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Canada’s top 30 brokers revealed for the first time

MAKING YOUR CASE BEST ARGUMENT FOR USING A BROKER

MARKET MAKEOVER ECONOMIC TURNAROUND FOR NICHE PRODUCT DEMUTUALIZATION WHY YOU’RE STILL WAITING

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THE RESULT OF A STRONG, SUPPORTIVE PARTNERSHIP.

Your success is our success, so we’re dedicated to going that extra mile to help you build and maintain a strong, healthy brokerage. RSA Insurance offers some of the industry’s leading marketing, educational and training support—including our renowned Making Partner program and customized portfolio promotions—which will help you connect with your employees, your community and your clients.

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Commercial Insurance

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SUCCESS

2013-11-05 9:58 AM 4/12/2013 9:49:53 PM

CONTENTS

FEATURES 6 | The Weekend Warrior Coverage is changing for the weekend athlete 10 | Risk Management Where does it fit when growing the commercial component of a policy? 12 | P&C Demutualization: Hurry up and wait It’s been on the federal agenda since 2011 – will 2014 be the year? 16 | An old-growth product takes root Canada’s traditional forest industry insurers have reason to smile 20 | Decoding cyber risk Just what is cyber risk and how can brokers profit? 23 | What cyber risk products do your clients need? What clients are looking for in a cyber insurance product 24 | Insure as you drive Telematics is revolutionizing the fleet insurance industry 28 | Staffing for the long haul It isn’t about finding the right people – it is about keeping them

INSIGHT 4 | You can’t talk to a website Brokers should take advantage of the personal touch 5 | The gender gap Can we learn from the EU’s non-gender insurance standards?

issue

1.2

Elite Brokers Canada’s

TOP 30

COVER STORY

Elite Top 30 Canada’s best brokers strut their stuff on the national stage

32-40 41 | A rising star in the broker channel The million-dollar man

44 | Shred those old habits Some frank advice to brokers who are reluctant to relinquish their paper empires 45 | Time management Your time management may well be contributing to a productivity downfall

34 | Just what makes an Elite Broker? 35 | And the winner is …

38 | Keeping up with the Joneses 39 | Rounding up the Top 5

59 | Statistics Who is filling the ranks as baby boomers leave the industry? 60 | Why can’t you get underwriting? Don’t hit that underwriting brick wall again – write it right the first time

REGULARS 51 | Events

48 | An incorrect truth It isn’t what’s true, it is what the client understands to be true 52 | Sales slip-ups Avoid these missteps to boost sales and energize your business 56 | Client communication Old school communication still plays a key role in connecting with customers

62 | Favourite Things 64 | Expert Advice The ingredients to making an Elite Broker

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© 2013. RSA is a registered trade name of Royal & Sun Alliance Insurance Company of Canada. “RSA” and the RSA logo are trademarks used under license from RSA Insurance Group plc. * “A+” rated by Standard & Poor’s. “A” rated by Moody’s.

CONTENTS

SIMPLY THE BEST COPY & FEATURES SENIOR EDITOR Vernon Clement Jones ASSOCIATE EDITOR Donald Horne CONTRIBUTORS Nikki Heald, Rob Purdy, Christopher Myrick, Stuart Huntington, Matthew Davies, Diane S. Baker, Doug Mathlin, Gary Hirst, Anders Sorman-Nilsson, Tony Hayes, COPY EDITOR Tanya Enberg

ART & PRODUCTION GRAPHIC DESIGNER Joenel Salvador SENIOR DESIGNER Alicia Chin

SALES & MARKETING NATIONAL ACCOUNT MANAGER Jesse Rumm 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

Editorial enquiries tel: 416 644 8740 • Ext: 231 donald.horne@kmimedia.ca Advertising enquiries tel: 416 644 8740 • Ext: 237 jesse.rumm@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 insurancebusiness.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or in part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss.

We’re back with our second issue, and before I begin, I would like to thank all those who have been so generous in their praise and appreciation of our October debut of the magazine. But here’s what now has us excited here at Insurance Business: the Top 30 Elite Brokers list. You’re no less enthusiastic. The industry response has been tremendous, and the numbers put up by those in the Top 5 are testament to the skill and hard work of brokers. Insurance veterans and new players who have pulled a chair up to the game are all represented, from the shores of Newfoundland to the Rocky Mountains of British Columbia (pp. 32-39). Brokers share with us their successes and their insights, and those who helped shape their careers. It makes for some fascinating storytelling. One good news story that came from British Columbia, involves an industry that laid the foundations for Canada that has suffered for many years has finally rebounded, and insurers shared their expectations on what the future holds (p.16). The move to demutualization has so far been a lot of talk and no action – but 2014 may be the year that Ottawa decides to roll up its sleeves and move forward with legislation (p.12). As we close out 2013 and move into the new year, we at Insurance Business look forward to telling more of your stories, and we share the same optimism for 2014 that you the reader bring.

Cheers, Donald Horne Associate Editor

CONNECT

Contact the editorial team:

donald.horne@kmimedia.ca

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IN THE NEWS

BROKERS:

YOUR BEST OPTION

You can’t have a conversation with a website Too many times he has heard tales of buyers remorse from people who have purchased auto insurance online, clicking boxes that promise cheaper premiums but carry large deductibles and sometimes little or no coverage. “It frustrates me,” says Brian Patterson, president and CEO of the Ontario Safety League (OSL). “Invariably, when people talk to me about insurance shortfalls, it was because they bought it online and didn’t realize what they were doing.” It is something Patterson hears all too often at the OSL – how people choose a higher deductible to save what amounts to $30 a year, only to end up paying thousands more when the worst happens. “They are a mess, because they tried to buy their insurance online. They under cover themselves,” says Patterson. “People go online and start with, ‘I’ll go with a no deductible – no wait, I’ll go with a $5,000 deductible and save $300.’ OK – but when you scrape the guardrail and look for collision (coverage), and find you don’t have any. ‘I didn’t understand the website’ is what they say. Well, you bought the insurance.” It is what makes brokers invaluable when selecting a policy and the right coverage options, says Patterson – and the single, great advantage that brokers have over impersonal websites. “Saving $30 for a higher deductible sounds great, until you get a scratch and have to pay for the entire repair,” he says. “A broker can explain that, but you can’t have that conversation online. For an extra $34 a year I increased my coverage to $5 million, but many people won’t do that buying insurance online. And I only did that after a conversation with my insurance broker.” An excellent example of brokers providing that “value added” conversation with the client is the deduction on winter tires, says Patterson. “You are basically achieving a deduction, based on the proactive activity of your customer,” Patterson tells brokers. “So if you educate your customers to put on winter tires, and you are able to reduce their fees by 6 or 8 or even 15 per cent, you’ve helped them

Trouble hitting your premium target? Try winter tires I think this is one of the ways that you can achieve that provincial target, taking advantage of the winter tire discount. You are basically achieving a deduction, based on the proactive activity of your customer. So if brokers educate their customers to put on winter tires, and you are able to reduce their fees by 6 or 8 or even 15 per cent, you’ve helped them help you meet that goal - Brian Patterson, OSL

Brian Patterson, president and CEO of the Ontario Safety League

help you meet that goal.” It is all too easy for people to fall into the trap of going for the cheapest option with the simple click of a mouse. That is why brokers need to look beyond the bottom line when speaking to clients – and stress the advantages of complete coverage to clients, says Patterson. “From a safety perspective, we say to brokers, ‘When you are talking to the client about coverage – don’t look at the bottom line necessarily,” he says. “Are they volunteering for Rep hockey? Are they carrying kids in the car at different times of the year?” The maze of insurance, that many layman view insurance to be, says Patterson, is where the strengths of the independent brokers are – offering the public the best path, instead of the cheaper, but potentially much more expensive one, offered by insurance websites. “Insurance can be very complicated,” he says. “The benefit of the broker, in my view, is the direct interaction.” But it is up to brokers to make that phone call, and to show their value to the client. “I think my broker could have explained a $100 worth of savings at least in just a five minute contact call – something a website cannot do,” he says. “Even if you left that in a message, you can bet your (expletive) I would return that call for $100 savings.”

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THE BIG PICTURE

THE EU GENDER DIRECTIVE – ONE YEAR LATER What does insurance look like without gender in the equation?

The EU Gender Directive came into force on December 21, 2012. Based on a ruling by the European Courts of Justice, it meant that insurers could no longer consider an individual’s gender when calculating any insurance rates or benefits. This was a big change for the retirement industry, which led to a fundamental change in the way we calculate annuity rates. As a result we’ve seen an equalization of male and female annuity rates, with female rates improving slightly and male rates falling slightly. The conventional wisdom at the time was that this change in rates would drive a spike in demand as male annuitants looked to secure ‘pre-Gender Directive’ annuity rates. Indeed, there was considerable comment and coverage in the market encouraging men to think about retiring before the EU Gender Directive came into force. However, looking at annuity sales over the last year, we see that the Gender Directive had a far more profound and long lasting effect on the market than the anticipated ‘spike’. This graph shows the percentage of males retiring with an annuity from Aviva based on individual cases (rather than by volume). You can see that the market trend (which had been steady at 70 per cent since 2007) begins to change rapidly in the second half 2012 as an increasing number of men bought an annuity before

GENDER-DIRECTIVE 85%

75%

65%

55% Jul 2012

Oct 2012

Jan 2012

Apr 2012

Jul 2013

This graph shows the percentage of males retiring with an annuity from Aviva based on individual cases

the Gender Directive came into force. Everyone expected this to happen to some extent, but what’s surprising is the sheer scale of this behaviour. Where many had anticipated a short spike in demand before December 2012, what we actually saw was a massive increase in the number of men bringing their retirement forward to benefit from pre-Gender Directive annuity rates. In fact, the trend, which started in August 2012, is so great that it subsequently depressed the market until May/June of the following year, as many men who would naturally have retired in that period had already done so.

