THE ONTARIO BROKER MAY 2014 by Annex Business Media

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COLIN SIMPSON ASKS: WILL TELEMATICS CREATE THE TIPPING POINT FOR BROKER DISTRIBUTION?

“THE FUTURE ISSUE”

02 PRESIDENT’S MESSAGE 04 TERRITORY UPDATE 06 VIEWPOINT 08 YBC UPDATE 12 COMMUNICATIONS UPDATE 14 TECHNOLOGY UPDATE 15 CSIO UPDATE 16 OPTIONAL BENEFITS 17 AFFINITY CORNER 18 COMMUNITY VIEW

The official publication of the Insurance Brokers Association of Ontario (IBAO)

PRESIDENT’S MESSAGE The Official Publication of the Insurance Brokers Association of Ontario (IBAO) Published by

Editor Angela Stelmakowich astelmakowich@canadianunderwriter.ca

Our E&O Program — What does it cover?

416-510-6793 Senior Publisher Steve Wilson steve@canadianunderwriter.ca

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Art Direction Sue Williamson The Ontario Broker is published monthly by Canadian Underwriter magazine (www.canadianunderwriter.ca). Canadian Underwriter’s Insurance Group of publications is part of Business Information Group (www.businessinformationgroup.ca), a subsidiary of Glacier Media Inc., a leading Canadian information company with interests in daily and community newspapers and business-to-business information services. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. The articles that appear in this publication represent the opinions of the authors and do not represent or embody any official position of, or statement by, IBAO; nor do they attempt to set forth definitive action standards or to provide legal advice.

Insurance Brokers Association of Ontario 1 Eglinton Avenue East, Suite 700 Toronto, Ontario M4P 3A1 Tel: (416) 488-7422 Fax: (416) 488-7526 Toll Free: (800) 268-8845 (888) ASK-IBAO www.ibao.org Annual subscription is $52 + tax. To order email: contact@ibao.on.ca For information on submitting an article, contact Ashley Hunking Marketing Coordinator ahunking@ibao.on.ca

02 May 2014 / THE ONTARIO BROKER

Randy Carroll CEO IBAO

For as long as I can remember, IBAO has been partnered with both The CG&B Group Inc. and Westport/ Swiss Re. Over many years, together these two partners have been the providers of IBAO’s errors and omissions program. Contracted as the broker of record, CG&B is the founder of the program, while Westport/Swiss Re is the underwriter of the insurance itself. Both firms play a valuable role in the delivery of IBAO’s E&O program, with each having a clear understanding of the product, the risk associated with the product and, not to be overlooked, the need to ensure both affordability and availability. Availability and affordability go hand-in-hand, and each relies on the

other to make a program such as ours as successful as it has been for so many years. During my tenure at IBAO, I have seen E&O providers come and go; I have seen new entrants enter the market and underprice their product offerings in an attempt to capture market share. Some stayed around longer than others, some brought experience with them, and others entered a marketplace that was new yet intriguing to them, but they did not stay long. Westport/Swiss Re, on the other hand, has been IBAO’s rock for E&O and has stayed with us as our provider through the good, the bad and the ugly market cycles this industry is known for. These partners have worked with our brokers and members of our Group Plans Committee to ensure our broker E&O offering is not just affordable, but that it leads the industry in terms of coverage, and that it provides coverage that will be available for the long term regardless of market cycles. This is not just of importance in Ontario; it resonates across Canada and the United States where Westport/Swiss Re is the industry leader in broker E&O.

Premiums under fire Over the past few years, we have witnessed what I would characterize as a soft market with premiums coming under fire. I am pleased to say that

Over the past few years, IBAO’s overall premium base has decreased by approximately 50%, but our policy in-force count has remained unchanged. Brokers have shopped, CG&B answered the call, and Westport/ Swiss Re delivered. both our E&O broker and insurer have stepped up to the challenge and delivered. Over the past few years, IBAO’s overall premium base has decreased by approximately 50%, but our policy in-force count has remained unchanged. Brokers have shopped, CG&B answered the call, and Westport/Swiss Re delivered. More important, they will continue to do so as this market cycle continues. Yes, affordability and availability is important when it comes to broker E&O, but so too is the added value provided. As a member broker of IBAO, you receive preferred pricing, policy discounts, enhanced policy wordings and sponsorship support at the Magenta level for your association (more than $100,000 annually) from CG&B, as well as various levels of

sponsorships with support from Westport/Swiss Re on a yearly basis. As IBAO continues to work with both our broker and insurer, we will continue to strive to provide further coverage enhancements, additional value-added services and more educational offerings for you to enjoy. On a side note, I am amused every time that we announce a new wording, as it takes no time at all for other E&O providers to follow suit. However, as I explained to both partners, IBAO must continue to lead and not become a follower.

