a broader view of what goes on in the marketplace, and are best able to sell to their clients the value of being with an MGA.”
According to ENCON’s Kate Harley, claims have been on the upswing in recent years – both in frequency and cost. “Speciality E&O business has really picked up, so you really need a strong, proactive staff that can handle the volume of claims,” she says. “That has been one of the biggest changes I’ve noticed over the past 26 years here.” The rise in claims is something that can be traced to legal settlements in the US, Harley adds. “It’s crept up over the border. When I first started managing claims in 1991, plaintiff’s counsel was unsure how to craft allegations to trigger coverage in speciality policies. Over the years, Canadian counsel has become much more adept at this.” This factor, along with the increasingly litigious nature of Canadian society and the growth of law firms focused on classaction lawsuits, means that professionals need the expertise and experience of speciality MGAs more than ever – both to offer both tailored, informed coverages and back that up with highly competent claims management. As an MGA, having the flexibility to work in a variety of markets and jurisdictions across Canada gives ENCON a leg up in these niche products, Cook says. “It is that ability to work with the broker to find a tailored solution to get results, because not every client fits inside the square box that some of the larger insurers are looking for,” Harley adds. “I know that when the client needs something a little different, we put our heads together and try to do just that. We don’t just say, ‘Here’s the box – take it or leave it.’”
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SPECIAL PROMOTIONAL FEATURE
MGAs
The value of an MGA relationship When a client comes in with a unique or challenging risk, brokers can benefit from having an MGA to turn to RETAIL INSURANCE brokers provide an essential service for their clients, who depend on their thorough knowledge and detailed understanding of their businesses. But even the best brokers occasionally face unique and complex challenges that require an expert’s opinion or perspective. In these instances, MGAs play an important role as niche market experts that can help strengthen the relationship between broker and the client. While brokers have a comprehensive understanding of general commercial or personal insurance lines, few are able to establish expertise in specialty market areas or have a complete understanding of all product lines. As a result, it can be challenging for brokers to navigate the requirements of unique products their clients might require. For example, a construction company might have environmental liability exposures as a result of the materials they are storing, the emissions from equipment used or a number of other factors. While the broker might
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understand the general risks associated with construction, he or she might be unaware of exposures such as the liability risk associated with an accidental product spill that results in environmental damage. As such, the insured might not be protected from the financial ramifications of environmental remediation. “It can be dangerous for brokers to handle business in a segment in which they’re not experts,” says Jodie Kaufman Davis, managing director at Burns & Wilcox Canada. “By partnering with an MGA, brokers gain access to a range of specialists, perspectives and experience that are not often found within the typical brokerage. This partnership helps brokers avoid errors and omissions in insurance coverage, and ensures that the best service is being provided to clients, thereby strengthening the broker-client relationship.” Top MGAs are most often defined by their expertise and knowledge, but most are sought after for their responsiveness and quick delivery. An MGA’s ability to provide consistent
service and fast turnaround helps brokers respond to their client’s needs. “The value-add of our MGA is the depth of our expertise and our commitment to client service,” Kaufman Davis says. “Burns & Wilcox Canada is often approached by brokers for our specialized teams and centres of excellence that address unique coverage areas. For this reason, Burns & Wilcox Canada focuses on ensuring the whole team has a detailed understanding of all product lines offered. This guarantees effective and accurate insight and counsel at the early stages of a relationship with a broker. We are able to create innovative and unique solutions that brokers rely on to provide their clients with the best coverage solutions.” Without MGAs, brokers can’t produce some of the special-risk policies on which their clients depend. The essential partnership between brokers and MGAs ensures insurance professionals are able to respond to challenging cases in the most cost-effective, comprehensive and reliable manner.
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SPECIAL PROMOTIONAL FEATURE
MGAs
The underwriters who never say never When other MGAs back away from risks they feel are too difficult, strange or complex, this team steps up to the plate
MANUELA ZIEMER’S job description says that she specializes in difficult-toplace casualty risks, but she believes a more accurate depiction is that she places “the weird and the wonderful” ones. As a damage insurance broker with April Canada, Ziemer writes for almost all kinds of liability insurance risks, from rail exposure to nuclear power plant simulators and cryogenics manufacturers. “We don’t believe in the mentality of not writing a class of business because the computer says ‘no,’” Ziemer says. “That’s the great challenge for me, getting them coverage that no one else is willing to provide.” This comes as a great relief to brokers who are used to seeing their clients rejected due to their size or lack of experience. “We’re the alternative to the big players out there who want a pound of flesh – which could be $25,000 or $50,000 – before they’ll even look at an account,” Ziemer says. “There are some accounts on the market, such as new companies starting up, that don’t have the revenue flow to be paying that type of premium, given that sales are minimal. You need insurance to be able to be in business, but if you’ve never had insurance, nobody wants to insure you. Then how are you ever going to have a
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chance at getting insurance?” That’s where Ziemer and her team come in. “If the broker is cognizant and willing to work with me and has a good client who wants to work with us, I’m open to the approach of trying to find a market that would be willing to consider this particular risk when they’ve been declined everywhere else,” Ziemer says.
ruption and financial loss – which can be the determining factor between life and death for some organizations. “One product recall could put companies out of business, not only from the financial expenses of the recall, but they could lose out on contracts or sales, and there’s always the cost of litigation,” Pitkin says. “All it takes is one faulty product.”
Digital defense Always prepared Almost every organization is at risk of a product recall or alert. For this reason, it is imperative that commercial clients remain prepared for any and every possible worst-case scenario. “The need for product recall coverage is really important, as it can help companies get back expenses related to a recalled product, and also communicate with consumers to reassure them about safety concerns,” says Kent Pitkin, national director of commercial lines for April Canada. Contrary to popular belief, manufacturers are not the only ones susceptible. Pitkin points to a recent case involving cucumbers that contained salmonella as proof that even the most innocuous-looking products can suffer a reputation-damaging recall. “Anything that a consumer uses has the potential to injure somebody and can be recalled,” he says. April Canada’s product not only covers the recall expense, but also business inter-
Similarly, April Canada’s cyber coverage protects against the growing likelihood of
TOP TIPS FOR BROKERS Choose underwriters who will review a file thoroughly and explain their discoveries in detail Ensure that hard-to-place risks such as product recall and manufacturing liability not only cover initial damages, but also subsequent business interruption and reputational setbacks Don’t skimp on manufacturing and product recall. Although clients may dismiss this coverage as too expensive, a costbenefit analysis will likely convince them otherwise Choose underwriters who are adamant about helping and will put forth tremendous effort to find a market willing to take on clients’ risks
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“We don’t believe in the mentality of not writing a class of business because the computer says ‘no’” Manuela Ziemer, April Canada
other firms in its dedication to developing products designed with brokers and their insureds in mind, as well as its commitment to first-class underwriting, as “we underwrite and review each file individually.” “We’re always developing products for new entrants to the market, such as those that are starting their own business and may not get attention from other companies because of their inexperience,” she says.