Clive Bolton Aviva’s managing director of At Retirement

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MARKET MATTERS / RECREATIONAL INSURANCE

INSURING THE

WEEKEND WARRIOR

Your client is an avid sports fan and loves his Saturday soccer. In fact, he’s the organizer. But what happens when a weekend warrior suffers a serious injury, and the best friend from Bay Street trades in his cleats and jock for an attorney and a lawsuit? By Donald Horne It’s a sunny Saturday afternoon and you are charging hard for a loose ball with only seconds left in the game. But so is Mike, your best friend from work, and the last thing you remember as you collide is hearing the crunch of bones and blackness. That is a recreational sports injury, and that can translate into lost wages, maybe even a lost job. As for your work colleague and the league organizer it translates into costly legal action to determine who is liable for a wounded weekend warrior. “The claim we most often get is this, a participant that is injured because of the actions of another player,” says Murray Morrison, the president of Allsport Insurance. “Take soccer. You have a late tackle, a person breaks a leg or injures an ACL, they can’t go to work, they lose wages. They will sue the player, and not only that, but the official and the organization, alleging that they should have known that this individual is prone for this.” It isn’t a hypothetical, but a reality in today’s everincreasing litigious society, where assigning liability in cases of what used to be considered life lessons has become the norm. “Yesterday I had phone calls from two individuals who were both playing soccer,” Morrison says. “One individual broke a leg and the other broke an arm. These were adults playing recreational soccer on the

weekend. The loss of wages is a huge factor for these people. They are mostly young men – 22 to 24 years old – and they don’t have the benefits to cover them while they are not at work.” Gina Bennett, vice president and underwriting manager, as well as the heir to the president’s chair at Allsport, says that it is important for brokers to explain to the client in detail the importance of making everyone participating in a recreational league exactly what is and what isn’t covered by insurance, with a view to mitigating personal risk down the road as well. “The broker needs to make sure the coverage is adequate,” says Bennett. “There’ve been a couple of incidents that made us aware that there is a need to develop a more robust package that makes available catastrophic limits. With every high limit comes a premium, and we would feel that the individual athlete may wish to purchase this type of coverage on their own.” “The (recreational venue) renter is a very unsophisticated client. All they know is that they’ve purchased insurance,” she says. “So they need to know they have liability insurance, not a no-fault accident medical plan. Many times someone will get hurt in a recreational activity, and all they really know is that there is insurance they paid for in the rental contract,

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CONCUSSIONS

but they don’t know what that insurance was covering.” Bennett believes greater clarity is needed. “The municipality’s broker needs to provide the municipality with a clear summary of what and who their renters are covered for under a facility user insurance program. The coverage summary should be made available to the renter if they require insurance under this program.” As is the case with the majority of unofficial recreational leagues, it is the person who is obtaining the insurance for the league (usually the organizer) that gets the summary page, but the other 20 or 40 participants don’t see it or know what is in it, says Morrison. “You can tell the people to explain it,” he says, “but you have to rely on them to do that.” Allsport Insurance got their start in the 1980s when recreational sport insurance was in its infancy, and during the intervening years have become the acknowledged leader in the field. “Back then, most people would buy a $1-million liability very basic policy. Those days are long gone,” says Morrison. “Coverages have expanded over the years to accommodate more demands and to meet the awards of the courts. The world has changed. The fact that a person is awarded $4 million in an automobile accident, the courts sees those injuries no different from sports injuries, so the automobile awards influence the sports liability awards. An injury is an injury.” For many people volunteering to organize or coach in recreational sports, it can come as a thunderbolt from the blue when they are served a lawsuit because a child playing minor soccer was injured on their watch. That’s why Allsport was created, to make insurance protection available to these organizations, coaches and volunteers. “Nobody wants to be a coach or an official of an activity and lose their home, that is the primary concern,” says Morrison. “We’ve had a statement of claims where the executives have been named specifically in the lawsuit. That creates quite a bit of fear, and you find that you have to hire a lawyer to defend yourself – the legal costs can be pretty substantial for an individual. We’re here to defend these lawsuits.” For some, the potential risks can sour their desire to volunteer for recreational sports, even if they are only named to be witnesses in a legal action. “The vast majority are in it because they love the game,” adds Morrison. “A lawsuit affects people, and

Most often caused by blows to the head, these traumatic brain injuries usually results in temporary disorientation or short-term memory loss, but more serious concussions can do permanent damage.

Coup

Countercoup

1 Initial impact, or coup, causes a countercoup when the brain strikes inside of the skull

2 Shaking disrupts the brain’s normal chemical balance 3 Brain swells: in severe cases, it puts pressure on the brain stem, which controls breathing and other basic life functions

Levels os severity Grade 1 Confusion lasting less than 15 minutes Grade 2 Confusion and amnesia lasting more than 15 minsutes Grade 3 Brief unconciousness, more serious amnesia

Guidelines for athletes Grade 1 May return to sport after 15 minutes Grade 2 May return to sport after 1 syptom-free week Grade 3 May return to sport after 2 syptomfree weeks

Back then, most people would buy a $1-million basic liability policy. Those days are long gone Murray Morrison president, Allsport Insurance

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MARKET MATTERS / RECREATIONAL INSURANCE

FROM THE SPORTS FIELD TO THE EMERGENCY ROOM Gymnastics Ice Hockey Snowboarding* Tennis Volleyball Swimming Pools Soccer In-Line Skating* Golf Football Weightlifting Skiing Exercise & Running Baseball & Softball Basketball Bicycles

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1998 1991 Estimated number of emergency room treated injuries among persons 35-54 years of age associated with 16 popular sports categories, 1991 and 1998

Gina Bennett vice president and underwriting manager, Allsport Insurance

The broker needs to make sure the coverage is adequate. There’ve been a couple of incidents that made us aware that there is a need to develop a more robust package that makes available catastrophic limits

afterwards they don’t want the hassle anymore. Even if they aren’t named, they can be witnesses, be involved in discoveries, etc. It takes time and money.” Bennett says Allsport developed a specific coverage wording for organizations faced with such an eventuality – to include participant injury. “To protect the participant, that is what you need,” she says. “Our coverage automatically extends to participant injury, whereas a lot of companies that dabble in sport insurance exclude such participant liability. The broker and client should be very clear on the wording of the liability policy that the carrier is offering. Quite often when we have a broker or policyholder who has obtained alternate quotes from other companies, there are restrictions or exclusions in their coverage that they may not be aware of.” What the industry needs to get up to speed on now is the potential liability posed by concussion and head injuries, says Morrison. “We certainly have concerns down the road that there will be a lawsuit against a sports association – I’ll pick on soccer here,” he says. “They hit the ball with their head so many times, if they have a concussion down the road that they can no longer be employable – that is a multi-million dollar lawsuit. You see in the NFL that they settle their lawsuit for $765 million. The public and lawyers see that and say, ‘My client suffered a concussion, look at all the money – let’s see who we can sue.’ We will see more of those in the coming years.” While looking into the future of sports insurance, Morrison expects that the national and provincial sports associations will agree to offer catastrophic accident insurance – allowing individuals to upgrade their insurance for themselves, instead of everyone chipping in an extra $5 or $10 each into general league membership fees which include insurance coverage. “If you can go to your sports association website, and click on X, Y or Z for catastrophic loss limits, I think clients will gladly do that,” he predicts. “Click here for the additional coverage … it’s a product Allsport is in its infancy developing and not yet available, but if you made it optional online, a lot of people would probably go for that. Many associations may balk at including another $5 as part of their membership fees, but if the individual sees something that is an added benefit for themselves or their children, they don’t mind paying for it.” Morrison adds, “As we go forward, Allsport ... will be working to develop more online capabilities for sports insurance.”

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SportS, leiSure and recreation inSurance SpecialiStS

Covering athletes, communities and families for activities and special events since 1987.

www.allsportinsurance.com IB1.2_page06-09_Weekend.indd 9

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MARKET MATTERS / RISK MANAGEMENT

MAKE COMMERCIAL COVERAGE MATTER

RISK MANAGEMENT

How you can make your business clients buy into a Risk Management Program As you know, commercial insurance is one small piece of your customers’ overall Risk Management Program. All Insurance Brokers are faced with rising operating costs and stiff competition for their share of the local market – so how do they improve on both of these points? Firstly, the technology that is designed specifically for your business - either Keal or Agency Manager or Power Broker - assist in managing the accounts payable and receivable as well as production. These are made available at select price points with select benefits. The use of these systems should lessen the possibility of error and provide immediate data on the operations. But the sales and production methods remain the same: contact a potential client, get their attention, make a presentation and then if successful, secure that customer and issue the appropriate paperwork. How many people were involved in this transaction? Two? Five Six or more? This is costly but is the method used most often. What about speaking to your client during the course of the year and upselling them on something

that is being suggested by their accountants, their board of directors, their bankers? Where are they with their enterprise risk management strategy (ERM)? How far along are they and what is the hold up? Compliance is an ever-increasing issue for your customer and if the accountants are referring to ERM, how long will it be before they are speaking to one of the big six brokerage houses on this matter. And where will you be? The aim for brokers should be to work alongside the CFO and CIO and other managers at the business head office. Providing the value of an outside risk manager can be invaluable to the client. One way to approach it is to offer services and software in stages: • Stage One: Conduct a thorough, free, review of the total Cost of Risk. Also do a review of the commercial insurance program and the group benefit. • Plan: Determine the client’s flexibility/adaptability to withstand the changes within the organization over the next two-to-five years of operation/growth.

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• Stage Two: Meet with heads of the departments: HR, IT, production, sales, marketing, etc., to see where they are today and where they see themselves within that two to five year period. At what price point and with which change do they see it coming? These can be loss of personnel, the need for new equipment, reduction of key staff due to retirement or illness, new competition in the market place, etc. • Stage Three: Focus on reporting to the CFO and the board of directors on these findings and how they will probably impact the bottom line or the mission statement. • Stage Four: Develop continuity plans, disaster preparedness, contingency plans for the departure of certain key people while coordinating with the future business plans (i.e. acquisitions, mergers,

etc.). The introduction of ERM into the corporate strategy will begin here. A demonstration of the software program will then be needed. At RiskAssist Consulting, this would involve a risk map on a sample client and a claims manager/document/policy tracker through ClearRisk Manager. All that is needed is for the client to choose a sample customer – i.e. class of business, number of employees, number of owned and or tenanted locations, gross revenues last year and the projected revenues for the coming term. It will be an anonymous demonstration, but the aforementioned detail will allow the insurer to craft a Risk Management program that will attract the client. The primary goal here is to make you a more important person in your clients’ eyes and to further the relationship with this client.

Diane S. Baker of RiskAssist Consulting explains how you can grow the component of commercial insurance within that program

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SPECIAL REPORT / DEMUTUALIZATION

P&C DEMUTUALIZATION:

Hurry up and wait The demutualization of Canada’s property and casualty insurers has been on the federal government’s agenda since 2011, but lacklustre support for the process and concerns about implementation mean that it may remain a low priority in 2014. By Christopher Myrick

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We remain confident that the Minister and his staff are continuing the development of the draft regulations required to allow demutualization in the Canadian P&C industry for those companies that wish to do so John Bowey and John Cooper, Economical Insurance

Directors of Economical Insurance Group faced a legion of hostile policyholders at the mutual insurance company’s June annual meeting. They demanded an explanation for the lack of progress in the demutualization plan they approved three years earlier, with some of the more agitated suggesting that the company take legal action against the federal government. But the 900 or so voting Economical Insurance Group policyholders may be the only people clamoring for demutualization. “For the current demutualization issue our standpoint has been pretty straight forward, we don’t think whatever regulation comes out – and if there is no regulation we’re not in a particular rush, we don’t need a regulation as none of our members are interested in demutualization, quite the opposite, they don’t want to be forced in any way into a

demutualization,” said John Taylor president of the Ontario Mutual Insurance Association, which represents the province’s 44 farm mutuals. In demutualization a policyholder-owned insurance company is converted into a stock company, with the equity in the converted company held by one or more shareholders. This means eligible policyholders receive benefits in equity, cash or a combination of both. The demutualization of the life-insurance sector took place in the late 1990s, with millions of life insurance policyholders carving up more than $20billion in company surpluses as firms such as Manulife and Sun Life Financial held initial public offerings. The same could happen for some of the mutual P&C insurers but, thus far, it has only been the policyholders of Economical Insurance Group who have aggressively been pushing for demutualization. The group’s voting shareholders approved a demutualization plan in 2010, while the majority of the country’s P&C mutuals are either ambivalent or opposed. The narrow benefits of demutualization, as envisioned by Economical, is likely a key issue slowing down the regulations. Economical believes only its 943 mutual policyholders who

John Taylor

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SPECIAL REPORT / DEMUTUALIZATION

vote at annual meetings should receive the equity or cash disbursement with demutualization, but other players in the industry feel the benefits should be shared more widely. “We don’t want to see anything that creates a short-term incentive for companies to demutualize at the expense of the long-term best interest of policy holders,” said Taylor. “As far as I can tell, the impetus [behind the regulation] is 100 per cent based on Economical’s wish to demutualize; nobody else as far as I know is saying ‘give us regulations’ or ‘we want to demutualize’ there’s not a single company.” Similar sentiments were expressed by companies and industry groups in consultation papers to the finance ministry. The Canadian Association of Mutual Insurance Companies (CAMIC), as well as firms such as Desjardins, have expressed concern that poorly formulated regulation could allow a small minority of policyholders, board members, and senior management, to receive windfall benefits from the demutualization of a P&C insurance company. This widely voiced concern means that if the government allows demutualization, it will seek to impose a process that is highly regulated.