CEOâ&#x20AC;&#x2122;s Schedule:

Presidentâ&#x20AC;&#x2122;s Schedule:

June 1-4 IBAC Board Meeting and Hill Day

June 5 IBAO Technology Meetings

June 5 IBAO Technology/BMS Meeting

June 10 IBRI Board Meeting

June 10 Partners for Action Roundtable

June 11-13 YBC Conference

June 25 Group Plans Meeting

June 19 Chatham Kent Golf Tournament

June 26-28 IBAO Board and Executive Meeting

Best practices upcoming Over the coming weeks, CG&B will be introducing best practices from an E&O perspective as it relates to insurance fraud, optional benefits coverage workflows and e-signatures processes, to name a few. These best practices will be shared with those who support the program and will be embedded in our future E&O education offerings that are delivered across Ontario. IBAO is currently working with Westport to build an E&O library that will also be made available to all member brokers who belong to the program. It is a great time to shop your E&O, but as you consider all this program has to offer, note that it is not just a product built on price alone. What value adds would be lost if you changed providers? We all know the market will shift; the question is where will you be when it does? I can assure you that both CG&B and Westport/Swiss Re are up for the challenge. I can also assure you that the direction we have given them is not to jeopardize the program for the sake of trying to compete with pricing. That would make no sense. Being leaders and experts in the field when it comes to broker E&O, both CG&B and Westport/Swiss need to continue to lead our brokers down a path where affordability and availability are not issues this association will need to be concerned with in the years to come. May 2014 / THE ONTARIO BROKER 03

TERRITORY UPDATE Jim Smith Director Territory 2 IBAO

and ensure they continue to have access to continuing education opportunities. Whether through C.A.I.B., licensing courses or continuing education courses, get involved and become more professional brokers in the process.

Team spirit

Taking Steps Now to be Ready for the Future As a first year director, I am honoured to be associated with IBAO staff and amazed at the dedication and determination displayed by President Chris Floyd, our executive team and the entire board. The last two years have been ones of transition, with many new staff members having been appointed. I congratulate Randy Carroll and the selection committee on making such stellar choices. This group is dynamic and ready to help us all move forward in these challenging times. Make the effort to engage with both staff and board members. Remember, we are here to provide leadership and assistance as we, “Get Ready for Tomorrow Today.” Territory 2 encompasses the affiliates of Sudbury, North Bay, Sault Ste. Marie and Timmins. The small population and large geographic area makes the work of IBAO more challenging. The delivery of education is difficult as the territory does not receive the level of participation necessary to make courses viable. That being the case, distance education through webinars and the like will afford the territory the opportunity to better engage members

Distance education through webinars and the like will afford the territory the opportunity to better engage members. 04 May 2014 / THE ONTARIO BROKER

One of the territory’s initiatives this year is to revitalize our affiliates. Representatives for Sudbury, for example, recently met to discuss the perpetuation of the local association. Our mission, including the engagement of more YBC members and the level of community involvement, were among the issues discussed at the meeting. The reaction from new and younger volunteers who have stepped up has been very encouraging. We anticipate great things for 2014. The Sault Ste. Marie affiliate has been quite active, with community involvement playing a central role in activities. The association sponsored a hockey game involving the Greyhounds, part of the Ontario Hockey League, a great venue in which to offer Bipper giveaways and showcase member offices. More than 3,000 people attended the event. Strong leadership and strong member involvement makes the Sault affiliate a strong contributor to the success of IBAO in the North. In Timmins, the association has been active in spreading the word on telematics and other relevant issues. Remember also that the annual golf tournament is coming up in August. Sign up now to see some fellow brokers and enjoy a day on the links.

Keeping up to date Territory 2’s regional meeting was held in North Bay on April 30 to May 1. Membership and insurer participation was strong and a great number of key issues were discussed. The work done by IBAO staff and board members has been tremendous. Territory 2 members and representatives thank President Floyd and staff members Brett Boadway and Lola Thake for updating us on the many initiatives. Whether it is the telematics initiative, work on the consent issue, pamphlets

Brokers need to communicate with their local representatives and share the good work that brokers do to promote our profession while safeguarding the Ontario consumer. regarding anti-fraud, work towards an e-signature solution or Canada’s new anti-spam legislation — the information was welcomed by members who are encouraged to learn more. It is worth mentioning that “duty of care” was prominent in both the errors and omissions seminar and in territory meetings. Discussions revolved around the duty owed to clients not just at the time of sale, but also at renewal and throughout the service process. “Treat a renewal the same way as new business” was the mantra. It was strongly recommended that all coverages be reviewed at every renewal, and that the situation of each client be studied, with a mind to making required changes to coverage to ensure any new needs are met. Members are advised to contact IBAO for more information on this important issue.

Communicate and share The recently called provincial election affords brokers the opportunity to engage representatives on issues that are important to brokers and consumers alike. Regardless of political bent, brokers need to communicate with their local representatives and share the good work that brokers do to promote our profession while safeguarding the Ontario consumer. The IBAO is hard at work on many issues. Call Brett Boadway to ensure you are familiar with our position on issues of concern, or to become a political action volunteer. A strong consistent message is key to broker success. The time to get involved with IBAO is now. Working together, we can perpetuate the broker channel and ensure our relevance in the 21st century.

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I can’t think of a company I’d rather deal with than Economical in a disaster. Scott MacEwan, BMF Insurance

Economical left a really good feeling for the clients and for us as brokers. Beth Feagan, BMF Insurance

Your clients count on you, especially when their lives have been turned upside down. When a tornado hit Goderich, Economical® was on site — actively supporting brokers like Scott and Beth and offering policyholders help that matters.