The April advantage potentially crippling online disasters. “We have coverage for direct loss, which includes loss of electronic data, business interruption and extra expenses, as well as indirect loss, which includes additional costs such as reputational harm,” says Sun Park, a cyber underwriter with April Canada. Park believes Aprilinsurance Canada stands business canadaout ad from 2015
Because commercial underwriting often serves as the backbone to the success of any enterprise, brokers need to know that they can rely on an organization with skilled professionals throughout Canada. “Our underwriters have been in the business for 20 or more years, and have the expertise look at 8:23 all types of businesses v3.pdf 1 to 9/29/15 PM
regionally and nationally,” Pitkin says. Brokers are drawn to April Canada’s underwriters for their deep wealth of knowledge, commitment to products and uncompromising attitude toward helping brokers conduct their business efficiently. April Canada’s underwriters are always on the lookout for emerging risks in general and commercial liability, so when companies need a pioneering product or operation insured, they can confidently write it. “When you look at standard products, there’s not a lot of differentiation, so brokers will simply go with an underwriter they know,” Pitkin says. “But with an emerging risk, they want someone who can relay knowledge and educate them enough to sell to their clients. That’s our key value proposition.”
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We truly appreciate you noticing our GREAT service over the years! It’s within the heart of SRIM’s operations to provide our clients and partners the highest in support and service quality.
Thank you again for all your hard work on my submission for the fitness studio. It was above and beyond my expectations. Your patience was truly appreciated!
I have been in the industry for 15 years, commercial for just over 10, and dealing with SRIM for most of that time. Most notably over the last few days, but also over the last few months – the level of service I have received from SRIM has been second to none. The turn around times on quotes is amazing, the terms received are competitive, and the expertise is appreciated. KUDOS TO YOUR TEAM!! Keep up the great work!
Edmonton, AB
Wow, wish every company was as efficient as you! Regina, SK
Williams Lake, BC
WE’RE THERE… to support our brokers! You guys are awesome and you have a happy client.
So love working with Miranda and Sherri and SRIM!!!!!
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Winnipeg, MB
Well thank you Angie. It was funny that 1 minute after I sent you the email the online sent the amended policy, I thought “How much quicker can you get without reading my mind?”…
You are way too good at your job, I don’t have enough thank yous for what you have accomplished for me at quote time. Thank you Thank you Grande Prairie, AB
Calgary, AB
Thanks very much for your quick response on this – the insured has expressed his appreciation as well.
Thanks for the quick turnaround. It’s appreciated.
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Special Risk Insurance Managers Ltd. is proud to be your independently owned and operated Canadian MGA, working with you on the ever-changing needs of your clients.
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FEATURES
MGAs
Transportation and consolidation As a market segment where risks are constantly changing, the transportation industry especially stands to benefit from an MGA partnership SINCE THE wheel was invented, its use has stimulated transport and commerce, and has raised the standard of living throughout the world. But the movement of goods and people can be a complicated practice. Transportation is a crucial segment of the Canadian economy, providing the link to every industry across the country. Air, rail, sea and road encompass areas such as commercial airlines, forest fighting, logging, local transit, ferries, tug and barge, waste haulage, logistics, and many, many more. Support activities for transportation, including air traffic control, stevedores and salvage, add to this complex and extensive industry.
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Things that move require a different approach to risk management and insurance. Add to that the multiple risks of international exposures, and there is a vital need to utilize specialized expertise in the field of transportation and trade.
How transportation risk has changed Over the past 10 years, the changing risks to transportation and trade have ranged from economic and political to environmental and societal. Economical: The worldwide economy has suffered from fiscal imbalances, currency fluctuation, and volatility in energy and
agricultural pricing. The risk of a global systemic financial failure is very real, and regulations continue to grow at an exponential rate. The challenges in the economy have led to neglected infrastructure in many cities. Roads, bridges, rail lines and ports are more vulnerable to natural disasters, and are often antiquated and crumbling. In many places, there has been a lack of development and maintenance. Political: Canadians are leaders in the export of goods and services, and have been actively pursuing new opportunities in global markets. With these new opportunities come new risks. Political risks are at the forefront, and are usually highest in developing countries where the economy and/or politics are unstable. Canadian businesses need to protect physical assets from risks of confiscation, expropriation, nationalization and deprivation. They also have a high risk of non-performance of a contract caused by a political event or act
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KEY TRANSPORTATION RISKS With the traditional and emerging risks in transportation and trade, Canadian businesses should be mindful of these coverages: Marine cargo Cargo legal liability Hull and machinery Marine general liability Aircraft hull and liability Aviation liabilities Non-owned aircraft liability Airports and aerospace of a government entity. Increased political violence and terrorist incidents add to the difficulty of doing business overseas. Supply chain disruption: Many businesses rely on ‘just-in-time’ shipping; consequently, a disruption in trade can cause serious damage to profitability, shareholder value, brand and reputation. This risk is rapidly increasing with the complexity of multi-modal transport and globalization. Major causes of disruption can include weather, closure of transportation routes and political events. A proper supply chain risk management plan and insurance program can help mitigate these risks. Environmental: Environmental impairment is a growing concern for many businesses that are involved in transportation or trade. Conventional coverage under a general liability policy is no longer adequate. Stricter regulatory requirements have increased the demand for a broader risk management and insurance solution. Technological: The movement of people and goods has never been as reliant upon the movement of data, nor have businesses been as vulnerable to the wide-ranging consequences of a data security breach. Advances in technology have made the challenges of securing data ever
more complex, while escalating threats from external parties and increasingly stringent regulations have made the consequences of data breaches ever more severe. Societal: Perhaps the greatest risk to transportation and trade is our rapidly changing society. Concerns about fresh water supply and food shortages may result in the migration of the population to more habitable geography. The transport of goods could encounter great risk as our infrastructure ages, the environment changes, government regulation increases, and trade is constantly disrupted. In addition, human error is the primary cause or contributing factor to transportation disasters and accidents, often resulting from improper or inadequate training. With our aging population, there is a very real concern that this problem will be exacerbated as transport continues to become more complex and there is a lack of expertise and experience.