Being public is always a good goal for a sector, it would bring corporate responsibility for the bottom line and would be of benefit for the whole of the industry

Tom MacKinnon

Still, Economical believes that the process is on track. “We remain confident that the Minister and his staff are continuing the development of the draft regulations required to allow demutualization in the Canadian P&C industry for those companies that wish to do so. As we have said before, we recognize it is a complex process and one in which Economical can contribute, but we cannot control the timing or ultimate content of the draft regulations,” company heads John Bowey and John Cooper said in its November demutualization progress report. “Once a regulatory framework is in place that is workable for the company, we are fully prepared to pursue either an initial public

offering or a sponsored demutualization transaction.” In addition to the monetary benefits for eligible policyholders, Economical argues that demutualization will enhance access to capital markets to fund growth and to compete more successfully against non-mutual P&C companies in Canada.

MARKET SUPPORT

Although demutualization has limited support in the insurance sector, it does find some support on Bay Street … although it hasn’t been a burning issue for Canada’s investment banks or capital markets. “Being public is always a good goal for a sector, it would bring corporate responsibility for the bottom line and would be of benefit for the whole of the industry,” said Tom MacKinnon, managing director of BMO Capital Markets. “Corporations would strive for bottom-line responsibility as they would have to answer to a new group of shareholders.” Based upon what happened in the life insurance segment, MacKinnon believes that the P&C sector would see consolidation, with larger, more robust, and competitive shareholder-oriented firms emerging. While MacKinnon notes that capital markets have an interest in consolidation, he agrees that there haven’t been many overt displays of interest from industry itself. However, he adds, that may change. “People [in the industry] want to see what happens with Economical before they start to consider demutualization,” he said.

CONSOLIDATION FEARS In addition to concerns that demutualization may enable a limited number of eligible policyholders to divvy up the funds of companies that are in most cases more than a century old, some industry players are concerned that demutualization would leave brokers and their customers with less choice. “We think that first of all that any mutual insurance company in Canada should make a credible case why they need to demutualize,” said Steve Masnyk, public affairs manager for the Insurance Brokers Association of Canada. “They need to convince their customers, decision makers – the government – why it is that they need to demutualize and why there is an urgency in the marketplace. Is there an urgency in Canadians not having access to quality products and a variety of

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quality products that are accessible and affordable?“ Masnyk says that mutuals in Canada represent about one out of four policies sold and that the different structures and values of mutual firms vs. shareholding ones ensure product and consumer choice. “There is a good balance between the three types of insurers in Canada: the stock companies, the mutual and the government-owned auto insurers in three provinces,” he said. “There is a good mix currently in the marketplace, from a broker’s perspective – those who deal with the customers on a daily basis and who have a good sense of what’s affordable and what’s accessible in the marketplace, Masnyk argues that because mutuals are policyholders rather than shareholders, they can take a longer-term view and not have to perform with a view of quarterly financial results. “They can smooth out the ebbs and flows of the market. When interest rates go up or supply dries up among stock

companies, mutual companies can fill in that gap because their pricing is not as volatile as it would be for a stock company.”

HURRY UP AND WAIT While the government has been considering the changes since 2011, given the lack of enthusiasm for the measure, some in the industry believe the finance ministry may hold off on the introduction of new regulations. “I have trust in the government doing the right thing, they have consulted widely and whatever they do at the end of the day will be right for Canadians,” said Masnyk. “I don’t really know where we’ll end up, but we have communicated to the government that we don’t really see an urgency for this issue to be dealt with one way or another and I think that’s the government’s position today. If there’s no real reason for them to do something, I feel that that’s the best way for Canadians.”

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FEATURE / FORESTRY

OLD-GROWTH PRODUCT PUTS DOWN

NEW ROOTS

A long-dormant segment of the business is sprouting new success for Canadian insurers and offering brokers a lesson in the power of global markets to grow their business

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Something needed to change, so we began to focus more of our efforts on other areas of insurance business such as errors & omissions, trucking and high–risk commercial liability It is easy to feel small amid the towering redwood trees that can trace their lineage back to the birth of Christ. Those who look to the trees for their livelihood understand that it is more than just a profession, but a passion. For those in the logging and lumber industry, the revival of the U.S. housing market has translated into an increased demand for Canadian wood products – and that’s good news for the traditional insurers of an industry that have taken it on the chin for several years. This, coupled with the continued emergence of Asian markets, has created signs of growth in the Canadian forestry industry once again. In order to meet the renewed demand for timber supplies, many logging contractors are buying up new equipment and their schedules of equipment are growing yearover-year. Noel Dodd, underwriting manager and partner with N.G. Williams & Associates Ltd. in Vancouver, B.C., says trades people who work in the mills are once again seeking liability coverage, and the industry as a whole appears to be well on its way to recovery. “Much will likely depend on the state of the insurance market as a whole,” says Dodd. In

Glen Williams

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FEATURE / FORESTRY

Noel Dodd

Our experience is that while some areas of the special risks industry, such as sawmills, have seen some hardening, most classes remain soft Vancouver, B.C. “Our experience is that while some areas of the special risks industry such as sawmills have seen some hardening, most classes remain soft.” For now the ever–present rumblings of a potentially hardening market around the corner continue to be nothing more than chatter or speculative, says Dodd. Strong evidence to suggest that equipment rates are going to increase dramatically in the coming year is lacking. From an underwriting perspective, although rates for sawmills have been on the rise during the past two years, when it comes to logging equipment and liability, capacity in the market place remains high while rates remain relatively low. In order to endure the ever-changing market conditions, companies must be willing and able to adapt, while at the same time maintaining the core values that brought them success in the first place. “When I started working at NGW in 2005, the forestry industry was running strong and the insurance market conditions were still relatively hard,” says Dodd. “Shortly thereafter things began to shift as more and more insurers began writing forestry risks, and in 2007 it was clear that the market conditions were once again softening.”

It wasn’t until 2009 during the global economic downturn, which followed the U.S. housing crisis ,that things ultimately hit rock bottom both in terms of the forestry industry and the economy. Without the demand for Canadian lumber brought on by the constant driving force of the U.S. housing market, mills began shutting down and contractors started selling their equipment. Trades people that had worked at mills or serviced equipment also found themselves looking for work in other industries as the trickle-down effect continued.

SHIFT IN APPROACH… “Something needed to change, so we began to focus more of our efforts on other areas of insurance business such as errors and omissions, trucking, and high-risk commercial liability,” says company president Glen Williams. These were classes of business that N.G. Williams & Associates Ltd. had been able to place for many years prior, points out Williams, but to that point the primary focus had always been forestry business. “While the forestry business continued to decline, the other business classes continued to grow,” he says. According to Dodd, not everything that came out of the recession and downturn of the forestry industry was negative for the company. “In a sense, the drop in logging and forestryrelated business forced us to diversify and seek other sources of business. The growth of these other areas of the business will ultimately allow us to maintain a steadier flow of business without the sharp fluctuations in volume throughout market cycles,” he said. “That said, as a result of the strong market relations that we have with our insurers, all of our forestry-related binders and facilities remain intact

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to this day, and over the course of the past three years they have continued to experience steady growth.” Historically, the primary focus of the firm has been difficult to place risks associated with the Canadian forestry industry. These risks consisted largely of sawmill property and logging equipment of all types. N.G. Williams & Associates Ltd. was founded in 1986 by Nigel Williams. In 1989 his son Glen Williams joined the firm after following eight years as a practicing lawyer. Since those early beginnings the business appetite of the company has grown to include a variety of other forestry related risks including standing timber, stock both in (stock in both storage and transit), log

hauling trucks and trailers, and a variety of liability exposures related to the forestry industry. Client demand for other types of coverage unrelated to forestry, as well as constantly changing market conditions, has acted as a catalyst prompting N.G. Williams & Associates Ltd. to develop markets for a variety of other special risks. Today, 95 per cent of the business handled by the company is placed through Lloyd’s. “All of our Lloyd’s markets are built on mutual trust, confidence and continuity through soft and hard market cycles,” says Dodd. “When I began my career at NGW I quickly realized that the sorts of risks that we see are not of a standard nature. The goal has always been to find creative solutions which address the unique needs of our clients.”

95%

of today’s business handled by NGW is placed through Lloyd’s

SPECIAL INSURANCE MARKETS FOR HARD TO PLACE LINES. For more than 25 years we have served insurance brokers from coast to coast with property and casualty markets which are imaginative and flexible. From equipment at the top of Mt. Everest to E&O for pollution credit programs, we have facilities for insuring the most unusual. All of our facilities are fully licensed in Canada. ON MORE DOWN-TO-EARTH RISKS WE OFFER VERY COMPETITIVE QUOTES FOR: • LOGGING EQUIPMENT

• MINING RISKS

• LONG-HAUL TRUCKING

• HIGH-END PERSONAL LINES

• SAWMILLS

• U.S. RISKS

• OILFIELD HAULING

• OVERSEAS RISKS

• STANDING TIMBER

• FINE ARTS

• E&O

• HELICOPTER LIFTS

• COMMERCIAL PROPERTY

• TRUCK CARGO LIABILITY

• COMMERCIAL LIABILITY

• D&O

502-850 West Hastings Street, Vancouver, BC V6C 1E1 Tel (604) 683-9351 Fax (604) 683-9311

Email Inquiries: info@ngwilliams.com

www.ngwilliams.com

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SPECIAL REPORT / CYBER RISK

DECODING CYBER RISK It’s a big and burgeoning sector in insurance, but what is cyber risk and how can brokers profit? Stuart Huntington investigates The Syrian Electronic Army’s hack that shuttered the New York Times website, and the recent deluge of denial of service attacks on major North American banks—including TD Bank, JPMorgan Chase, Wells Fargo, Citigroup and Bank of America – highlight the growing risk of cyber attacks to businesses of all stripes. Underscoring that risk, the FBI’s top cyber sleuth, Austin Berglas, said that corporate America could be broken down into two groups: “those companies that have been hacked, and those that are going to be hacked again.” Enter cyber risk insurance – an indispensable armament in the digital age – during a booming market.