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The Economical brand includes the following property and casualty insurance companies: Economical Mutual Insurance Company, Perth Insurance Company, Waterloo Insurance Company, The Missisquoi Insurance Company, Federation Insurance Company of Canada. ©2014 Economical Insurance. All rights reserved. Economical® and related trademarks, names and logos are the property of Economical Mutual Insurance Company and are registered and/or used in Canada. All other trademarks are the property of their respective owners.

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VIEWPOINT Ken Myers, B Comm., FCIP, CAIB President Insurance Brokers Association of Canada

BIP Usage and Attitude Study Broker support for the Broker Identity Program (BIP) is confirmed in Canada. With consumer recognition and understanding of the BIP brand logo becoming ever more positive, there is high value in brokers displaying it at every opportunity. BIP is also important to Insurance Brokers Association of Canada (IBAC) advocacy efforts, building credibility for our association with politicians and

investment partners. And the 25th anniversary of the BIPPER this year offers a perfect milestone to measure broker engagement with the BIP. While we understood that the BIP was in use in many brokers’ marketing communications, IBAC recently commissioned some research to quantify the breadth and depth of its use. Additionally, we wanted to better understand the underlying motivations of BIP’s most ardent supporters, as well as diagnose why some brokers have not adopted it, or are only light users. An online survey of brokers was developed by an independent research firm, and administered by member associations. A big “thank-you” to all participants, including Tripemco Insurance Brokers Inc. of Burlington, the randomly chosen winner of IBAC’s $2,500 contest. A robust total sample of 1,153 brokers — representing different community size, brokerage size and brokerage

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BIP utilization of one form or another is generally good everywhere. age — was collected and weighted by province to reflect broker distribution across Canada. The results were reassuring: BIP utilization of one form or another is generally good everywhere. That said, the study also revealed there is room to improve brokerage penetration and type of use. Key findings include the following: • an average of 74% of brokerages (varying from 67% to 81% by province) use the BIP symbol in communications; • use is higher in smaller communities (fewer than 50,000 people) and smaller brokerages (fewer than 11 employees); • 42% of brokerages are medium to heavy BIP users (use at least five of the most important identifiers, such as exterior signage, business cards, stationery, contracts, pins, website, e-mail signatures, social media, reception area and window/door stickers); and • reasons cited for widespread use of the BIP include that it signifies membership in an official association, offers the benefit of awareness from the television campaign, builds trust with customers, conveys credentials and professional knowledge, provides assurance of integrity and high standards, and represents an important symbol for consumers that is easy to spot. Reasons for not using the BIP tended to center on simple forgetfulness (53%), lack of proper consideration (46%), and oversight (45%). A minority of brokers expressed concern about perceived branding priorities/conflict (24%) and uncertainty about usage rules (20%). However, there are still opportunities to improve visibility of the BIP trust mark. Displaying the symbol brings the power of the BIP television campaign directly to your front door, identifying your brokerage as a valuable source of trustworthy and impartial insurance advice. Display the BIP at every opportunity. Consumers recognize and understand what the BIP stands for, so don’t miss any opportunity to take advantage of that connection.

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YBC UPDATE Greg Kruk Team Leader Territory 11 Young Brokers Council

The Future of our Industry In 2014, the biggest challenge in the market is being proactive as a broker channel. To date, brokers have allowed our competitors (direct writers, banks and agencies) to not only catch us, but surpass us, in terms of technology, client touch points and efficiencies in the cost of doing business. In doing so, that has allowed those competitors to operate at a higher underwriting loss, offset by expense ratios being much lower, and, in turn, to offer lower premiums. Brokers need to do a better job of embracing technology and lowering the cost of doing business, while at the same time, striking a balance in how we place our product. Our product is the big differentiator. We

offer professional advice, advocacy and choice. It has been well-documented that price is only one part of the equation. As such, if brokers keep trying to compete on price alone, we will be doomed to fail as a channel. Clearly, this does not mean abandoning efforts to attract clients whose purchase is based solely on price. However, it does mean taking a multi-faceted approach to our model as brokers and establishing a way to attract those clients, while still providing the value-added services to those clients who want and expect more from their insurance broker. Many insurance companies are operating with a multi-channel approach and are doing so quite successfully. It only makes good business sense for brokers to do the same.

Stormy weather A second major challenge for the market as a whole is how brokers will deal with the issue of climate change. It has become apparent that this is not going away. This is no longer an opinion; it is now a fact, and as an industry, we need to make sure we are working to prevent losses instead of hoping to avoid them.

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08 May 2014 / THE ONTARIO BROKER

Brokers need to do a better job of embracing technology and lowering the cost of doing business. This can be done by educating clients and working with them to take precautions to prevent damage from the elements and global warming. This demands educating insurance professionals first so that they can, in turn, educate the insured. There are tools available to brokers to be able to educate their staff and their clients to help to decrease loss frequency and loss severity. These should be accessed and applied, but they are often overlooked, while brokerages just “hope” their clients will not submit claims.