Who can meet these needs? The Canadian insurance market is dominated by large-scale insurers. These companies are very good at delivering ‘transactional’ insurance products, and can offer efficiency due to the large number of policies they write.
Rolling stock and railroad liability Truck and other vehicle physical damage Political risk Contract frustration Kidnap and ransom War and terrorism Trade disruption Trade credit Environmental liability Professional liability Management liability Cyber and privacy risk Lloyd’s is the largest specialty insurer in Canada, and with extensive product offerings that are available to Canadians, they provide the most comprehensive insurance solutions in the world.
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9/10/2015 4:57:44 AM
FEATURES
MGAs Niche insurers serve the remainder of the WHY IT PAYS TO SPECIALIZE market. They rely on expertise and deliver good products to specialized market segments. Virtually every business enterprise has a transport or trade risk, and those with global As a result, the insurance market for transexposures have enhanced risk. Financial institutions, agriculture, mining, energy, portation is quite fragmented. The large-scale forestry, manufacturing and construction all are affected by these risks. and niche players are good at what they do, Focusing on a special segment will enhance innovation, offering the ability to create but with all the challenges in the transport and new solutions (for example, combined insurance coverage for aircraft and environmental liabilities). trade industries, it is not enough to properly This specialization also offers the ability to identify new risks (for example, supply chain disruption), service clients. Brokers need a ‘one-stop shop’ increasing the loyalty of the client. where insurance coverage is consolidated – Focusing on one segment also will provide an ability to develop a comprehensive risk management a place where they can go to put a program program – something that can only be done with an in-depth knowledge of the segment. together that encompasses all the risks that their client will encounter. This is where MGAs have an advantage. also has access to the worldwide expertise of pation. We need to immerse ourselves in the Combining the benefits of expertise in multiple their underwriting partners. Many MGAs industry, engage in discussions, learn and share areas and a focus on a niche area, the MGA can are able to offer local syndication of Lloyd’s, knowledge. An MGA is the ideal partner – they develop comprehensive insurance programs benefiting from the company’s expertise and can participate in the industry and can tap that are meaningful to the client and are not diverse worldwide product offering. into global expertise such as Lloyd’s to ensure readily available in the market. The broker The key to success in meeting the challenges that the transportation industry continues to benefits from working with a local MGA, but of transportation clients starts with participrosper. 86928_Insurance business canada Ad AW.pdf 1 01/10/2015 17:58
Specialist risks needs specialized expertise
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Lloyd’s unrivalled reputation for insuring unusual and complex risks is underpinned by its underwriting expertise, strong financial ratings and global licensing network.
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In a world of emerging and evolving threats, Lloyd’s has your risks covered.
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www.insurancebusiness.ca
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You can expect more at Trisura.
Find out more about our industry leading specialty insurance and surety solutions at www.trisura.com
a step above
Trisura Guarantee Insurance Company is a Canadian owned and operated Property and Casualty insurance company specializing in niche insurance and surety products. We are a proud supporter of the Insurance Broker’s Association of Canada.
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PEOPLE
PRODUCER PROFILE
Coast to coast Sarah MacKinnon rose quickly through the ranks of the insurance industry, and now she’s taking on a new challenge – in a new country
SARAH MACKINNON foolishly studied marketing management – not accounting or finance, like some of her friends – at Dalhousie University in Halifax. But little did she know that her marketing background would help her vault her way up the insurance industry ladder some years down the road. Marketing jobs were few and far between when MacKinnon graduated with a bachelor of commerce degree in 2002, and she fell into a position at Bell & Grant Insurance. She quickly moved into a commercial processor role, starting off in personal lines before becoming a CSR for two producers at the firm. While working toward her CAIB designation, MacKinnon took courses through a brokerage then known as Umlah Insurance. In 2004, a position became avail able, and she joined the Umlah team. MacKinnon acted as the group’s marketing coordinator, undoubtedly glad for the skills she once balked at. “It was a neat position,” she says. “They had a bunch of producers who didn’t have much insurance experience, but they had great people skills, so they needed someone who could put their submissions together.”
Insurance Brokers. That shift gave MacKinnon the opportunity to learn from her new leaders. Hay, whose many clients followed him to SNC, always strove to do the right thing by the client and the industry as a whole, MacKinnon says. James, meanwhile, had basically been running Umlah, so putting her at the helm was a no-brainer. “She ran a tight ship, in a good way,” MacKinnon says. “It was a good change, and they were great at taking over.” But seven years later, Stewart and James decided to sell SNC to Archway Insurance, an independent brokerage composed of more than a dozen offices throughout Atlantic Canada. Impressed by MacKinnon’s strong commercial background, Michael Stack, one of Archway’s owners, convinced her to stay on as regional commercial manager. MacKinnon was attracted to the commercial division, and was eager to put her management skills to the test. “It was challenging, but in a good way,” she says. “It made me really think back to when I was in school, taking courses in strategic management or production operations.” Indeed, MacKinnon’s education aided in her push to streamline each brokerage’s proprietary process into a single company-wide system. “It was a challenge that I was happy to take on, but it was very difficult to convince people that our way was better than what they’d been doing forever,” she says. For starters, MacKinnon worked to separate the
“It was very difficult to convince people that our way was better than what they’d been doing forever”
Moving on up MacKinnon’s marketing skills – as well as her dedication and hard work – fuelled her drive and her decision to stay on at Umlah when it changed hands in 2006. Caroline James, a longtime Umlah employee, and Stewart Hay, who worked at a competing brokerage, purchased Umlah and changed its name to SNC
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COMBATING THE ‘WHO CARES’ MENTALITY Sarah MacKinnon believes the commoditization of insurance is one of the greatest challenges facing the industry. “It’s all about ‘hurry up and get it done,’” she says. “Customers are less loyal and are time-poor.” But personalized service, including form letters and contacting clients via their preferred platform, whether that’s strictly text or email, can help boost brokers’ business. “When you provide that level of customer service, clients are OK with waiting a little bit in order to get that level of service and that level of knowledge,” MacKinnon says. “That’s where we can make up for the lack of 24/7 service. It’s not always going to save the account, but it does help.”
personal and commercial divisions, and to implement more pleasant consumer-facing initiatives. Relying again on her marketing background, she eventually convinced Archway’s brokers to use a form letter – on the company’s official letterhead – that could be tailored to the client. “That was one thing I felt very adamant about,” she says. “We need to present ourselves as professionals, and we can’t be sending out these internal memos.”
