CRTC Ruling Limits Client Outreach: Brokers

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CRTC Ruling Limits Client Outreach: Brokers

Limited calling options may hinder broker-client relationships.

Terri Goveia on August 24, 2010

Direct mail. Advertising. E-mail. Brokers can reach clients in many ways, but the phone is still their top tool, insurance service providers say in the wake of a CRTC decision that deems certain calls telemarketing.

The back-and-forth exchange of information between clients and their insurance brokers will suffer under communication restrictions, says Karen Slaunwhite, director of the Insurance Brokers Association of Nova Scotia (IBANS). “That [exchange] is difficult to do on a piece of paper,” she points out. “It doesn’t provide the opportunity to ask questions that normally arise out of conversation.”

The association’s formal response to the ruling stresses brokers’ need to tend to the “lifetime” of a client policy, and maintain asset protection and risk management. That ongoing relationship “do[es] not constitute telemarketing within the meaning of the Unsolicited Telecommunications Rules and [we] believe that the CRTC should amend the current rules to afford brokers the opportunity to entirely fulfill their responsibilities to their clients,” an IBANS statement reads.

“This is an advice-based service,” Slaunwhite told CITB August 24. “If we’re limited in how we communicate [with clients], things will get filtered out.” That breakdown in communication can result of gaps in coverage for the consumers, she adds.

A possible appeal?

The country’s national broker association hasn’t yet ruled out an appeal of the August 19 decision, though it is still assessing options, according to Steve Masnyk, Insurance Brokers Association of Canada (IBAC) spokesman. “An appeal is possible,” he said in an interview.

Although the ruling singles out unsolicited and after-hours phone calls, some elements–such as the leeway brokers have to contact existing clients–still remain unclear, he says.

That will have a significant impact on brokers in provinces like Ontario, who are trying to help clients wade through complex changes to auto insurance. “That would fall in line with the [CRTC's] principles,” Masnyk says. “They consider it telemarketing, but it’s not.”

Even with system changes aside, the ruling impacts how brokers relay any change of circumstance–either with a policy or a client’s situation. Or even an emergency: last year, following the tornado in Vaughan, Ontario, brokers made early-morning calls to policyholders in the hardest hit neighbourhoods just north of Toronto.

“We’re not sure this is in the best interest of consumers,” Masnyk says.

Unfair comparisons: Advocis

Financial advisors–who’d lobbied to have insurance brokers exempt from the telemarketing principles only to have their own client calls reined in by the CRTC–echoed that sentiment. Representatives from Advocis (The Financial Advisors Association of Canada) say the ruling “reinterprets” what constitutes unwanted contact between investment dealers, advisors and their clients.

“The CRTC has offered no evidence that the original exemption for advisors and dealers had caused any problems for consumers,” the association’s August 24 statement reads, noting that under the restrictions (which include after-hours calls), “a shift–good or bad–at Toronto’s stock exchange cannot be communicated to BC clients until hours after the market has opened.”

“Now, according to the CRTC, we provide no more valuable service than, say, window washers,” said Greg Pollock, Advocis’ president and CEO.

Varied impact

However, the impact on insurance brokers will likely vary based on where they are, and what they’re trying to do, says Darryl McKay, president of the Insurance Brokers Association of Saskatchewan (IBAS), noting that brokers in larger cities might rely on cold-call lists more than those in smaller towns, where tighter knit communities use word-of-mouth to generate new business.

But clients everywhere should be made aware of new products and other offerings, he points out. “I’d want to provide that service.”