Smooth succession Succession planning is the third major challenge threatening our industry. The barriers to entry have never been higher in the broker channel and never lower for direct writers. Having recently gone through this process, I can say with confidence that succession planning has never been more difficult or more taken for granted than it is right now. With market values being so high and family transactions heavily taxed by government, it is making it tough for brokerages to stay in the family. This is causing consolidation on the brokerage side of the industry and is forcing the hand of many brokers (those who are proud to be an employer and a contributor to their community) to have to pass the torch to another brokerage operation that may not share the original vision, mission or community pride. This has been a major reason I have started to get involved in the Young Broker Council and taken the role as team leader for Territory 11. I believe that if well-planned, and implemented, family brokerages can thrive and that succession will not be an afterthought. In addition, I see the opportunities for consolidation through cluster groups as a way to compete with the alphabet houses while continuing to operate as a cog in the local communities.

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WILL TELEMATICS CREATE THE TIPPING POINT FOR BROKER DISTRIBUTION?

Colin Simpson CEO Independent Broker Resources Inc. Will telematics create the tipping point for broker distribution, and is this a good thing? I believe the answer to both questions is yes. Telematics is a disruptive technology that will change the way that the insurance industry views, measures and rates those risks that utilize its capabilities. Insurance companies are grappling with this new perspective and how it will impact the very foundation upon which their business models are built. There are numerous opinions with regard to whether or not being a first-mover or a follower in telematics will ultimately lead to the greatest gains in value. However, one thing is

for sure — at some point in the not-too-distant future, there will be the “haves” and “have nots” when it comes to insurance companies that offer telematics products. A recent national newspaper report in the United Kingdom noted that market opinion in the U.K.’s insurance industry was that within the next 10 years, telematics technology will be an “opt-out” rather than an “opt-in” for motorists. Will telematics be the “be all and end all” here in Canada? It is unlikely. That said, telematics will have a profound impact on the broker distribution network if left to evolve in the hands of the largest companies in our supply chain. Are we overreacting? Telematics is only one element of a large and complex market. However, what is key is that it is, no doubt, the first of many influencing factors coming out of the technology and automobile markets that will transform the shape of the insurance supply chain. If any one element of the supply chain is sleeping at the wheel — as it

were — it may find itself, at best, significantly disadvantaged; at worst, irrelevant in this new world. Given the fragmented nature and the sheer number of individually minded business owners who make up the broker network, how can brokers possibly be masters of their own destiny when faced with such a tidal wave of change? Quite simply, through scale. Brokers are beginning to realize and embrace their collective power — power, which if roughly scaled across the country, could be at least twice the size, by premium volume handled, of the largest insurance company operating in the Canadian marketplace today. If we look back in history, the broker network has controlled much larger volumes, but has yet to be a significant leader in the evolution of the market itself. The large difference looking back compared to looking forward today is that the role of IBAO has changed. Today’s leaders are more forwardlooking and have their fingers, if not the beginning of their entire grip, on the pulse of the market.

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Impact on brokers Let’s really consider the impact that telematics may have on you as a broker. It is absolutely essential that insurance companies offering telematics products provide brokers access to driver information (data). Without this access, how can a broker assess a consumer’s risk profile? They cannot. Without this access, how can a broker match a consumer to the “correct” insurance policy that reflects his or her risk requirements and driving patterns? They cannot. Without this access to driver data — and the only available source for consumers being their insurance companies — how can brokers add value to telematics users in the same way they do with other consumers? They cannot. Significant inroads have been made by IBAO and its for-profit entity, Independent Broker Resources Inc. (IBRI), in educating and obtaining insurance company buy-in that provides brokers access to the necessary driver information (data). However, this is just the tip of the iceberg.

Impact on supply chain Telematics is the first of many disruptive technologies that have the potential to impact the insurance supply chain.

Consider, for example, the driverless car. Is a broker required when the insurance company is insuring the manufacturer’s hardware that controls the car as opposed to the driver? I read an article the other day that suggested crash-detection software in cars is having a significant impact on claims losses — a tremendous win for road safety and reduced claims costs if it plays out as expected. Scale does not always lead to success, but scale and capability should. IBAO invested in telematics at a crucial time, a time when the association still had an opportunity to influence the evolution of the market. The investment, although in its early days, seems to be paying off. As the largest network of independent brokers in Canada, you have a real opportunity to lead and be at the forefront of developments in the insurance industry. Is it not time for the collective broker network to sit in the driver’s seat and chart its own route to the future? So will telematics be the tipping point for broker distribution? I truly believe that it will be. Members of IBAO and its sister associations across the country need

to decide what type of future they want — and what it is they are prepared to invest in to reach the destination. I would strongly recommend continuing to invest in your association and demand that it, in turn, invests in its own capability to ensure brokers leverage their scale and lead the insurance market. As a broker (member or not), you have choices. Telematics is a prime example of where today’s choice of action will directly impact your future direction. Telematics will not be the only new technology or innovation that has the potential to be disruptive to the broker network. It is, however, the first that I am aware of where brokers have made a collective investment toward their own capability. To me, this represents the tipping point for brokers. Are you prepared to embrace and leverage your collective scale, continue to invest and remain relevant to tip the balance back in your favour? I truly hope so! The IBRI telematics solution is moving quickly. Check out ibao.org/news for press releases, or follow us on twitter for updates @IBAOntario. May 2014 / THE ONTARIO BROKER