California, here she comes That’s not the only challenge MacKinnon has taken on in recent months. In August, she handed in her resignation at Archway to move 4,740 kilometres to San Diego, where her husband of nearly 10 years landed the job of a lifetime. “It’s funny because I’m very much taking a support role now … and that’s not a role I envisioned myself in,” she says. Still, MacKinnon won’t be out of the business for long. She’s buffing up her knowledge of California insurance legislation and is looking forward to the ethics course she’s required to take to legally work in the state, though the process, she says, is slow-moving. “I very much feel like I’m chasing my tail a little bit,” she says. “But thank heavens I have time that I can wait on hold and talk to someone. Slowly, but surely!”
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FEATURES
BROKER ADVICE
First-class policies As your clients accumulate wealth, their insurance needs are changing – and as a broker, you should be leading that discussion A NEW car in the driveway, a painting worthy of a museum, plans to purchase a vacation property in a tropical destination: If these are within the grasp of your client, the first thing you should be putting in their hand is an updated policy to cover this newfound wealth. “Brokers really need to understand the insureds’ needs,” says Paul Johnstone, senior vice president of the personal insurance division at Chubb Insurance Company of Canada. “What do they have out there? What are they insured for? Where do their liabilities lie? High-net-worth individuals tend to have properties in unique locations [and] assets like fine art, collector vehicles, wine and jewellery … are all exposures that need to be discussed and analyzed.” Opening that discussion is a tremendous opportunity to engage with your client and drive a rewarding customer experience. “We can offer better choices that complement what high-net-worth individuals have.
HIGH-NET-WORTH INDIVIDUALS IN CANADA 350 319,600
300 250
282,400
279,900
331,500
298,100
251,400
200 100 50 0
2009
2010
2011
2012
2013
2014
Source: Capgemini and RBC Wealth Management, World Wealth Report 2015
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As wealth grows, so do customer needs, as they have a lot more capital to spend on luxury goods that have a greater value.” As a result, policies should provide higher limits and customizable solutions. While a wall and a roof may be universal, for instance, the quality of building materials used in the construction of a luxury home is substantially higher than in a typical subdivision home. “An insurer that specializes in covering homes of higher values should have that experience in providing unlimited replacement features or being able to indemnify customers from a loss standpoint, making sure contractors who build the homes are of the quality that they are looking for.”
What brokers need to know “It is a very basic approach that the broker needs to follow ... these customers need advice too,” Johnstone says. “It just might not be on the best price, but the best value that the client would get out of the policy to suit their needs.” Brokers should ask about what the client has acquired over the year or what new passions they’re pursuing, such as collecting art. “Those kinds of questions lead to what the insurance policies should be,” Johnstone says. Chubb has a customizable, tailored product that reflects the unique needs and circumstances of the high-net-worth space, he adds. “It is important to review customer needs holistically and see which customers need more specialized coverages,” he says. “It is
INVESTMENTS OF PASSION
Jewellery, gems and watches 29.2% Other collectibles 23.4% Luxury goods and collectibles 19.2% Art 16.7% Sports investments 11.6%
Source: Capgemini, RBC Wealth Management, World Wealth Report 2015
important to check values – maybe a home that hasn’t been checked for years needs to be re-evaluated, as changes or renovations may have increased the value.”
International concerns “When you are wealthy, you are going to travel more,” Johnstone says. “And our customers tend to travel to exotic locations, so the policy needs to be able to cover them in terms of liability and content extensions.” Having an international infrastructure in place to handle a claim is crucial so that when something does happen abroad, there is a support system in place. “There can be greater risk of hotel room invasions or carjacking incidents,” Johnstone says. “Chubb’s Masterpiece® Family Protection endorsement provides protection for your customer and their family against such unfortunate incidents on a worldwide basis. It is one of the differentiators of a company like Chubb. There are so many things that can happen in the world, and insurance is one of those things that you don’t really know that you need it until it happens.”
“As wealth grows, so do customer needs, as they have a lot more capital to spend on luxury goods ...” Paul Johnstone, Chubb Insurance Company of Canada
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Move up to Chubb. Your customers have a great lifestyle. Entrust us to understand its value. At Chubb, we understand the value of your customers lifestyle. Let us show them a world of superior coverage and services, a place where unfortunate events are met with a surprisingly easy, supportive claims experience. Unlike typical insurance, Chubb is here to help protect their standard of living, not just their things. With over 85 years of excellence in Canadian customer service, Chubb Personal Insurance offers leading customer experience and smart policies tailored to your customers unique and individual needs.
Insure wisely. Live confidently. Chubb refers to member insurers of the Chubb Group of Insurance Companies.
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9/10/2015 4:58:54 AM
SPECIAL PROMOTIONAL FEATURE
COMMERCIAL LIABILITY
Why go digital? An innovative new online platform offers a unique solution for brokers to conduct business more quickly and competitively, all while improving client satisfaction MARKEL CANADA has a philosophy: Make things easier, quicker and more business-friendly for brokers. To facilitate this, the company has developed an online commercial insurance portal that allows brokers to quote, bind and receive policies almost instantaneously. The portal can be used on any computer, smartphone or tablet with Internet access, allowing brokers to operate wherever is most convenient for them. There are no policy fees, and the client is not required to sign applications before issuance. This not only makes the broker’s job easier, says Emilie Gravel, online business development manager for Markel Canada, but it also helps to increase the bottom line. “One of the advantages of the online portal is that it provides higher commission to brokers,” she says. “The rates are exclusive to our online portal, which makes them more competitive than if risks were written the traditional way.” In fact, the insurer guarantees a 25% commission on all non-program business conducted through the portal. Plus, brokers can use the time saved by the portal’s convenience to secure new business or work on existing accounts.
Innovative features Currently, the online portal issues policies for small to medium E&O accounts, as well as D&O ones, but Markel Canada is looking to expand to other lines in the future. While many insurers are increasing their
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digital offerings, there are several features that make this online portal a particularly notable and valuable resource. “Information that you send is automat ically saved in the portal, so you can pick up where you left off at any time,” Gravel says. “We heard from brokers that it was frustrating when it takes a couple weeks to
quote in a traditional way, so we now offer a platform for them to enter information and obtain a quote instantly and from anywhere with Internet access.” Gravel emphasizes that underwriters are still on hand to quote any policies that may contain risks too large or complex for the portal, and brokers can choose the
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traditional or the digital route based on their own preferences. “Markel is known for underwriting excellence and product knowledge, so whether or not brokers use the portal or talk to underwriters directly, we’re able to support [them],” she says.