WHO’S AT RISK? The short answer is everyone. The digital revolution has affected almost every industry, meaning that firms in every sector are vulnerable. Verizon’s latest Data Breach Investigations Report suggests that 47,000 security incidents have taken place across the globe in the past year, which have compromised at least 44 million records. And that’s just the breaches we know about. Both large and small organizations are being targeted by cyber criminals, but smaller firms are

showing less urgency when it comes to minimizing cyber risk, Willis North America says. According to a Willis report, 22% of Fortune 501 to 1,000 companies have taken no stance, issuing no public statement regarding cyber risk. By comparison, only 12% of Fortune 500 companies remain silent. “This is concerning because the view that firms may see themselves as less likely targets of an attack runs contrary to our experience,” says Ann Longmore, Willis’s executive vice president of FINEX. “In fact, many of these firms are sitting at the center of the bull’s eye.” The average cost of a data breach is $188 per compromised record, according to the Ponemon Institute. To a small business, that price could be a death sentence. To insurers, helping reduce that potential per-record exposure could be an avenue for attracting business. Some, such as Chubb Corp, are offering cyber liability insurance customers an incident response plan to help control the costs of a data breach. Chubb’s plan helps clients collect and maintain important employee and customer information, including health–care records, social security numbers, debit and credit card numbers, and financial

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BY THE NUMBERS

A snapshot of online breaches last year

47,000

security incidents in the past year

94%

were attacks from external parties

14%

7% perpetrated by multiple parties

tied to business partners

involved insiders – more than 10% up year-over-year

19% of data theft was attributed to state-affiliated actors (Chinese thieves accounted for 25% of this subset) Source: Verizon Data Breach Investigations Report 2013

information. In the event of a breach, clients have a reliable resource for retrieving lost data. Ken Goldstein, vice president and worldwide cyber security manager at Chubb, says this incident response plan will especially aid small businesses. “Many small businesses may not have the resources or expertise to develop such a plan, leaving them exposed to the disruption of a data breach, and costly first-party expenses, legal ramifications, and regulatory fines and penalties,” Goldstein says. Incident response plans like Chubb’s are believed to help reduce per-record costs of data breaches by up to $42 per record, the Ponemon Institute study estimates.

COVERAGE The first area of confusion that emerges around cyber insurance is what it covers — and what it should cover. Cyber insurance policies have historically been triggered primarily by data breaches and hacking attacks, but policies now can cover a much wider range of risk exposures. Companies must “figure out what’s important and understand what they think their risks or exposures may be,” says Jake Kouns, chief information security officer at Risk Based Security, a Virginia-based risk management firm. Typically, a cyber policy covers clients against a range of first-party and third-party liabilities, including the costs of notifying customers that their data may have been compromised, as well as legal fees and costs associated with any third-party action as a result of a cyber incident (see box above for more information). Policies don’t typically cover reputational damage, nor do they cover the cost of software and system damage.

Another important aspect of cyber coverage is business interruption, says Allianz global head of fidelity Nigel Pearson. “Traditional business interruption coverage needs to be triggered by physical damage,” he says. “With cyber, there is no physical damage — it’s more likely that a system has been affected by a virus or employee error. Cyber extends business interruption to cover this too.”

This market has nowhere to go but up Betterley Risk Consultants PART OF THE SOLUTION While insurance is increasingly employed, it needs to be twinned with an aggressive data protection policy. While 94% of the breaches identified by Verizon stemmed from outside sources, the vast majority of those could have been avoided by instituting simple or intermediate controls. The Marsh cyber risk report recommends that risk managers take steps to steel themselves against cyber attacks, including determining the criticality of various IT systems to ongoing operations, and developing and testing business continuity and crisis management plans. “The purchase of cyber insurance should be just one part of a well-planned and effective risk management program that also includes policies and protocols to prevent and mitigate technology risks,” the report states. This approach could provide an opening for brokers who play a critical role in educating organizations DECEMBER 2013 | 21

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SPECIAL REPORT / CYBER RISK

BY THE NUMBERS 40

about the parts of their businesses that are in need of the strictest IT security, and how to implement best practices — all part of a value-added service designed to attract and maintain clients. Brokers can talk to insureds—or the potentially insured — about the importance of encrypting data, and securing servers and hardware, among other steps, but experts also stress the importance of training the front line of cyber defense: the employees of the insured. “You shouldn’t be the only one vigilant about protecting your and your customers’ information,” says Steve Cullen, senior vice president of worldwide marketing at the digital security firm Symantec. “Your employees should all be on the lookout, and [the] business owner should be there to give them some guidelines.” Following are some tips — from the National Cyber Security Alliance — that brokers can offer clients or potential clients on employee education: ■ Establish social guidelines: maintain concise and strict rules on use of social media sites and tools. ■ Keep machines clean: set clear rules on what can and can’t be put on company computers or devices. ■ Keep passwords strong and long — and make sure to change them routinely. ■ Set the tone to be skeptical. With emails and attachments, when in doubt, throw them out. ■ Keep communication lines open: encourage employees to be vigilant and report any strange behavior on their computers or devices. ■ Said one industry observer: “A security plan without active participation by your employees is like an alarm system that’s never switched on.”

Who are the victims?

35 30 25

20 15 10 5 0

36% of breaches involved financial organizations 24% of incursions affected retail and restaurants 20% of intrusions involved the manufacturing, industrial, utility and transportation sectors 20% of attacks struck professional and information services Source: Verizon Data Breach Investigations Report 2013

7% 15%

Attacker motivation

49%

23% 49% opportunism 23% industrial espionage, financial crime, terrorism, data theft 15% dissatisfaction with employer/job

MARKET SIZE

7% social activism, civil disobedience

Total domestic cyber security insurance premiums in 2013 are estimated to be $1.3Bn — up from $1Bn in 2012. And that figure is projected to continue growing at a brisk pace, according to Betterley Risk Consultants, which noted in its 2013 Cyber/Privacy Market Survey that “most carriers report strong growth in premium in the 10% to 25% range although some reported premium growth of over 100%.” Betterley reports that new players are entering the market and predicts this will cause competition-driven downward pressure on premium pricing, but doesn’t expect it to be very significant. “We think that this market has nowhere to go but up,” the report concludes.

6% other

Source: 2013 IBM Security Services Cyber Security Intelligence Index

That’s good news for nimble U.S. brokers and carriers who operate in by far the world’s largest cyber security insurance market, but the outlook gets even rosier offshore. While the cyber insurance market overseas is less than a tenth the size of the U.S. market, “it’s growing rapidly,” says Allianz’s Pearson. “The threat will not go away. It’s here to stay. In five years, the cyber risk market could be worth hundreds of billions of dollars worldwide.”

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WHAT CYBER RISK PRODUCTS DO YOUR CLIENTS NEED?

Cyber risk is the fastest growing insurance product on the market. That much is true. But what products do your clients need? Matthew Davies takes a look at what is out there and, more importantly, what is needed Cyber insurance is designed to be very flexible and easily tailored to an organization’s needs. It has two components. The first is a third-party liability coverage which would respond to a demand for damages from someone who has suffered a financial loss due to a network security or privacy breach for which the organization was liable. The other component is first-party coverage that applies to the out-of-pocket costs that a company must pay in order to investigate and respond to the consequences of a network security or privacy breach that involves personally identifiable information of the organization’s employees or customers. Cyber insurance also provides some very valuable coverage where other traditional insurance may not respond, such as a business interruption loss due to a cyber attack. Businesses can pick and choose to buy some or all first-party coverages that are offered to suit their particular needs.

What types of cyber risk are there? Where does that coverage fit in a policy? Every organization has a cyber risk - even if they don’t collect, store or use a customer’s personally identifiable information (PII), such as a credit card or banking information. They will have PII in their database about their employees that, if breached, could lead to identity theft for the affected employees. Organizations that have employees or customers outside of Canada may be subject to specific legislation that protects private information in that organization’s care, custody or control. That legislation may require mandatory notification of a breach of privacy to those affected and to local regulators, whereas that might not be the case in Canada.

How do you sell cyber risk insurance, explain the necessity of it to a client? At Chubb, we explain to our clients that cyber risk

is not only an issue that is of concern to the IT department or the chief information officer - it is an enterprise risk management issue that can affect the entire organization. Privacy and network security is a corporate governance issue, it has implications for human resources and employee relations, it has compliance exposures if your company is subject to review by outside regulators, there are implications in respect to vendor selection and vendor management., especially when an organization chooses to outsource its IT services to a Cloud provider or to a subcontractor for web hosting or application services. There are aspects of physical security that are important considerations that an organization must think about in terms of who can access its premises and its computer resources. Having privacy and network security liability coverage is increasingly becoming a requirement that many organizations must fulfill when they enter into a contract with customers, especially if that customer is an institution, government entity or a large multinational.

Matthew Davies senior underwriting specialist, canadian manager | professional, media and cyber liability, Chubb Insurance Company of Canada

How has cyber risk grown in the last 10 years? Chubb first introduced one of the first cyber coverages in 2001 for financial institutions. As the regulatory environment changed during the last decade to include mandatory notification of affected parties in various jurisdictions around the world, we expanded our coverage and offered it to a wider commercial audience. We revised our coverage again in 2009 and at that time began offering it in Canada as we saw there was going to be a need for Canadian clients to be able to buy coverage for the quickly evolving exposures around privacy issues. We have also invested in services, such as eRisk Hub, a web-based risk management portal, to help provide our clients with up-to-date information and other services related to cyber issues. DECEMBER 2013 | 23

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SPECIAL REPORT / USAGE-BASED INSURANCE

INSURE AS YOU

DRIVE Black boxes in vehicles are revolutionizing auto and fleet insurance â&#x20AC;&#x201C; how will it affect your business?

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IMPLICATIONS FOR PRODUCERS For the past two decades, the fleet of 200 trucks at RAC Transport Co. Inc., has been outfitted with digital technology that monitors and records vehicle speed, braking, and engine revolutions per minute. The information helps the company evaluate driver safety and improve efficiency. But RAC Transport has yet to throw its data collection program into overdrive and adopt the next logical step for this data: usage-based insurance.

USAGE-BASED INSURANCE AND TELEMATICS Usage-based insurance, increasingly popular in personal auto, is gaining traction in the commercial market but is not yet advancing at full speed. Usage-based insurance enables insurers to base premium rates on actual driver behaviors and vehicle usage rather than solely on traditional indicators such as past claims and infractions. Data reflecting driver behaviors and vehicle usage are recorded and transmitted via in-vehicle telecommunication devices, referred to as telematics devices, to a central location. There, the insurer — or a vendor working on behalf of the insurer — assesses the data in order to gauge risk and establish pricing. As driver behaviors and vehicle usage reach agreed-upon thresholds, premium rates can be adjusted accordingly. Industry experts predict that usage-based insurance is poised for rapid growth, with 20 per cent of all vehicle insurance in the U.S. expected to incorporate some form of usage-based insurance within five years, according to the National Association of Insurance Commissioners. “The commercial sector and usage-based insurance are an absolute natural for each other,” says Frederick Blumer, CEO of Vehcon Inc., which is developing smartphone technology for usage-based insurance. Beyond the potential to reduce premium rates, commercial usage-based insurance makes sense for other reasons as well, Blumer says. For example, the telematics devices that collect and transmit data for insurance purposes can also be used to help owneroperators improve routes, save fuel, locate vehicles and reduce idle time. “The ROI for telematics hardware in the commercial sector is very short,” Blumer says. “It might take three to six months for such systems to pay for themselves. And if you have another valueadded feature such as insurance on top of that, then the ROI is extremely attractive in the commercial setting.”