COMMUNICATIONS UPDATE Norah Black Marketing Coordinator IBAO

Talking Shop Never thought I would utter these words, but… it’s an exciting time in insurance. The industry is abuzz with change — some good, some bad, but all very relevant to clients. Something we hear often at the IBAO is the difficulty brokers have carving out time to keep their clients up-to-date on industry news. Specifically, the time it takes to write content for newsletters, their websites, or the various social media platforms that they use (or want to begin using). What I’m getting at is twofold: one, we should always be striving to improve on the service side and give our clients what they (specifically) want and need; two, given everything that is happening in the current environment, it is important to have a strategy. Ideally, that strategy should be one that creates a partnership between you and your clients based on solutions and, simultaneously, makes clients feel connected to the industry and, of course, you.

Talking telematics Telematics remains the hot topic, with usage-based insurance heavily covered in the media. How it unfolds is fast approaching; in the meantime,

Telematics is a new concept to the average consumer in the province, and your clients – including the most savvy – will have questions. 12 May 2014 / THE ONTARIO BROKER

we need to be sharing the pros and cons, how it is working in the United States and Europe, and what clients can expect here in Ontario. Telematics is a new concept to the average consumer in the province, and your clients — including the most savvy — will have questions. You might find that those who are typically uninterested become more engaged (imagine that… auto insurance… interesting). I say capitalize. Once clients are using telematics, the number of questions you will get and the importance of client communication will skyrocket. “Was I really speeding? I swerved to miss a squirrel. Will that impact my driving score? My daughter is hard on the brakes. Any tips?”

Talking politics Elections always dominate the headlines. We are all aware of politicians’ tendency to inflate issues to push their agendas or throw a competing party under the bus. Our job is to keep clients closer to reality. Using Ontario auto insurance example, it has been widely stated on the campaign trail that rates have not budged. Compare that to comments from the Financial Services Commission of Ontario (FSCO), which has reported that auto rates have come down an average 6%, and brokers across the province describe significant decreases with the first round of reductions, as much as 10% in some areas. While you might feel that you are constantly cleaning up campaign-trail messaging, managing client expectations will make your job easier in the long run. Be the voice of reason. When you are asked the inevitable — “When will I be getting my 15% reduction in my auto premium?” — there are a few key responses: The government has set a target to reduce rates (on average) by 15% over two years. Despite what you have heard in the news, rate reductions are not instantaneous; they take time. The target is 15% on average so not everyone is guaranteed to see that reduction.

Our job is to ensure that clients are provided the right coverage, at a reasonable cost, to adequately cover their exposures to losses. This means more conversations around risk or loss control, particularly related to water. Talking weather The “lovely” weather we have experienced (and are still experiencing) this year is a great opportunity to review with clients what is covered in their basic home insurance policy, as well as discuss if customized coverage is the way to go. Our job is to ensure that clients are provided the right coverage, at a reasonable cost, to adequately cover their exposures to losses. This means more conversations around risk or loss control, particularly related to water. Essentially, we are talking about keeping clients informed, but also making them feel comfortable. Since we cannot all pull up a chair or join them on the couch to converse at length, a step in the right direction is e-mail marketing. It is efficient, cheap and easy. Getting back to that “difficulty carving-out time” piece — our recently launched CONNECT tool offers a library of content to get started, and we are working hard to update it on a continual basis with relevant, informative pieces. These are things that you can put in front of your clients to keep them in the know. Like I said, it is an exciting time in insurance — what better occasion to update your clients on the latest developments. Sign up for the CONNECT tool at www.ibao.org/connect or contact us to get started.

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TECHNOLOGY UPDATE Alek Mirkovich CEO and Co-Founder Campayn

Get Prepared for CASL Whenever I visit my sister’s home, I often do not knock (I just walk right in like I own the place). My wife says this is rude, but, hey, it’s my baby sis and we don’t need to go through these pleasantries. Now, if a stranger tried that, he or she would quickly be met with a far different attitude. Being her brother, I do not need consent, but others do. The way businesses communicate electronically today also demands following some similar rules. CASL stands for Canada’s Anti-Spam Legislation, something that brokers will need to be ready for by July 1, 2014. This is a big deal, and penalties can be costly. CASL is broad and deals with not just spam, but also hacking, malware, online fraud and other things. This article, though, will focus on electronic communications since that is what applies to all brokerages.

Consent Spam is often thought of as things like

pornography or pharmaceuticals, but it is much broader. If a broker is sending any sort of commercial electronic messages, consent is generally required, but there are a few instances where consent is implied and others where it is not required. Situations where consent is implied or not required include as follows: • sending to family members or someone with whom you have a personal relationship; • sending to employees or individuals associated with your business; • sending to anyone with whom you have a current contractual relationship, such as an insurance policy (implied consent); • providing warranty or safety information about a product (implied consent); and • there has been a transaction with the individual within the last two years (implied consent). Senders have a three-year grace period to gain the consent of those to whom they send or will send electronic communications. Implied consent is sufficient during this period, but express consent must be acquired to go forward after that period. Express consent can be obtained if you have an online sign-up form and what will be sent is clearly stated (say, “Sign up for our newsletter”). If there is an opt-in checkbox, it must not be pre-selected for the recipient. As well, all of these records must be maintained.