The Markel advantage While the portal is still in relative infancy, it already addresses such complex products as professional liability for a wide range of jobs and management liability for private
companies, nonprofit organizations and unions. This is in stark contrast to what’s presently offered on the market. “I’m not aware of any other competitors that offer miscellaneous E&O policies or professional liability, unless it’s on a program basis and not individual accounts,” Gravel says. On top of this competitive advantage, the company is working on tailoring the portal to align with broker partners’ own programs, “so it’s almost a branded portal to them, even though it’s provided by us,”
“One of the advantages of the online portal is that it provides higher commission to brokers. The rates are exclusive to our online portal, which makes them more competitive ...” Emilie Gravel, Markel Canada BENEFITS OF THE ONLINE PORTAL Brokers can quote, bind and receive policies in minutes Accessible from smartphone, tablet or computer Provides higher commission to brokers Gives brokers more time to conduct other business Intuitive and user-friendly design Trustworthy coverage provided by Markel Canada
COVERAGE DETAILS
PROFESSIONAL LIABILITY Although web developers, zoology consultants and Latin fitness instructors might not seem to have much in common on the surface, they all require sufficient professional liability. Markel Canada’s coverage can provide: Fast, simple cover for ‘miscellaneous’ professionals Up to $2 million in coverage Opportunity to add $5 million in commercial general liability Optional business interruption and office contents coverage for all applicants
MANAGEMENT LIABILITY Gravel says. This level of attention and detail to insurance professionals’ needs has resonated widely with the broker community. “I just bound three new businesses through the new Markel portal this week,” says Alannah Granger, an account manager for commercial insurance at Ogilvy Insurance. “It was extremely easy to use – actually, it was probably the easiest portal I have used. The premiums were extremely competitive, and the commission rates are exceptional. It gave me lots of options to offer my clients, and I was able to quote, bind and have a policy in less than five minutes.” It’s this user-friendliness that will keep Granger and other industry professionals coming back to the portal. “[Markel Canada] definitely has a hot new product,” she says. “I know I will be getting a lot of use out of it.”
Management liability is a critical coverage for many private companies, nonprofit organizations and unions. Markel Canada’s coverage can provide: State-of-the-art policies designed for private companies, nonprofit organizations and unions D&O liability up to $2 million with 100% dispense cost allocation, except for employment claims Worldwide coverage – claims can be brought and maintained in any jurisdiction Automatic pollution defence costs cover for 50% of the policy limit, up to $1 million Option to add employment practices liability
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FEATURES
FLOOD INSURANCE
The engineering solution to an insurance crisis
CANADA’S FLOOD VULNERABILITIES Floods are the most common natural hazard in Canada Snowmelt runoff can cause unexpected flooding
Canada still lacks properly updated flood maps, but private engineers have taken the lead in creating a unique flood risk assessment solution
Flood maps haven’t been updated in more than 40 years
FLOODS HAVE become the most expensive catastrophic claim in Canada – $1.7 billion has been paid out for damages incurred by the 2013 Alberta floods alone. That’s why engineer Stephen Gill decided to use his flood risk management background to help protect Canadian businesses from devastating losses. “When you’re in the United States, FEMA and the federal government determine whether a building is in a flood zone or not,” says Gill, partner and CEO of Flood Risk Canada. “In Canada, all the flood maps are outdated, so every time someone makes a revision to their property, they could be risking their property and not even know it.” Aware that the market needed a tool to fully evaluate flood risks, Gill developed a highly advanced flood modelling system that allows his company to quickly assess when a property or area is susceptible to flooding and respond accordingly. “When we assess the flood risk for a property, we know when it is in a flood zone and can evaluate how deep the water may be, even before the storm starts,” Gill says. “If we sense a threat of mega flooding at a commercial real estate site, we can then respond by putting a flood barrier up and defending it.” Gill relies solely upon his own data, which is developed by engineers who are experts in quantitative analysis. Third-party data, he says, may not take into account risks that have emerged as the result of new construction, which can certain make areas more susceptible to flooding and global warming.
Insurance also rarely provides full coverage
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Government relief programs do not offer full coverage for losses
“When we looked at the flood maps in Canada, the accuracy of some of the zones were way off, sometimes by 50 or 300 feet,” he says. “We go beyond that – we look at flooding source, depth of water and months when [a flood is] most likely to happen.”
dollars in damages, and the owner is now suing the brokerage for errors and omissions neglect.”
The broker’s role
Constant vigilance
“When you’re telling a client about their exposures and helping them make decisions
One of the most unique features about Flood Risk Canada is that it operates on a continuous basis. “We monitor the property 24/7/365, basically all the time,” Gill says. “When we evaluate property, we immediately enter it into our system. As soon as it rains, Environment Canada activates our alert, and we get involved and keep an eye on it.” This not only includes rain, but also any other potential forms of water damage. “When snow melts, we take that into calculation as well,” Gill says. A response team will arrive about 24 hours prior to the flood warning and spend about three hours defending an averaged-sized building from the water. “When water recedes, we remove the barriers, and it’s done,” Gill says. “We only do quick response.” Gill and his team of engineers and flood risk advisors work nationwide to help commercial real estate clients mitigate potential damages, recognizing that “an uninsured flood loss can be devastating to a corporation,” he says. “At the end of the day, it’s cents on the dollar to make sure companies don’t get washed away.”
“Every time someone makes a revision to their property, they could be risking their property and not even know it” Stephen Gill, Flood Risk Canada about buying flood insurance, brokers should give advice based on our current, real-time data, which is 99.9% accurate,” Gill says. He has seen firsthand what happens when insurance brokers neglect his team’s analyses. “One time, we informed a client that they were building in a flood zone, but the broker refused to follow our advice. The broker then told this imaging center that his business wasn’t in a flood zone,” he said. “There ended up being a spring storm … that caused several millions of
Source: Swiss Re
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9/10/2015 4:59:48 AM
FEATURES
FRANCHISING
Is your business suitable for franchising? With the right foundation, franchising your business can be a very effective way of expanding your reach and growing your brand quickly, according to Stefan Kazakis
WHILE FRANCHISING has slowed down in recent years from the rapid rates seen in the 1990s to early 2000s, it is an exciting method to grow your business. But the decision to travel down this route is often a more ‘bright shiny light’-driven campaign rather than a well-thought-out plan. And this, in turn, ends in failure. However, if done correctly, franchising can be a very effective way of expanding and growing your brand quickly. For well-run businesses with systems and processes, procedures and rules, franchising will provide benefits and satisfaction for all parties. However, be under no illusion. This is
not an easy path to take. Establishing a business model that can be considered for franchising has to be undertaken with education, skill, patience and, not surprisingly, capital. And I have one bonus tip that I will explore a little further in the article – you simply must have a defined target market. So, what should business owners do if they believe their business has what it takes to become a franchise opportunity? You need to be assertive but fair, and clear on the vision. Who needs to do what by when? You will continue to work harder with even greater focus. You’re accountable to other
IS YOUR BUSINESS READY? How do you know when your business is ready to be considered for franchising? Here are my top seven tips: 1 Proof of concept, establishing a franchise system
and preparing it for market can take as long as three years. The business needs to be making a healthy predictable profit – this is non-negotiable.