For insurance producers, perhaps the most pressing issue associated with commercial usage-based insurance is becoming educated about how usage-based add-ons work. “In personal lines, one thing we know for sure is that if people spend some time educating their own agents, they usually see much better results than predicted,” says Mike Carroll, vice president of sales at telematics device manufacturer Danlaw Inc. That also holds true in commercial lines, says Jeff Stempora, CEO of Advanced Insurance Products & Services, which offers telematics devices and predictive analytics. “For the most part, in the commercial space, the relationship is with the broker or agent,” Stempora says. “That relationship is critical to the health of the business. If the agent is not educated on what usage-based insurance is and what it can do, then your sales will lag, without a doubt. And that has been the story for the past few years. Insurance companies really have not invested a whole lot in training and educating their agents. “The last thing agents or brokers want to do is be embarrassed in front of a customer because they really don’t have a good handle on what usage-based insurance is and what it does for the customer. So they aren’t going to recommend it if they don’t feel comfortable with it,” he says.

Moreover, commercial owner-operators don’t have the same reservations about data collection and privacy that individual consumers tend to have, Blumer says. One of the greatest Canadian success stories has been for Desjardins General Insurance Group, which introduced the Ajusto and Intelauto usage — based insurance pricing programs almost one year ago. According to the latest quarterly report from Desjardins (DGIG), in the first four-and-a-half months approximately one third of eligible new customers in Ontario and Quebec have signed up for the programs, with about 38,000 customers having enrolled. “With these programs, customers can earn a discount of up to 25 per cent on their auto insurance renewal,” says Sylvie Paquette, president and COO of DGIG. “That’s positive for us as we are attracting good drivers and encouraging good driving habits, and it’s positive for our customers as they are saving money on their auto insurance. In addition, it is supporting the Ontario government’s goal to reduce the cost of auto insurance in the province.” Liberty Mutual’s OnBoard Advisor program has been one of the more visible commercial usage-based offerings, but the company declined interview requests.

Mike Carroll

20%

of all vehicle insurance is expected to incorporate some form of UBI within five years Source: National Association of Insurance Commissioners

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SPECIAL REPORT / USAGE-BASED INSURANCE

The Danlaw DataLogger coming to a vehicle near you?

The Hartford’s FleetAhead program has been heavily publicized as well. When announcing the availability of FleetAhead two years ago, the Hartford reported that it had conducted a six-month market test in which FleetAhead helped a regional beverage distributor reduce risky driving behaviors by more than 75 per cent in a fleet of more than 100 vehicles. That, in turn, helped increase fuel efficiency by nearly 7 per cent and cut accident costs by 80 per cent.

BUMPY RIDE Although commercial usage-based insurance carries promise, potential customers are concerned about the costs and headaches of installing telematics devices in large fleets. Insurers face their own concerns — chief among these is a series of patents held by Progressive Casualty Insurance Co. Progressive’s patents, the first of which was filed in 1996, have made it difficult for other insurers to develop usage-based insurance programs without apparently infringing on Progressive’s intellectual property rights. Progressive has filed lawsuits against numerous carriers that have launched usage-based offerings. In June, Progressive announced that it would make its intellectual property available to other companies; however, one of the terms is that licensees won’t be allowed to rate insurance based on customers’ driving habits until April 2015. Progressive offers usagebased insurance for personal auto; the extent to which its patents apply to commercial usage-based insurance isn’t clear. The situation is further complicated by the fact that the Patent Trial and Appeal Board may throw out Progressive’s patent claims

entirely, although no resolution has been reached on this matter. Legal questions are not the only obstacles that carriers face. A lack of industry-wide standards makes it difficult to compare data collected by the many different types of telematics devices/systems on the market today. That, in turn, makes it difficult to assess risk and price premiums confidently. Another concern is the sheer cost of the equipment that commercial fleets require. “It can be fairly expensive to set up infrastructure and have it installed in vehicles,” says Jeff Stempora, founder and CEO of Advanced Insurance Products & Services, which provides technology solutions to insurers that offer usage-based coverage. “For an owner-operator who doesn’t want to pay anything extra to have this happen, you have to have the insurer step up,” Stempora says. “And the trouble is, it’s a pretty hefty bill up front. The worry is that the insurer is going to dish out several thousand dollars, possibly, to equip vehicles for monitoring capabilities, and maybe the customer will just leave.” Nonetheless, Stempora is confident that over time the floodgates will open. “The insurance industry is always trying to find new ways to differentiate itself and provide more value, and one way is to underwrite risk more accurately,” says Stempora, a 28-year industry veteran. “In the past, we didn’t have good predictive factors or good data, especially on the commercial side, to do underwriting —or more sophisticated underwriting — and pricing. And now, with telema-tics, that has all changed.”

SECRET SAUCE Danlaw Inc. manufactures a small self-install telematics device that connects to the vehicle’s on-board diagnostics port, where it can monitor speed, engine RPM, fuel level, as well as position information (GPS data) and acceleration.

TELEMATICS IN CANADA A variety of telematics companies are eager to enter the Ontario market, like ingenie out of the UK. The anticipated savings for drivers age 16-24: $700. Desjardins Insurance launched its telematics product, Ajusto, in Ontario in the spring. One third of eligible new customers have taken advantage of telematics in Ontario and Quebec to date: Totalling 40,000 people. Ajusto is a variation of the program run by Industrial Alliance, called Mobiliz.

The difference between Mobiliz and Ajusto is that Mobiliz shows your driving patterns and compares it to others participating in the program. Ajusto only shows your driving patterns. Mobiliz adjustments are made on a monthly basis, not annually upon renewal like Ajusto. Desjardins puts the average savings from Ajusto at 12 per cent, but there is an opportunity to realize up to 25 per cent in Quebec (Ontario drivers top out at 15 per cent). Ajusto is currently before the provincial regulator for final approval.

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The commercial sector and usagebased insurance are an absolute natural for each other

Data points that can be collected by in-vehicle telematics devices include:

Frederick Blumer, Vehcon

Many users of the device, called the DataLogger, are small-fleet owners looking for ways to improve performance and safety, says Mike Carroll, vice president of sales, telematics, at Danlaw. “They also can get discounts from their insurance carriers,” he says, noting that many insurers offer such discounts even if users haven’t signed up for usage-based insurance add-ons. Danlaw also provides the device to numerous insurance carriers that use the DataLogger in conjunction with personal usage-based insurance offerings. “Sales are definitely growing. In commercial telematics, there is a big interest in the self-install option,” Carroll says, adding that owners of small fleets would rather connect a small box to the on-board diagnostics port than install costly hardwired equipment. Advanced Insurance Products & Services offers multiple ways to collect and send data from commercial vehicles, such as: • a black box hard-wired into the vehicle • a dongle connected to the vehicle’s on-board diagnostics port • smartphone technology But the company’s core product—what Stempora calls the “secret sauce”—is predictive analytics. “That is the math behind predicting outcomes,” Stempora says. “The business of insurance is all about predicting what you are going to have to pay out in

the future, in terms of claims. The company that can do that more accurately has a strategic advantage, because it will achieve more stable financial results in the long run. So insurance companies put a lot of effort into developing mathematical models that predict the future as accurately as possible.” His company has developed a proprietary analytics platform that can analyze massive volumes of data, helping assess risk as driver behaviors and vehicle usage change. “Once the insurer has insight into my propensity to get into an accident, it can price the insurance policy appropriately and collect enough money over time to be able to pay out what it will have to pay out in the future,” Stempora says. At RAC Transport, Hyett, the safety director, says he would be happy to gain access to additional data reflecting vehicle usage and driver behaviors, not only to reduce insurance rates but also to improve safety. “We would like to get information on quick turns and lane changes,” he says. But the company’s fleet is scattered across three states, and installing telematics devices could prove time-consuming and costly. The trucking company would be interested, Hyett says, but only if usagebased insurance delivered good-driving discounts, and if the installation and costs of the necessary equipment were taken care of by the insurer. “They would have to be really competitive to get us to change,” he says.

■ Engine RPM ■ Engine-idle time ■ Fuel consumption ■ Hard braking ■ Miles driven ■ Rapid acceleration ■ Trip start and stop times ■ Trip start and stop locations ■ Seatbelt use ■ Streets taken ■ Time of crash ■ Velocity

KEY INNOVATIONS: 1998

The first hands free car gateways were introduced

2000

The first GSM & GPS systems were brought to market

2002

Bluetooth hand free voice gateways with advanced voice integration features

2003

Integrated GSM phone with Bluetooth

2007

2010

2009

2011

Multimedia handset integration is introduced

Fully integrated mobile navigation using a car GSM system

3G multimedia car entertainment system

Telematics and Infotainment systems introduced based on Linux

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BUSINESS STRATEGY / RECRUITMENT

STAFFING FOR THE LONG HAUL Recruitment isn’t about finding the right people. It’s about keeping them

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Insurance brokering can be a lonely occupation. Many brokers run small, one-man operations. But when the time comes to bring new staff on board, it’s important to make certain you find recruits who fit your business. Company culture is a bit of a nebulous concept, but Hays Insurance director Jane McNeill says cultural fit both from an employer and employee perspective is one of the most important criteria when it comes to hiring or joining a company. “By considering not only a candidate’s technical skills but their cultural and team fit, an organization is far more likely to get recruitment right the first time. There are countless cases where a potential candidate may look impressive on their resume and excel in the required technical skills, but ultimately fails to fit in with the team or align with the organization’s way of doing business, its values and its belief system,” McNeill says. “In these cases, their actual on-the-job behaviour is inconsistent with the values and expectations of the team they are working with and the organization as a whole. They are then not able to make the best possible contribution and this can be costly to the organization.”

CANVASSING FOR CANDIDATES Finding any candidates – let alone the right ones – can be a task in itself. Sorting through CVs can seem like an onerous task. After all, anyone can make themselves sound good on paper. This is where a recruitment agency can help separate the wheat from the chaff. Carla Pibworth of Pathways, a recruitment agency specializing in brokerage industries, says brokerages have unique needs when it comes to new hires that traditional recruitment agencies may not understand. “I’ve produced a fact find document that asks what they’re looking for in terms of clientele, the business they’re expected to write, the stress levels involved.

The placement of those brokers is really important. I fact find right down to the nitty gritty of what people are looking for rather than, ‘I’d like a broker please,’” Pibworth, a former broker herself, focuses on thoroughly screening applicants to ensure she only delivers qualified candidates to brokerages. She says she helps potential brokers tick all the administrative boxes – including association membership, training and licensing – before trying to place them with a brokerage. “The time used for going away and doing their training, and then taking a few days to do their courses and assessments is all time taken away from writing business. So if I can deliver candidates to the interview process who already have those essential qualities, then they can start being trained in terms of client time, product knowledge and accreditation, and they can be sitting in on interviews as opposed to more training,” she says.

FINDING THE RIGHT FIT Personality testing can be a vital part of ensuring the staff you hire both fit the culture of your

Organizations need to recognize career progression as a major motivator, and make the most of every opportunity to promote their brand as an employer of choice throughout the recruitment process. Not doing so is a wasted marketing opportunity DECEMBER 2013 | 29

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BUSINESS STRATEGY / RECRUITMENT

WHY EMPLOYEES LEAVE The latest report from recruitment company Robert Walters found that:

80% of those surveyed would leave a role if there wasn’t sufficient career progression available and 79% of hiring managers had been given a lack of career progression as a reason for leaving a role.

75% of those surveyed ask speciﬁcally about career progression during the interview process.

More than half (55%) of those surveyed actively search for job advertisements that promote career progression, yet only 37% of organizations address it in their job adverts.