Senders have a three-year grace period to gain the consent of those to whom they send or will send electronic communications. Implied consent is sufﬁcient during this period. Identification So just what identification should be included in electronic messages? These include the following: • your name; • your company name; • your mailing address (physical or mailbox); and • your phone number or e-mail address.

Unsubscribe mechanism An unsubscribe mechanism must be available for 60 days after receipt of the electronic message. That mechanism must also be effective within 10 days. There are many ESP’s (E-mail Service Providers) all over the world, but ultimately, a broker is responsible for complying with CASL.

Campayn can help you Campayn can help with consent by retaining sign-up records and tracking every sign-up done through forms created on a company. Should it be needed, Campayn can provide an exact list of individuals who have signed up to specific forms expressing consent, as well as include a server-generated date and time stamp. An unsubscribe link is also automatically included and takes effect as soon as a recipient clicks it. Get prepared and get compliant! Disclaimer – This should not be interpreted as legal advice. Please consult your own legal counsel for speciﬁc legal direction. IBAO has recently launched a CASL Self-Guided Learning Module at ibao.org/elearning to help members with this new legislation.

14 May 2014 / THE ONTARIO BROKER

CSIO UPDATE Michael Spiar Member Engagement & Communications Specialist CSIO

A Paperless Future — Today Technology and consumer expectations continue to develop, and the broker distribution channel is evolving to improve its competitiveness. The technological changes and benefits extend to all aspects of business, whether improving efficiency in business processes or providing an enhanced consumer experience. That said, two aspects are universal: more speed and less paper.

Paperless beginnings Paperless workflow has developed steadily, particularly when in the early 1990s CSIO first released its EDI (AL3) data standards that remain in wide use today. With EDI in place, brokers and insurers are able to transmit policy data quickly and digitally through CSIOnet. The savings in paper and related costs are significant, including less storage space, faster communication and reduced manual data re-entry. Complementing this workflow was the release of the CSIO XML data standard in 2003, providing capabilities for real-time transactions and improved time savings. The CSIO eDocs data standard in 2012 produced another advance in paperless workflow — electronic download of policy documents, such as dec pages, billing and renewals directly into a broker’s BMS. Included in a broker’s daily EDI download, eDocs automatically attach to the correct client file, eliminating the need to sort, scan and file paper documents from a courier. “Our staff has saved well over an hour a day, and we haven’t yet implemented eDocs with all the insurers we use for

personal lines,” notes Brenda Rose, vice president/partner at FCA Insurance Brokers. “We’re looking to realize much greater time savings as time goes on.”

Digital consumers change expectations. Broker workflows are not the only beneficiaries of technology advances — products available to the mass market in the form of mobile phones and tablets have changed consumer habits and, consequently, expectations. In fact, a recent Nielsen study has found that 40% of insurance research is conducted on mobile devices, and 25% of consumers will search for insurance exclusively on those devices. Brokers can take advantage of this growing trend by investing in technology solutions that extend paperless workflow from their offices to mobile consumers. One such technology is electronic signatures, or eSignatures. A natural complement to eDocs, eSignatures enable consumers to sign documents electronically on their computers, smartphones or tablets instead of printing, signing and scanning. The improvement in convenience meets the digital expectations of a changing consumer market and results in both faster transactions and higher retention rates. Daniel Fabiano, partner at Fasken Martineau DuMoulin LLP and author of CSIO’s eSignatures Advisory Report, says he feels adoption of eSignatures among brokers in Canada is just beginning. “Consider the last five years for consumer credit cards: we’re using PIN and chip cards now, not cards where manual ink signatures are always required. Effectively, eSignatures will eliminate pen-and-paper signatures in the majority of transactions.”

Interfaces take the stage The future of customer service in the broker distribution channel also lies in interfaces — enabling clients to access, and even modify, their documents online. “Thirty percent of our population would buy insurance out of a vending machine if they could,” says Jeff Ives, president of Ives Insurance Brokers.

“So why could we not be the machine that they buy from?” Ives Insurance recently launched its 24/7 interface that allows personal lines consumers to access and modify their files online. “We did a fair bit of market research,” says Ives, “and realized that our clientele wants technology to be a part of their purchasing process. There really wasn’t anything else in the marketplace in Canada that we were aware of that would allow us to do some of the things that we built into this system,” he points out. “It allows the consumer to go online to look at their policy and make minor changes — everything from banking and address change to live quoting. We’re even beta-testing the ability to make full changes to your policy, such as changing the insured vehicle.” As with EDI, XML and eDocs, Ives recognized the need for new workflows to accommodate this consumer access. “Consumers are actually working in my BMS. We come in the next morning, see that they made changes to their policy, check and see that they’re proper, then go and do the direct upload to the insurer.” The introduction of consumer interface technology has been well-received by Ives’ test clients. “The feedback has been fantastic. They love it,” he reports. “We’ve got a range of people — our oldest person using it is 78, with our youngest being 18. It’s given us a pretty good vision as to what these people are seeing, what they’re asking for, and what they want out of the system.” Looking to the future, Ives sees an extension of paperless consumer access to commercial clients. “It’s your plumber working out of a vehicle needing a policy to cover tools and equipment, covering liability. We’ve built three policies to accommodate folks like that, and they’re going to be able to buy them online. It’s going to be point, click and buy for them.” The market will always change, but with thorough research and an eye for emerging consumer trends, the broker channel is well-positioned to improve its competitiveness by attending to and adopting new technology. May 2014 / THE ONTARIO BROKER