4 You have a predictable operations procedure with
good systems and ‘how-to’ manuals for all tasks, including testing and measuring for all activities. 5 You have a proven lead generation system that
2 The business should be making a positive cash flow
without key/critical staff being present. Having the right management structure is also non-negotiable. 3 There needs to be uniqueness – but not extreme
uniqueness. The best uniqueness is often found in a customer delight system.
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delivers leads within a cost-per-lead budget. 6 You have a progressed and defined sales system to
ensure a 60% conversion on all leads, regardless of the sales skills of the person selling. 7 You have a culture of open, honest communication.
business owners buying into your vision. You must have strong ownership of the brand and the ability to share it with a new network of business owners who must and will embrace it as their own. You are OK with not having all the greatest ideas in your business, and more important, you are OK with encouraging this. You will have taken legal advice and have a franchise agreement that has been developed with an authentic reputable franchise development and legal team. The investment for this is a minimum $70,000. You will develop a training arm for all franchisees composed of internal and external consultants/trainers. You must have a recruiting system for franchisees that is more about de-selection than selection. Before anyone invests in your franchise, you need to be absolutely sure that you can define who your target markets are. You need to be clear about who will buy the product and why. You need to be able to identify them with great clarity. If you are a bookstore owner and are considering a franchised bookstore, it’s no good to simply say, “I know there are plenty of book lovers out there, so I’ll be fine.” There’s no room for vagueness, guessing, crossing fingers or hopeful estimations when it comes to this stuff. The skills and tools required to create an idea are very different from the
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earn? Are they married? Are they single? ? WHERE do they congregate in their greatest concentration? Where are they being influenced? ? WHAT is their desired Big Outcome? What is the problem you solve for them? ? WHEN is their highest level of frustration? When will they say, “I need to buy this”? One in 10 of your future clients is not ready to buy right now, but is thinking about doing so. When do they say, “Now is the time”? ? WHY will they choose you? This is one of the hardest questions to answer. Whatever your product or service, your potential ‘A’ clients have other options available to them. ? HOW do you expect them to do business with you? How do you expect them to communicate with you, contact you and correspond with you? How can they let you know they are interested in your services? Will this be online, face-to-face, over the phone or a combination? In our modern, highly connected world, it’s more important than ever to make it easy for people to interact with you and buy from you.
skills and tools required to grow market share. It’s the same for someone who is considering a coffee shop franchise in the city centre. If the extent of their strategic planning is that lots of people come into the city, and lots of people like coffee, so if they open a nice coffee shop in the city, they should be fine, then that’s not great market research. In fact, that isn’t market research at all, but you’d be surprised how often franchises get started like this. You won’t be surprised to know they don’t last long if the owner doesn’t wake up real fast. Having made the decision to franchise your business, your franchisees are going to want to know that this will provide them with a product or service that they think other people or organizations want to buy. But thinking this and knowing how and why it will happen are two very different things. At some point in their busy lives, with all sorts of other options available to them, you want people to look at the product and say, “Yes, this is what I need.” These people or organizations are referred to as
the target market, and you and the franchisees need to know exactly who they are, and how you’re going to grow and service them. Why is this so important? Because if someone is investing in a franchise, they have to focus on how they can serve your target market; they cannot be everything to everyone, or they will actually be no good to anybody.
So, who is your target market? Now that you know why it’s so important to find out who your target market is, let’s have a look at how you go about doing it. There are six questions you must be able to answer about your target market. If you can’t answer all of these questions, you won’t be able to meet the needs of this market. ? WHO is the person or organization you wish to serve? You need to be able to define them in detail. For example, ‘parents’ is not a well-defined target market. What age are they? How many kids do they have? Where do they live? How much money do they
The more you understand the who, where, what, when, why and how of your target market, the better you’ll be able to shape your franchise. So how do you tell when your business is suitable for franchising? When you know your business inside out! Your business is ready when you are not motivated by the initial capital investment of a franchisee. Ultimately, you will be ready when you already have enough money in your bank account; you will continue to invest in the training of your franchisees, ensuring the reputation of your brand and concept continues to grow relevance. The most important thing I ask my clients who ask about franchising is, “Are you ready?” Keep in mind that even the best-laid plans will result in failure if the underlying business model is not ready for franchising.
Stefan Kazakis is a renowned business strategist, sought-after presenter and founder of Business Benchmark Group. He is also the author of From Deadwood to Diamonds.
www.insurancebusiness.ca
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9/10/2015 5:00:23 AM
FEATURES
MOTIVATION
How to overcome excuses Great people throughout history have often failed, quite miserably, before finally reaching their goals, writes international business strategist Dan Waldschmidt
Not everything needs to be done in place of sleep. If you work for a boss, then you owe them solid time. You can’t cut that out. You can, however, cut out television time, meetings and anything else that gets in the way of achieving your goals. Replace entertainment with activity toward your goal.
3
Refuse to let yourself wallow in self-doubt
You’re alive to succeed. Stop comparing your current problems to your last 18 failures. They are not the same. You are not the same. Here’s something to remember: Your entire life has been a training ground for you to capture your destiny right now. Why would you doubt that? Stop whining. Go conquer.
4
Ask yourself, “What can I do better next time?”
And then do it next time. If you spend a decade or two earnestly trying to be better, that’s exactly what will happen. The next best thing toward doing something amazing is not doing something stupid. So learn from your mistakes, and use the lessons to dominate.
5
Proactively take time to do things that fuel your passion
Exercise is a great example. Living in the moment requires you to live at peak performance. A huge part of mental fitness is physical fitness. A sparring or running partner is a great way to refresh physical competition. Physical activity accelerates mental motivation. VAN GOGH sold only one painting during his lifetime. Winston Churchill lost every public election until becoming prime minister at age 62. Henry Ford went bankrupt five times. Albert Einstein was a terrible student and was expelled from school. Sigmund Freud was booed from a stage. Ideas, brilliance, genius – they all mean nothing without the guts, passion and tenacity necessary to make your dream a reality. But often, people fall back on excuses and give up on trying to reach their goals. Most of us have dreams – and many of us have big ones – but few of us actually see them through.