65% of organizations only address career progression in the later stages of the recruitment process.

company, and stick around for the long haul. Recruiting employees who are the right fit for your company is easier said than done – so it is not surprising that the use of psychometric testing to screen job applications is on the increase, even for non-client facing roles. Understanding how to optimize personality – or psychometric – tests can help you find employees with specific traits that are best suited to the position you’re trying to fill, Paul Forti, from U.S.based PCM Management Consultants, said in a recent interview. He listed the following points as essential to keep in mind to ensure the effective use of psychometric tests: Make sure they’re legal: Not all tests are equal in the eyes of the law. If a test is not properly created or administered, it could be considered discriminatory. Hiring an experienced personality testing firm or consultant can also mitigate your risk, but that can end up costing a lot of money – depending on the scope of the testing, number of employees, and type of test administered. Create a detailed job description: It’s critical to

understand the job for which you’re hiring before you apply the test. If you need a salesperson who is outgoing and good with people, you’re going to be looking for a different personality type than someone who works with numbers in the office all day. Choose the test that measures what you need: There are many different personality tests available to employers, measuring everything from morality and integrity to whether a person is an introvert or extrovert. Be sure that you’re measuring the criteria you need for the position you wish to fill – or you’re wasting your time. Be aware of the test’s limits: While reputable tests can tell you what personality traits a person has, the tests can’t tell you whether the person will succeed in the job. Work environment, management style, corporate culture, practical experience and training all have significant impact on the performance of an employee. A test can tell you some things about an individual, but it should not be used in place of extensive interviewing and reference checking. McNeill says while many employers are turning to psychometric testing to explore a candidate’s ethical behaviour, preferences and motivation, it is important to remember they are not a cure-all solution. Rather, a person’s track record remains one of the best predictors of their future performance and is something that can be explored in face-to-face behavioural-based interviewing. “Behavioural interviews allow you to see how a candidate approaches various work situations and whether their behaviour matches the way your organization conducts business. You can also then see if the candidate’s attitudes and behaviours are shared by your business,” McNeill says. “We recommend behavioural-based interviewing in order to determine how a candidate acted in a previous role, which gives an indication of their future performance. This provides deep insights when attempting to uncover their integrity and standards of business conduct.” “These interviews can also help determine the ethics of a candidate and identify not only the

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technical skills you want but also their integrity and standards of business conduct. Pay attention to any red flags during an interview, such as if a candidate is evasive, tries to control the interview or is argumentative. This provides an insight into their professional conduct.

KEEPING QUALITY PEOPLE Finding good staff is of little use if you can’t keep them. Staff retention can be tricky in mortgage broking, with brokers looking to strike out on their own as they gain more skills and build up their own client contacts. But Richard Manthell of recruitment company Robert Walters says providing a path for career progression can keep new recruits around for the long haul. “Organizations need to recognize career progression as a major motivator and make the most of every opportunity to promote their brand as an employer of choice throughout the recruitment process. Not doing so is a wasted marketing opportunity.” Research from the company suggests that the best professionals want to join organizations where good career progression is offered, Manthell says. “So, from the moment a potential employee reads a job advertisement through to when they sign their employment contract, they should feel that their future career progression is a priority for your organization.” If this is done successfully, not only will it be easier to source quality professionals but also easier to retain them, Manthell adds. A recent Robert Walter report offered the following key lessons for companies looking to retain quality staff: Recognise career progression as a motivator: Having something to aspire to and achieve is a major personal motivator for many. Presenting pathways to progression is just as important as any other aspect of a role. Make first impressions count: The job-seeking process is often the first contact with a brand, and the first impression is formed by the job advertisement.

By considering not only a candidate’s technical skills but their cultural and team fit, an organization is far more likely to get recruitment right the first time Jane McNeill, Hays Insurance Ensure your job advertisement presents a persuasive, accurate reﬂection of a role and what the organization can offer. Not taking the time to include some basic information on what progression opportunities are available is a wasted branding opportunity. Career progression is not always a promotion: Education, training and professional development is the most sought-after career progression offering – so ensure they are articulated and on offer from the start. Don’t overpromise: Overpromising and not delivering leads to staff disengagement, and also damages your employer brand. Being honest about what you can offer and what candidates can expect, as well as following through on progression opportunities will ensure you recruit and retain the best candidate for longer. Make sure expectations are aligned from the beginning of the recruitment process. Set consistent organizational standards and development programs: Career progression programs should include one or more of the following: development planning, talent identification, performance feedback, internal mobility, and training and development. Provide tools to manage career progression: Give your employees the opportunity, and encouragement, to take control of their own careers. Give them the necessary tools and feedback to progress and support their goals. Performance reviews and development planning are vital to this process, but ensure goals are measurable and that the individual is accountable. DECEMBER 2013 | 31

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TOP 30 BROKERS

TE BROK ELI

Elite C

2 013

TOP 30

Brokers

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Insurance Business proudly presents the results of the Elite Brokers survey, an exciting new program that has been embraced by the brokering community. Although earning power is important, we also took a look at those brokers who are taking advantage of technology – moving boldly into the 21st century. One of the questions asked of brokers was whether they leverage mobile technology. A full 66 per cent of those who participated said they did – underlining the need for brokers to take advantage of the “tech tools” at their disposal. Those producers managing business on the road versus the office were varied, with numbers stretching from zero per cent to 100, but with the majority of those falling between the 40 to 60 per cent median. But looking beyond the numbers, we were not simply inviting applications from the most advanced and senior executives working at highprofile, well-resourced brokerages. We were also aiming to reward brokers from smaller firms and niche industries who were punching above their weight and achieving big things. “Forward thinking brokers leverage their brokerage-management systems and business intelligence tools to define opportunities,” says Purdy. “When brokers differentiate themselves the opportunities are endless. Specialization allows brokers to gain market share while others are trying to catch up.”

As a strong supporter of the Top 30 Elite Broker list, Applied Systems sees the value in highlighting and celebrating the best that Canada’s insurance industry has to offer. “We are excited to partner with Canada’s Top 30 Elite Brokers program to help create a forum for excellence for the Canadian broker channel to share best practices and empower the broker of tomorrow,” he says. “There is tremendous talent and potential within the Canadian brokerage community and there are many success stories to celebrate.”

Top-performing insurance brokerages recognize the importance of investing in the latest brokerage management and mobile innovations Jeff Purdy, the senior vice president of Applied Systems

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TOP 30 BROKERS

JUST WHAT MAKES AN

ELITE BROKER? The nation’s top insurance players are front and centre for the inaugural Elite Brokers ranking by Insurance Business, a new initiative that rewards and grades the top 30 leading brokers in the Canadian insurance market

Our inaugural Elite Brokers ranking attracted entries from all corners of the country, as we sought to evaluate and rank the top 30 individual insurance brokers from across Canada. So exactly how was each applicant assessed, you may ask?

O METHODOLOGY

The ranking system is a comprehensive and independent means of ranking the best-performing insurance brokers in the country. Due to the advanced and detailed information needed, each broker was required to supply their own details to Insurance Business to be eligible. In order to rank performance, however, we were not simply inviting applications from the most advanced and senior executives working at high-profile, wellresourced brokerages. We were also aiming to reward brokers from smaller firms and niche industries who were punching above their weight and achieving big things. Our yardstick for success included: • Premium income • Revenue per client • Industry awards and recognition • Number and value of policies written • Number of new clients introduced to the business • Industry awards and recognition • Number and value of policies written

THE KEYS TO SUCCESS When interviewing our top 30 brokers several common strategies for success became clear: CUSTOMER SERVICE An unwavering commitment to customer service is essential, from first point of contact with a potential client through to follow-up after a claim has been processed. RELATIONSHIPS With clients, colleagues, insurers and other brokers, if you want longevity and success in your brokerage career, you need to nurture your relationships across the board. PERSONAL CONNECTIONS It’s no longer acceptable to sit behind a desk and correspond via email. If you want to be a cut above the rest in today’s market, you need to hit the phones, visit clients in person and make a genuine connection. INTERNAL TEAMWORK Every broker bar none agreed that continued success is not possible without a qualified and supportive team to back you up.

• Number of new clients introduced to the business during the 2012 calendar year. Entries for the Insurance Business Elite Brokers ranking, collected throughout October and November this year, went through an evaluation process. Beyond the pure numbers of profit, there were other considerations as well – which spoke to the technological advances now available in the industry: •The percentage of personal lines new business coming through an online channel • If the brokerage was leveraging mobile technology and • The percentage of producers managing business on the road versus in the office. A place in the Insurance Business Elite Brokers ranking is clear recognition of each broker’s professional standing as one of the leading brokers in the Canadian insurance market. However, in interviews with our inaugural top 30, the consistent message received was that they couldn’t have achieved such successful results without a strong network of support staff and stakeholders.

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ELITE TOP 30 BROKERS LIST Rank

Name

Company

Location

Revenue

Danny Sgro

Jones DesLauriers Insurance

Toronto, Ont.

$3,493,000

Kevin Stedman

Jones DesLauriers Insurance

Toronto, Ont.

$2,271,425

Jeff Rodin

Nacora Insurance Brokers Ltd.

Markham, Ont.

$1,997,754

Chris Sikorski

Renfrew Insurance

Calgary, Alta.

$1,293,000

Tony Di Corpo

Racine Chamberland Inc.

Montreal, Que.

$1,102,712

Rank

Name

Company

Location

Joe Palmer

Palmer Atlantic Insurance

Hartland, N.B.

Mike O’Grady

O’Grady & Associates Insurance Services Inc.

Tilsonburg, Ont.

Brock Longworth

Cornerstone Insurance Services

Prince Albert, Sask.

Norm McIntyre

Jardine Lloyd Thompson Canada

Toronto, Ont.

Andrew J. Kilpatrick

Mitchell Sandham Financial Services

Toronto, Ont.

Mark Jackson

The Insurance Market

Toronto, Ont.

Debbie G. Khan

KRG Insurance Brokers

Toronto, Ont.

Mark McKay

Highcourt Partners Ltd.

Toronto, Ont.

Ron Lamon

Algoma Insurance Ltd

Sault Ste. Marie, Ont.

Don Normandeau

Le Bon Ami Insurance Brokers

La Broquerie, Man.

Don Hatton

Hatton Insurance Agency Ltd

Duncan, B.C.

million in revenue

Angela R Walton

Wilson Insurance Ltd.

Fredericton, N.B.

C.J. Nolan

Munn Insurance Limited

St. John’s, N.L.

Michael Delaney

RIO Insurance Brokers

Toronto, Ont.

Susan Thirkill

Cambrian Insurance Brokers

Sudbury, Ont.

Judy Bell

Beyond Insurance Brokers Inc.

Whitby, Ont.

TOP 10 TOTALS

Royle Leung

Broker Team Insurance

Richmond Hill, Ont.

average of

Rod Tidsbury

Nauroth & Associates Insurance Brokers Ltd

Prince George, B.C.

Victoria Blodgett

Darling Insurance and Realty

Peterborough, Ont.

Aaron Beattie

Hoffmann Kool Insurance

Saskatoon, Sask.

Bill Moretti

Tredd Insurance Brokers

Toronto, Ont.

Tereen Mowrey

Henderson Insurance

Moose Jaw, Sask.

Michael Abraham

Paisley Manor Insurance

Toronto, Ont.

Jimmy Murphy

Lloyd Sadd Insurance Brokers

Edmonton, Alta.

Andrew Clark

Marsh Canada Limited

Toronto, Ont.