OPTIONAL BENEFITS James E. Bonnay Insurance Consultant

not accept that defence in most cases. The courts have clearly indicated the auto policy is not understood by most clients who rely on the expertise of their brokers to advise them about available coverages.

Benefits must be explained

Optional Benefits and Court Decisions

There have been several cases that have proceeded to court for a decision in cases involving the lack of optional benefits or explanations regarding these benefits. Many of these cases refer to a precedent case about providing advice, Fletcher v. Manitoba Public Insurance Co., handed down by the Supreme Court of Canada in 1990. In this case, Justice Wilson states it is the broker’s duty to not only convey information — such as information brochures — but also to provide counsel and advice as to the risk assessment and to tailor the policy to fit the particular needs of plaintiffs. Form letters accompanying renewals may not be sufficient. When such a form refers to adding optional benefits without fully explaining these benefits (and more important how they fulfill the needs of a particular client), and when each renewal contains the same form letter, the information in that letter is of no value to a court decision. In a case with inadequate income replacement, the judge stated the broker should have requested information about the plaintiff’s financial circumstances and income, and whether it had changed, so as to make a proper assessment of the needs. Quoting the decision, the judge states: “There was no discussion of the plaintiff’s income, nor were there examples given of the levels of income that would support the optional benefit coverage. The broker did not quote the additional cost of optional benefits at any level.” Brokers might defend this procedure as too time-consuming, and I agree that could be the case. But the courts will 16 May 2014 / THE ONTARIO BROKER

In a current case in Sudbury, a father and daughter were seriously injured when struck head-on by an uninsured and unlicensed third party who, himself, was killed in the crash. The father, who was earning more than $150,000/year, is unable to work, deemed catastrophic, while his daughter has suffered brain damage. They are running out of benefits. They have been with the same direct writer for more than 20 years. That insurer sent them a form letter each year indicating the availability of optional benefits, but did not provide explanation of same. The father, who has Grade 5 education, cannot read English (the mother can). The mother checked off a questionnaire declining optional benefits, but admits that she did not know what they were. Do you believe, referring to the previous cases, that the insurer may have a problem?

Judge will consider past actions Sometimes, however, other factors may influence a judge to not proceed against the broker. Consider a case a few years ago in Bracebridge. A middle-aged motorcyclist was seriously injured when struck by another motorcyclist coming from the opposite direction. The third party had no licence, had taken the motorcycle without the owner’s permission and was killed in the collision. The client brought an action against the broker for the lack of adequate income replacement. From the records of the broker, it was demonstrated that the client, on numerous occasions, had requested changes to regularly reduce his premium. He requested that liability be reduced to $200,000. (The broker in question refused, but did reduce liability to $500,000).

The courts have clearly indicated the auto policy is not understood by most clients who rely on the expertise of their brokers to advise them about available coverages. On one occasion, the client asked to delete all accident benefits, which is not possible. He deleted all physical damage coverage. When the judge reviewed the broker’s documents relating to the changes, the judge found the client would not have purchased optional income replacement on the basis that he was always attempting to reduce his premiums.

Document discussions about coverages Similarly in Zefferino v. Meloche Monnex Insurance, the judge was not convinced that the plaintiff, Nicola Zefferino, would have purchased optional income benefits even if Meloche Monnex had fully explained these to him. The evidence indicated that Zefferino had never before purchased anything other than basic automobile insurance coverage, and had actually declined optional benefits since “there was no need.” The judge further noted that over a 10-year period, the plaintiffs had switched insurers five times, always to improve the price. The judge concluded there was no evidence that anything other than basic coverages was secured on any of these prior occasions. From these examples, the absolute need to document the file when requests or discussions regarding coverages, and particularly optional coverages, is also evident. A review of enclosure forms and letters would be a good idea. IBAO has a very good brochure available for optional benefits, Ontario Automobile Insurance — Know Your Options. The brochure also states, “What you need to know about your insurance in Ontario.” And more than anything, “Good luck.”

AFFINITY CORNER Jeff Guthrie Chief Sales & Relationship Officer Moneris Solutions

Risky Business Choosing the right payment processor can be risky business. As an insurance broker, you facilitate transactions daily on behalf of customers and licensed insurers. And each successfully executed deal earns the brokerage financial reward, making client acquisition and retention a key source of revenue. Brokers work hard to sell risk to prospects, so why not take steps to ensure that revenue is secured? Having a less than reliable payment processor can greatly impede business activity. There are many payment-processing services, but not all are right for the business needs of a specific brokerage. To help choose the most reliable and advanced processor for your business, consider the following factors:

and their potential for changing the way your firm does business. The ideal payment solution could include, among other options, e-commerce, mobile and contactless payments, or wired and wireless terminals for stationary and long-range checkout, complemented by value-added services. Aside from facilitating transactions, many payment processors offer services that help to streamline business operations. Integrated management solutions combine point-of-sale software with payment-processing technology to improve how your business runs. Consider a processor that can offer broad-range benefits in addition to core services, like gift and loyalty programs, business management tools and point-of-sale security solutions.