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Here are six tips for jumping off the excuse train and forging the path to your goals.
1
Avoid the need to blame others for anything
Mean, small-minded people know that they suck. That’s why they’re so cranky and eager to point out others’ mistakes. They hope that by causing others to feel inadequate, everyone will forget how woefully off the mark their own performance is. Don’t blame anyone, for any reason, ever. It’s a bad habit.
2
Stop working on things that just don’t matter
6
Apologize to yourself and those around you for having a bad attitude Do this once or twice, and you’ll snap out of your funk pretty fast. When you start genuinely apologizing for being a bad influence on those around you, you learn to stop whining and start winning. Dan Waldschmidt is the author of Edgy Conversations: How Ordinary People Achieve Outrageous Success (www. edgyconversations.com). He is an international business strategist, speaker, author and extreme athlete. His consulting firm solves complex marketing and business strategy problems for savvy companies all over the world.
www.insurancebusiness.ca
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9/10/2015 5:00:49 AM
Team 24 Challenge Accepted
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9/10/2015 5:01:47 AM
FEATURES
MARKETING
Your personal brand: from ‘now’ to ‘wow’
When you Google yourself, what’s the first thing that comes up? Is this image consistent with how you want to be portrayed? Nikki Heald explains the importance of consistent personal branding
TODAY, IT’S more important than ever for you to make your personal brand stand out. The idea of personal branding is certainly not new and has been bandied around for many years. Simply put, it relates to the way you market ‘you’ to the outside world. It’s about your professional profile and reputation. It’s about the value that others perceive you possess. Branding incorporates reputation and credibility. It influences whether people will buy from you, do business with you or even want to associate with you. If you want to
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stand out from competitors and position yourself to win, then developing, fine-tuning or tweaking your current brand is the way to go. The good news is that you can shape and control your brand. Personal branding should be an integral part of your overall marketing strategy – and if you don’t particularly like the term ‘personal brand,’ then substitute it for another term such as ‘personal visibility,’ ‘personal perception’ or ‘professional profile.’ Ultimately, it doesn’t matter what you call it; the fact is, there is a proven link between
projecting a professional image and success. Celebrities are good examples of personal brand managers. They work tirelessly and consistently to promote their visibility in their fields of expertise. They find ways to be unique and memorable. However, you don’t have to be a superstar or celebrity to build a strong and unique brand proposition. Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity. How well you know yourself is vital. Do you have a strong sense of your professional message? Do you know your brand story? Do you communicate your brand consistently using multiple sources? Identifying what distinguishes you from others is no easy task, especially in this world of marked competition, but it’s unquestionably worth the investment. For those of you who own a business, perhaps you’ve spent loads of money on marketing campaigns to promote your business, but when was the last time you invested in you?
Where do I start? The first step is to reflect upon your current
www.insurancebusiness.ca
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brand and then determine whether this is your ultimate or desired personal brand. Ask others around you for feedback – clients, colleagues and your management team. What words do they associate with you? What do they believe are your strengths? What areas do they perceive you may be able to develop? What makes you different from others? A clear understanding of what your brand looks like now as opposed to what you would like it to look like in the future allows you to identify those gaps that will require your attention. Generally, the identifiable gaps will fall under one of the ‘Five Keys to Personal Branding’ that I have developed and use in my workshops: 1. Presentation: Dressing to reflect your position and meet client expectations; good grooming, hygiene and presenting an image that conveys credibility 2. Communication: How you position yourself verbally, nonverbally and in written communication; ensuring your online presence communicates the right messages 3. Behaviour: How you conduct yourself at business events, meetings and day-to-day interactions; demonstrating courtesy, respect and correct protocol for the situation 4. Skills: Ensuring you keep your knowl edge and competencies up to date; being on top of what’s happening in your profession through training, mentoring and coaching 5. Service: Providing exceptional service to both internal and external parties; doing what you say you are going to do and finding ways to delight your clients After you’ve carefully analyzed these five core areas and discovered the gaps, the next step is to determine what action you plan to undertake to take your brand from ‘now’ to
‘wow.’ Remember, this will take time, energy and effort; it won’t happen overnight.
Social media and branding The growth of LinkedIn, Twitter, blogs and Facebook has made it even easier for prospective clients to research you – and believe me, they will. In this digital day and age, people rely heavily on social media, and what you post is of interest to them. People are using Google personally and profes-
future of personal branding. Take time to create some short videos (ideally, no more than 90 seconds) about who you are, what you do and the value you are able to offer. Load them onto You Tube, your website, LinkedIn or other relevant sites for current or prospective clients to view.
Broadcasting your brand After all the time, energy and effort you’ve invested into cultivating your ultimate
“The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post” sionally on a daily basis. The first thing to do online is to find out what is being said about you and what information comes up in searches. Google your name and see what comes up. What do social media sites reveal about you? Does the content support the brand or perception you wish to convey to others? Could they be updated or improved to enhance your online image? The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post. From a business perspective, LinkedIn’s powerful position in search engines means that your LinkedIn profile will probably come up first. Make sure you have a professional photo that creates a great first impression (not a dodgy one taken after a few drinks); provide all necessary contact information; customize your profile URL; load your summary, skills and work history; and add recommendations and honours or awards you have achieved. Social media is just one way to promote your visibility, and while blogs, articles and LinkedIn assist with this, video is the
personal brand, you need to do something with it – otherwise, you’ve effectively wasted your time! There are countless ways to communicate your value to both internal and external markets. Don’t be shy – it’s your time to shine and get your name out there. Here are a few ways that you can build your presence: sponsorship, community involvement, networking, hosting an event, chairing a meeting, getting involved in committees, producing a white paper, speaking at events, or writing articles, newsletters or a book. Remember, discovering or enhancing your personal brand is not difficult and will have a significant impact on sales and career advancement. Your individual marketing campaign is essential to building credibility and confidence but must be backed up by consistent, day-to-day action.