BY THE NUMBERS: Group

Average($)

Top five collectively

$9,006,175

Top five average

$1,801,235

NUMBERS FOR THE TOP FIVE Total Policies:

6,086 3,960 Total Clients:

Average Years Experience:

23.4 TOP 30 TOTALS

16.3

average of

542,461

1,247,890

BY PROVINCE: Province

Brokers

Ont. Sask N.B. B.C. Alta Que.

18 3 2 2 2 1

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TOP 30 BROKERS

KEEPING UP WITH

THE JONESES Canada’s Top Broker might be more accurately described as top brokers, with two Jones DesLauriers professionals finishing atop the Elite List

T 01

Danny Sgro,

PARTNER, CHIEF SALES OFFICER TECHNOLOGY AND SPECIALTY RISK ADVISOR, JONES DESLAURIERS INSURANCE

TORONTO, ONT.

There must be something in the water at Jones DesLauriers, as two Toronto brokers from that firm posted some big numbers to take first and second spots in the Top 30 Elite Broker Survey. Leading the charge for Jones DesLauriers was Chief Sales Officer Danny Sgro who broke the tape

first almost $3.5 million, outpacing his closest competitor and colleague by more than a million. Along with being a partner and producer at Jones DesLauriers, Sgro is also the relationship manager for some of Jones DesLauriers’ key insurance companies and a mentor to the young producers. “My success can be attributed to hard work and dedication,” Sgro told Insurance Business, who got his start by graduating from the University of Toronto with a degree in chemical engineering. “I knew I wanted to move into the business side but still utilize my engineering experience,” he says. “My strategic plan was to work in loss prevention and risk management, gain a strong underwriting background, work in marketing and sales on the insurance company side of the business, and then move to the broker side. I am very fortunate that this came to pass as per the script.” Fellow partner Kevin Stedman, chief sales officer at the firm gave Sgro a good run for his money, posting numbers $2,271,425. Like Sgro, Stedman attributes his success to staying focused, being well organized and delivering results – but certainly had no intentions of entering insurance when he first got his start. “Growing up with a family in the insurance business, I swore I would never get into the industry,” says Stedman. “When I graduated from the business program at Sir Sandford Fleming College, I was soon after presented with an opportunity to work with a direct writer. The position was intriguing so I welcomed the opportunity, and began my career and appreciation of the insurance industry.”

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02 Kevin Stedman,

PARTNER, CHIEF SALES OFFICER TRANSPORTATION, MANUFACTURING AND CONSTRUCTION ADVISOR, JONES DESLAURIERS INSURANCE

TORONTO, ONT.

Each see the shrinking of the broker channel as one of the biggest challenges facing the industry, and urge brokers to recognize the growing sophistication of the customer. “With fewer insurance companies and fewer brokers due to consolidation, we will likely see larger, more sophisticated brokers and insurance markets in the near future,” says Stedman. “Clients are becoming more sophisticated in their insurance and risk management knowledge and requirements. The industry will have to respond accordingly to stay ahead of the game.” Evolving to meet the customers’ needs is crucial to maintaining the health of the broker channel, agrees Sgro. “The broker landscape has changed dramatically in the last 10 years and will continue to evolve,” says Sgro. “Client expectations of their insurance brokers have increased dramatically. Brokers who will thrive will need to leverage their past experience and knowledge, to provide sophisticated insurance advice and specialized, sector specific products to their clients.” Almost every broker has a story of a mentor who helped guide them through those early, difficult years. For Sgro, there were three. “Gary Boileau, now with Affiliated FM, hired me straight from university and worked with me in my early years of development,” says Sgro. “Then Judy Maddocks promoted me ahead of my time at Kemper Insurance to a senior position and worked with me to excel in that role. When I came to Jones DesLauriers Insurance, it was Bob Jones who gave me the opportunity and mentored me in my transition into the broker side of the business.” For Stedman, his support system starts at home and ends with his brokerage team. “First and foremost is the support of my family, wife and children, then the support of a superior service team at Jones DesLauriers Insurance,” says Stedman. “There are a number of individuals throughout my 24 years in the insurance industry who have guided and supported me, and those individuals know who they are.”

Rodin credits hard work Jeff Rodin, the vice president of Nacora Insurance Brokers Ltd. in Markham, Ontario, racked up some impressive numbers for 2012 – placing him firmly in the rarified air of the top five brokers in Canada. Taking third place with $1,997,754, Rodin is proof positive that hard work in the commercial and personal sector can reap great rewards. “I have been in the insurance industry as a broker for 31 years having obtained my RIBO license on June 1, 1982,” says Roding. “I have grown organically, having never purchased a book of business throughout my career.” Focusing mostly on the commercial market, Rodin’s personal lines book also focuses on the movers and shakers in the commercial market. “My production is 90 per cent commercial with 10 per cent personal lines,” says Rodin. “The personal lines clients written are mostly that of the commercial principals, directors, officers or a family member.”

03 Jeff Rodin

VICE PRESIDENT NACORA INSURANCE BROKERS LTD. MARKHAM, ONT.

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TOP 30 BROKERS

Chris Sikorski SENIOR VICE PRESIDENT, PARTNER RENREW INSURANCE LTD. CALGARY, ALTA.

Client time is time well spent Chris Sikorski secured fourth spot in the hotly contested top five broker survey, not by running the race more quickly, but by taking the time to get to know the clients’ needs. “I invest a significant amount of time getting to know the client and their business,” says Sikorski. “Placing their business is just the beginning of that relationship in which I spend the time necessary to develop their trust and develop open lines of communication. Doing so allows me to match the needs of my clients; provide the proper coverage, terms and conditions, with the insurance supplier.” Insurance isn’t about reinventing the wheel, says Sikorski, but finding new and innovative ways to make their services indispensable. “In order to succeed, brokers must distinguish themselves from their competitors by having access to a broad scope of markets, recognizing and managing client risk and advocating for clients,” he says. “The insurance industry is complex and constantly evolving, so professional development of the broker is key to ensuring that the client’s needs are met.”

Tony Di Corpo INDEPENDENT BROKER RACINE & CHAMBERLAIN MONTREAL, QUE.

A never-give-up attitude For Tony Di Corpo of Racine & Chamberlain, the secret to his success is no secret at all. “I dedicate myself 100 per cent to my business with passion. I work hard, I never give up and I always push myself to go one step further,” he says. “To manage the inevitable stress and to keep the needed energy to achieve my goals, I stay physically active by jogging on a regular basis. Also, I make sure to maintain a pleasant atmosphere at the office so I can continue to enjoy practicing my occupation. In fact, to this day I still believe that I have the best job in the world.” Rounding out the Top 5 of the Elite Broker list with $1,102,712, Di Corpo offers these words of advice to the independents that are looking to get ahead in the industry. “They need to never forget that insurance brokering is a service industry; never take a client for granted,” he says. “Someone wise once told me that ‘if you don’t serve your client, you can be sure that someone else will.’” Like so many other brokers, Di Corpo credits his wife and family support system. But he also looks back fondly to when he started out in the industry. “I owe a debt of gratitude to the Late Mr. Daniel Racine who hired me, believed in me, who pushed me to be and do my best and who was definitely a source of inspiration,” he says.

FOR MORE ON THIS YEAR’S TOP 30 ELITE BROKERS, GO ONLINE TO: WWW.INSURANCEBUSINESS.CA

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THE

MILLION-DOLLAR MAN

Only four years in, Sherif Gemayel has grown his team from two to 22, has partnered with Rogers Insurance, and is writing $1 million in coverage a month. How is he doing it? There is a new young gun on the insurance scene, with only a background in the oil and gas field and a lot of verve and vision; and now he is going toe-totoe with the direct writers in Alberta. And winning. “Brokers are constantly complaining about the direct writers,” says Sherif Gemayel, president of Sharp Insurance in Calgary, Alberta. “They are difficult to compete with, yes; but they are not infallible. You have got to know how to sell

against them. As brokers, we need to be a lot more creative, because we have a lot more products to sell. It is too bad we’re not doing that as an industry.” Gemayel backs up his straight talk with some impressive numbers, like growth exceeding 30 per cent annually, which have placed him firmly among the top brokers in Canada, and in the same heavyweight class as the direct writers. “Sure the big banks have lots of money, one big bank does about $3 million in new business monthly DECEMBER 2013 | 41

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FEATURES / BROKER SPOTLIGHT

– so we’re not that far away,” Gemayel told Insurance Business magazine, citing the bank’s numbers for the region he operates in himself. “But they are not infallible – they’ve just been doing it for so many years that nobody has gone up against them.” When Gemayel had his introduction to insurance, the experience was not exactly rewarding. “I came from the oil and gas world – I really didn’t know much about insurance,” he says, describing his first brokerage as a lesson-learned experience. “Before Sharp, I came from a sales background. The brokerage that my previous partner was working at, I would visit him at the office and then ask him questions like ‘How do you drive business?’ and he would tell me ‘We wait for the phone to ring.’”

We started it with the idea that we wanted to change how insurance is sold and the approach to selling it, so we took more of an online approach – that was pretty uncommon at the time Turned off by an attitude that Gemayel describes as laziness, he decided to build something from the ground up himself with his friend Harp Niijar. “I persuaded him to start a new brokerage from scratch. And we did,” he says. “Harp was going to buy into the brokerage he was working at, but I persuaded him to start from scratch rather than buy in. Fast-forward four years, and we have grown to a staff of 22 doing over $1 million of business monthly.”

For Gemayel and his partner, the concept for the brokerage when it was created in August of 2009 was ground breaking for the time. “We started it with the idea that we wanted to change how insurance is sold and the approach to selling it,” he says. “So we took more of an online approach – that was pretty uncommon at the time.” Part of that uncommon approach was to launch a mobile app for clients in 2010. “I’m 99 per cent sure we were the first brokerage to launch a mobile application for our clients in 2010, which basically gave clients the ability to see some of the policy information, request changes, and submit claims through an app,” says Gemayel. “Now there are a lot of other apps out there. We have re-launched our mobile application, which now gives real-time data for our policy holders, real-time pink cards, tells them when the payments are coming out, how much the payments are, available on iPhone, Android, Windows mobile, BlackBerry … the whole nine yards.” Niijar is no longer a partner at Sharp, that void being filled by the investment from Rogers Insurance, which bought 40 per cent of the company. It is the marriage of the latest technology and the recent partnership with Rogers is what has Gemayel optimistic about Sharp’s future. “We’re out to change the world of insurance,” he says. “Having a partner like Rogers is great because you have a lot of resources available. They’ve got tons of experience and size – it is really fantastic.” The joy of this relationship can be seen in the commercials that are available on YouTube, featuring Gemayel and Bruce Rabik, the chief operating officer of Rogers Insurance. The dead-pan delivery of Rabik is in clever contrast to Gemayel’s buoyant demeanour. “Rogers is the largest brokerage owned by Albertans and Sharp is the fastest growing brokerage

