5 issues on IBAO’s radar

Brokers should be ready to accept change, said Randy Carroll, IBAO CEO.

Consolidation was a hot topic at the Cookson Walker 2011 P&C Crystal Ball conference, held in Toronto on January 21.

Randy Carroll, CEO of the Insurance Brokers Association of Ontario (IBAO), jokingly said brokers were doing a great job of selling the broker market share. Carroll pointed to the recent sale of Quebec-based brokerage Assurances Claude Paquet to the Co-operators as an example.

“Who is going to stay and who is going to go and under what terms remains to be seen,” he said.

During his presentation, Carroll revealed the main issues and trends that are on IBAO’s radar this year.

1) Broker market share

A report by MSA research found that while brokers in commercial lines hold about 93% of the market share, brokers in personal property and auto lines hold only about 56% of the market share, said Carroll. This number is on the decline.

“The current broker business model is not sustainable in the market place and it needs to change,” he said. “We’ve got to take a look at how to do things differently.”

For example, brokers need to go beyond the current Monday to Friday, 9:00am to 5:00pm office hours because many customers work during that time and it’s unlikely they will purchase products. Instead, consumers will research and buy products after work, on weekends or online. Brokers should extend business hours and provide product offerings online, he said.

Also, consumers have rising expectations. According to a Pollara survey, 38% state they aren’t getting what they want from their brokers, revealed Carroll. Consumers want to be contacted if there’s a change in coverage or insurer, and when it’s time to renew. Brokers need to appeal to consumers in order to remain competitive.

2) Technology

Carroll used predictions from IBM as an example of how far technology has come and how far it could still go. In 2007, IBM predicted that by 2011 business professionals would work out of a virtual office using tablet technology, and that instant messaging would become the preferred method of interaction.

Over the next five years, IBM predicts holographic technology for video calls and conferencing, electronic devices that can be re-charged through static electricity, and technology that will map out the fastest route for your commute.

The broker challenge is to accept technology and current methods of communication because it’s not going anywhere, said Carroll.

3) Auto reforms

It’s too early to tell the outcome of the auto reforms in Ontario, said Carroll, but it seems things are moving in the right direction.

The actual percentage of buy ups (how many consumers have chosen to purchase additional auto insurance) is about 7%, however, it depends on the area.

“We’ve got some brokers that are seeing upwards of 45%, and some that are well below 7%,” said Carroll. “It really depends on the market share of the area that you’re serving.”

4) Fraud

Carroll said that the issue of fraud needs to be dealt with internally and the regulatory environment needs to change before fraud can be battled externally.

“The regulatory environment has handcuffed the insurers in regards to what they have to pay and how long they have to pay it,” he said. “They have to pay [the clients] because they don’t have the time to investigate. [They] don’t have any option but to send money. We need to fix the internal system.”

5) Credit scoring

IBAO remains firm in its stance on the use of credit scoring for personal lines insurance.

“We’re going to continue to push in an effort to prohibit credit scoring in the use of all personal lines of business,” he said. “Our intent is to minimize regulatory interference.”

A TC Media site,
Business Solutions

TC Media

Transcontinental Media G.P
1110 René-Lévesque Bldv W.
Montréal, QC H3B 4X9
(514) 392-9000