3. Understand what is important With all of the options available to

brokerages, it is important to assess the value of the payment-processing service as a whole. Does the brokerageâ&#x20AC;&#x2122;s payment processor provide a reliable service? Are transactions fast and efficient, with little lag time and few processing errors? Ask how the processor protects client data from a security breach, as well as the kinds of reporting tools it can offer to track your finances. At the very least, a payment system should be user-friendly and easy to maintain. If a technical issue arises, there should be access to helpful, courteous service at any time of the day. Just as a broker encourages prospects to proactively manage risk, the same principles should be applied when investing in a payment processor. Visit ibao.org/moneris for your membership-exclusive payment processing solution.

1. Know your business and its needs This sounds simple enough, but when it comes to how payments are facilitated, important details about the business are often overlooked. First, consider the type of service being sold and the audience to which it is being sold. What are the practical options for payment acceptance within the insurance industry? What are the different methods that your brokerage could be using to close sales? Envision how you see the business evolving in the future. What starts as a one-person operation could one day grow into a multi-person brokerage. This might require expanding payment solutions from a countertop terminal to an online web store. It is never too early to start planning for the future.

2. Investigate the options It is worthwhile to research the latest advancements in payment technology

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May 2014 / THE ONTARIO BROKER

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COMMUNITY VIEW BUILDING SUPPORT Moller Insurance Ltd., in conjunction with IBAO, donated magenta Bipper blankets to Yellow Brick House, an organization in York Region that provides services to women and children who have experienced violence and abuse. Left to right: Dr. Laurel Douglas Shurgarman, board director for Yellow Brick House; Bipper (aka Jim Moller), sales at Moller Insurance; Lorris Herenda, executive director for Yellow Brick House; Amber Gordon-Bunn, resource development coordinator for Yellow Brick House; and Christine Campbell, office manager for Moller Insurance.

WRAP IT UP On April 30, Jones-Dooley Insurance Brokers, with the help of IBAO, donated magenta Bipper blankets to Rouge Valley Health System staff for the Ajax Pickering Hospital. The blankets will be used in caring for the hospitalâ&#x20AC;&#x2122;s long-term care patients. Left to right: Bipper; Marsha Jones Dooley, licensed independent insurance advisor for Jones-Dooley Insurance Brokers; and Danielle DeLuca, special events coordinator for Rouge Valley Health System.

We offer customized financial solutions. Talk to us about our comprehensive program for IBAO members... available exclusively from BMO Bank of Montreal For information contact, Tony Ngo Manager, Industry Programs Tel: 416-927-5348 Fax: 416-927-6369 tony.ngo@bmo.com

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18 May 2014 / THE ONTARIO BROKER

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IBAO Education FOR BROKERS BY BROKERS

WHAT’S HAPPENING THIS MONTH WEBINARS Getting Started in Commercial Lines Series Date I June 17 – 26 Time I 9:30 a.m. – 12:00 p.m. Accreditation I 2 Technical Hours (per module)

Fee I $125 (per module)

New to the commercial lines side of the business? Looking to make the transition to commercial as quickly and smoothly as possible? This webinar series is for you. Upon completion of the four modules, participants will have learned the basic foundation of commercial property and liability coverages, including commercial risk assessment.

SEMINARS Errors & Omissions Loss Control Dates I June 17 Location I London Times I 8:30 – 11:45 a.m. I 1:15 – 4:30 p.m. Fee I $125

The Difference Is You! Dates I June 18 l Kitchener I June 25 l Hamilton Times I 9:00 a.m. – 4:30 p.m. Fee I $209

In order to qualify for your firm’s Loss Control Credit, and in accordance with the attendance and position requirements, this seminar must be taken every three years if your firm has been claims-free for this period.

Excellent customer service is the back bone of the insurance business and where CSRs can really standout. Learn how by providing awesome service that will set your brokerage apart from the competition and increase customer retention.

Attracting Quality Prospects Through Digital Marketing Dates I June 19 Location I Barrie Times I 9:00 a.m. – 4:30 p.m. Fee I $209

Understand how the different components of digital marketing can work together to generate leads. See reallife examples of how proper website planning, content marketing and Search Engine Marketing can generate demand online. During this workshop, you will learn to use the tools most used by leading insurance brokers to gain new prospects and engage your clients.

CAIB CAIB 3 Immersion Date I June 23 - 27 I Exam July 9 Time I 8:30 a.m. – 4:00 p.m. Location I IBAO Toronto Fee I $595 I $304 (Materials/Text)

www.ibao.org/events/event-calendar

An instructor-led, five-day intensive course consisting of hands-on exercises, practice exams and group discussions. The concise format helps students prepare to write the final exam the week following the course in the chosen location.