Nikki Heald is the managing director of Corptraining. Heald co-authored the book Views On The Way To The Top, publishes numerous articles, and her input is sought by various media channels.
www.insurancebusiness.ca
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9/10/2015 5:04:09 AM
PEOPLE
CAREER PATH
FOUR DECADES OF SERVICE While rising through the ranks as an insurance broker, Judy Bell also took the time to give back to the industry 2011
BECOMES TERRITORY DIRECTOR FOR THE IBAO In 2011, Bell finished her tenure as president of the Insurance Brokers Association of Durham Region and set her sights on bigger fish, becoming a territory director for the Insurance Brokers Association of Ontario “That was amazing. The part I liked about being on [the board] was the opportunity to speak to other like-minded, passionate insurance brokers” Two years after heading to Warden Insurance to become the personal lines manager, Bell decided to get more involved with the association side of the business, becoming a director with the Insurance Brokers Association of Durham Region “It was the opportunity to have a voice and [learn] what things we need to do to better in the industry [to] help the brokers maintain the channel” Two years after returning to work, Bell earned her RIBO licence and found her way to BW Sproule Insurance Brokers. There, she was introduced to the Insurance Brokers Association of Ontario by the company’s owner, William Sproule
1995
JOINS THE INSURANCE BROKERS ASSOCIATION OF DURHAM REGION
1985
MOVES TO W. BRUCE MARTIN INSURANCE BROKERS
1980
In 1985, when Sproule sold his brokerage to W. Bruce Martin Insurance Brokers, Bell decided to stay on. She continued working with that book of business and helped the company – which was making its first foray into the Toronto market – hire new staff, and eventually became the office manager
GETS INVOLVED WITH IBAO
“I always felt if you want to make changes, you have to be able to get involved” After graduating from high school, Bell found work doing data entry at Fireman’s Fund – her first foray into the insurance world. But she wasn’t typing forms for long “I found I really enjoyed dealing with the brokers and was interested in the issues they had. It’s very easy for an underwriter to say no to me, but when I had to say no to a client, it was a bit more challenging”
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While in conversation with her good friend Peter Blodgett, Bell mentioned that she’d like to start a new brokerage, one that really went beyond 2008 insurance. Blodgett agreed to back Bell and OPENS BEYOND presented a target of $1 million in premiums in three INSURANCE BROKERS years. At the end of its first year, Beyond Insurance Brokers had nearly $950,000 on the books; the firm is now heading toward the $6 million mark
1974 LEAVES THE INDUSTRY Just a few years after joining the broker channel, Bell left insurance behind when she became a mother – but she returned just four years later “Back in those days, that’s what you did when you wanted to have a family. You chose not to work and stay at home and look after your kids. For me, it was the right thing to do … [but] I didn’t want to be out of the industry too long” JOINS THE INSURANCE INDUSTRY
1970
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Open minds. Understand Risk. At Sovereign General, we believe that open minds create better solutions. Operating as an established ‘A-’ rated Canadian Insurer, our experienced professionals across the Country are empowered to create innovative solutions to your specialized insurance needs. So next time you are faced with a complex challenge our knowledgeable team is committed to solving it. Rest assured your clients’ policy will be underwritten with an open mind. Phil DeFehr AVP, Corporate Production phil.defehr@sovgen.com sovereigngeneral.com
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email insurancebusiness@kmimedia.ca
IN SYNC Mary Beth McInnis balances her work and home life thanks to her years as a synchronized swimmer MARY BETH MCINNIS might be a relative rookie in the industry – she’s been selling insurance for just two years – but she has some of the best time-management skills in the business. As a competitive synchronized swimmer, McInnis learned at an early age that time management is crucial to work-life balance. “[Synchronized swimming] definitely taught me time management and organization,” she says. “If you’re swimming during all your free time, you need to know when to work and not be goofing off.” McInnis has competed at three national competitions, earning bronze in 2011. In 2013, she retired from the sport to focus on her work as a commercial lines broker and finance company controller with Peake & McInnis Insurance Brokers in Charlottetown. Still, she has stayed close to synchronized swimming and now coaches younger girls in the sport. “I really like coaching,” she says. “It makes me happy to see other girls enjoying it and who are passionate about it.”
2
The number of minutes McInnis can hold her breath
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3
The number of national competitions in which McInnis has competed
68
The score (out of 100) her’ team earned at the 2011 national championships
www.insurancebusiness.ca
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ENCO
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22/09/2015 9/10/2015 1:59:16 5:06:17 PM AM
FEATURES
EXPERT ADVICE “The industry has responded by putting many proactive measures in place to deal with the tough situations caused by catastrophes – because they will happen” Syed Usman, RSA Canada
Preparing for disaster 365 days a year WATER, WIND and hail are three of the worst perils that exist when it comes to natural disasters. Although we have now moved out of the summer season, when this dangerous weather is most common, disaster can strike at any time. With winter approaching, now is an opportune time for brokers to advise clients on how to prepare their homes for cold weather and winter storms, according to Syed Usman, RSA Canada’s national catastrophe claims manager. Adequate preparation can help clients protect their property and avoid an emotional claims process. By sharing preparedness tips, brokers also can build trust by demonstrating they care about their clients’ safety. “The worst thing that can happen when disaster strikes is to not know what to do,” Usman says.
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Five to seven years ago, the insurance industry was mostly in a reactionary mode when it came to disaster management, he says. Now, things are different. “In the last five years especially, I’ve seen that catastrophes are becoming the norm,” Usman says. “The industry has responded by putting many proactive measures in place to deal with the tough situations caused by catastrophes – because they will happen.” Catastrophe management allows for a focus on preparing for and handling claims service quickly and efficiently. It involves putting proactive measures in place to prepare for the moment when disaster strikes, and making sure internal and external partners are ready in the event of a disaster. For example, it’s possible to track catastrophic weather events such as hurricanes
or severe thunderstorms, at which time Usman can put claims staff, vendors and brokers on notice. And, he adds, it cannot be overstated how important it is to constantly remind clients about disaster preparedness and general safety tips. “Some of the things that you have to do to prepare for potential disasters may feel like a chore, but they are absolutely necessary, year-round,” Usman says. “Basic tips such as cleaning out gutters, making sure the home is not left unattended while you’re out of town, turning off water to external hose pipes in the winters … these are tips that customers need to hear every year.” Brokers can visit www.rsabroker.ca/ climatesmart to find tips and information on disaster preparedness to share with clients before a catastrophic event occurs. The Insurance Bureau of Canada website also provides relevant industry statistics and information to allow brokers to stay on top of key trends. If disaster does strike, Usman stresses that customers need compassion and understanding. “If damage occurs to a customer’s property, it can be an extremely stressful and emotional time,” he says. “Insurers and brokers need to be sensitive to this situation, and work towards efficient and simple claims service.”
www.insurancebusiness.ca
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9/10/2015 5:06:43 AM
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