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INSURANCEBUSINESS.CA

Change is eventually going to happen. We are seeing quite an acceleration and change in the insurance world. Whether it is in the product or how it gets sold in Alberta,” says Rabik. “Sharp is a brokerage leading the way on the internet.” With the simple message, “Together – we’re better,” the YouTube commercials reinforce the drive to reach out to clients online, and to maximize that presence when clients look for car insurance. “Our big thing is technology. We employ and deploy a lot of technology,” says Gemayel. “We find a lot of our business through the online world. So if you are searching for insurance, whether it is auto or home or commercial, we are typically one of the first ones to be found.” Proving the advice offered by HUB International CEO Martin Hughes in an interview in the October issue of Insurance Business magazine, Gemayel has been able to expand by exploiting the niche market. “We’ve found some cool niche programs that have been successful in the personal space,” he says. “We’re mainly personal lines, perhaps 95 per cent personal lines. We are predominantly auto – and it can be a lot of policies when you are writing a million bucks a month in auto.” One of the technologies that Sharp Insurance has taken advantage of is telematics, but Gemayel has put his own unique spin on it. “We’ve masked it as a game and called it Rate My Driving,’” he says. “Basically, the client turns on the game and it senses how quickly they accelerate, decelerate, how quickly they are turning … then it gives them a score

Sherif Gemayel

based on that data. It’s a fun game, but it is also a test to see how the telematics will work – it is not applied to their insurance.” Encouraging clients to participate by making it a game has overcome the reluctance many have about telematics, says Gemayel, especially over concerns of privacy of information. “Clients love it. We did a soft launch back in June, and we did a hard launch at the end of October,” he says. “We’ve had about 300 downloads before the hard launch, but we’re looking at well over 2,000-3,000 downloads since the hard launch.” All the client has to do is log in to the app, register their information, verify their identity, then turn it on and play the game whenever they choose. For Gemayel, Rate My Driving is just one small piece of a puzzle that is coming together for Sharp Insurance as the company continues to push forward and expand. And it is the same advice he offers other brokers that he takes to heart himself. “Move forward with the times – don’t stay stagnant and just assume business is going to stay the same,” he says. “Change is eventually going to happen. We are seeing quite an acceleration and change in the insurance world. Whether it is in the product or how it gets sold.”

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INSIGHT

SHRED THOSE OLD HABITS

For brokers reluctant to trade their empire of paper files for a digital future, here is some frank advice from Jeff Purdy of Applied Systems IB: Independent brokers have been traditionally reluctant to embrace technology, hanging on to their paper systems and files. What is the cost for brokerages in terms of clients and commissions? JP: The impact on brokers who do not embrace technology is that their business will run at lower margins than those who leverage technology to manage and measure their brokerage performance. Many factors in the insurance marketplace are driving price down and in an environment where revenues are down, margins are more important. Lower margins put pressure on all areas of the business, including staff productivity and new business acquisition. Positive results can be achieved when brokers invest in great brokerage management technology to help manage their margins, improve internal efficiency, mitigate risk and increase opportunities for growth to compete.

IB: What will the technology offerings look like for brokers in 2014? JP: As consumer demographics continue to evolve, brokers need to adapt their service offerings to be there for their customers and interact with them in different ways. Consumers expect instant access in banking and retail; if they can’t access insurance information and interact in a way that they are comfortable with, they will look elsewhere. Brokers need to provide clients with the ability to access their policy information any time of day via PC, tablet or mobile phone. In 2014, we will see significant increases in brokers leveraging self-service technology and managing their brokerages remotely via mobile devices. Data security is critical; in the event of a disaster, customers need access to policy information, even if their brokerage is directly impacted by the catastrophe. Damage caused by severe weather has recently emerged as the leading cause of property insurance claims. Brokers need to have their critical data secure and accessible in times of severe crisis when their customers need them most.

IB: What is the biggest mistake you see when brokers and technology mix? JP: Unfortunately, some businesses perceive technology as the ‘silver bullet’ and hope that the investment alone will ensure success. Technology is an essential tool to help business be better and deliver results. The best opportunities come to those brokers who optimize their technology to its maximum potential and align it to their business plan. Many of our customers leverage our services and education team to implement best practices for optimization.

Jeff Purdy senior vice president and general manager, Applied Systems

IB: Independent brokers are losing clients to the directs at a rate of 1 per cent a year. How can this slow attrition be stopped, if at all? JP: Brokers today believe that they can’t compete with alternative sources of insurance distribution. As a result, investment decisions-or lack of investment decisions-are made because of that thought. In our opinion, the cost of technology is relatively inexpensive compared to revenue that brokerages can generate from increased sales and efficiency. As a result, this level of attrition can absolutely be stopped and the balance of power can be reversed by embracing technology to regain market share. Brokers need to maintain a strong online and mobile presence and leverage self-service capabilities in order to emulate the larger players in the marketplace and compete.

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INSURANCEBUSINESS.CA

TIME MANAGEMENT:

ARE YOU A TIME SAVER OR A TIME SPENDER?

Do you feel like there is simply never enough time in the day to get your business firing on all cylinders? Your personal time management beliefs may well be contributing to your productivity downfall, but a change in mindset can do wonders for business as well as your stress levels, argues Nikki Heald Do you ever wish you had more hours in the day? Do you find yourself stressed, anxious and a little overwhelmed when tasks are incomplete? Well, if you think it’s getting harder and harder to manage your time, you’re certainly not alone. More and more employees are complaining about the pressure on their time and that their workload appears to be increasing. We each have 24 hours in our day, so why is it that some people breeze seamlessly through their tasks and others struggle with time? Time management is really about managing yourself. While we can’t control the number of hours in our day, we can control the way we work. Interestingly, your personal time management beliefs may well be contributing to your productivity downfall. Are you convincing yourself that there is not enough time? Do you refrain from delegating because it’s easier to do it yourself? Are you in the habit of always saying yes to others? Do you believe that multitasking makes you more efficient? Firstly, in order to make positive time management changes it’s important to develop the mindset that your time is valuable. In other words, recognizing the importance of what you do and deciding what

deserves your energy. The essence of working effectively is firstly knowing what to do, and secondly just doing it.

TRIVIAL INTRUSIONS While these may appear to be very simple steps at first glance, with so many distractions and interruptions in the workplace, it’s easy to lose focus. Research has demonstrated that about 2.1 hours per day is wasted on trivial intrusions. These time wasters destroy any attempt at effective time management if they are not identified and eliminated. Some interruptions, of course, are necessary and cannot be avoided, but many are just needless annoyances. Think about your working day and consider all of the inconsequential disturbances that may occur. Some of the biggest time wasters include checking Facebook, texting, social chit-chat, smoking breaks, IT issues, humorous emails, feeling tired, personal phone calls, questions from colleagues, and notifications. It’s easy to see just how quickly 2.1 hours can accumulate. Additionally, a lot of time may be spent on low payoff activities, rather than high payoff activities. Our high payoff activities are those that bring us maximum return. Essentially, they are tasks or actions DECEMBER 2013 | 45

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BUSINESS STRATEGY / TIME MANAGEMENT

that are the most significant. High payoffs are duties that are generally aligned with our key performance indicators (KPIs) or targets, or form part of our job description. Low payoff activities are those activities that, in reality, don’t significantly impact on results or the bottom line. And yet it’s often these tasks that get the majority of our attention. Why? Well, firstly they often require minimal effort and can be done quickly. This provides us with instant gratification – we feel as though we’ve been busy. Additionally, because they are easier, they may be more pleasant and enjoyable to complete than high payoff tasks.

IDENTIFY AND ELIMINATE

TOP TIP Think about when you are at your most productive, and then plan important tasks for this time.

High payoff activities will vary from person to person, job to job. A low payoff for one individual may well be a high payoff for another. Either way, it’s vital you have a clear understanding of what your high payoffs are. That way, you can ensure that maximum time is devoted to these. In theory and ideally, we should be aiming to work on high payoffs for around 70–80 per cent of our working week. Unfortunately, research has demonstrated that realistically only about 40 per cent of our working week is actually spent on them. The trick is to identify your low payoffs and, once you’ve done so, consider ways to remove or eliminate them. Not everything has to be done by you! Create a list outlining low payoff tasks in one column and high payoffs in the other. Doing this will provide clarity about where the majority of your time is being depleted, and allow you to recognize where your time should be invested. Learning to manage your time wisely not only improves productivity but also has important health benefits. When we feel more in control of our workload it’s only natural we are likely to feel less stress. How many times have you taken work home or logged on remotely late at night? If you find yourself doing this consistently, it’s important to recognize the toll on your health, wellbeing and ability to relax. See Top 10 Time Management Tips’ at (right), for advice that may assist you in increasing efficiency and managing your day better. Remember, good time management is about managing yourself. We all have the same amount of time, but what we do with it and how we use it will determine whether or not we are successful. Happy planning! Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining and co-author of Views On The Way To The Top.

TOP 10

TIME MANAGEMENT TIPS

1. Take time to plan your day either first thing in the morning or in the afternoon before you leave work. Create a to-do list or a system that you can refer to. Invest planning time to save working time.

2. Diarize and allocate specific times to attend

to certain tasks. Be sure to set time limits and stick to them. Utilize your most productive time.

3. Consider the 4 D’s of time management:

Do it – Only if it takes less than two minutes to complete Delegate it – Many low payoff tasks can be delegated. Ensure the person you delegate to has the required competency or skills Dump it – Trivial or meaningless information or emails that are not required Diarize – Non-urgent tasks can be diarized to be done in the future

4. Keep track of time spent on low payoff

and high-payoff activities. Try to keep a schedule for the week.

5. Batch or chunk similar work, such as

processing or filing. This ensures you are in the headspace of doing repetitive work, and it promotes efficiency.

6. Avoid the urge to multitask Research has

demonstrated that multitasking slows you down and increases the likelihood of error.

7. Allocate contingency or buffer time in

between tasks. This will allow for unexpected interruptions and distractions.

8. Plan for periods of relaxation, and try not to be a workaholic. Ensure you take your lunch break – resting improves focus and attention.

9. Don’t always be a ‘yes’ person. Saying yes

to others will certainly increase your popularity; however, it will impact negatively on your personal productivity. Learn to say no nicely.

10. Finally, resist the urge to check your inbox constantly – some things can wait and don’t require your immediate attention.

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4/12/2013 9:47:19 PMPM 02/12/2013 4:55:15

FEATURE / LEGAL

WHAT IS TRUTH?

A recent Court of Appeal decision involving disclosure suggests that what may be of greater importance is what the client understands to be true, Rob Purdy of Patterson Law explains

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The 19th-century author Oscar Wilde once wrote, “Truth is rarely pure and never simple.” Lynette Badenhorst might agree. In a recent decision of the Manitoba Court of Appeal, Badenhorst vs. Great-West Life Assurance Co. (2013 MBCA 5; SCC denied leave to appeal), the court overturned a trial decision in favour of Ms. Badenhorst that found that she had not withheld material facts in her applications for disability insurance on the grounds that her answers to the questions asked in the application “were truthful according to her understanding of the questions and the understanding of a reasonable person.” Instead, the court held that Ms. Badenhorst had provided incorrect answers that were material to the issuance of the policy, and permitted Great-West Life (GWL) to void the policy. Ms. Badenhorst was a physician who, in the spring of 2006, began experiencing difficulties in her marriage. She was referred to MD Care, a professional assistance service offered by a group of psychiatrists to physicians who required counselling or other support. Through MD Care, Ms. Badenhorst and her husband began seeing Dr. Prober, a psychiatrist, for marriage counselling beginning in July 2006 until April 2007. Despite the counselling, Ms. Badenhorst and her husband separated in September 2006. In November 2006, Prober referred Ms. Badenhorst to another psychiatrist, Dr. Schwartz, for individual psychotherapy. On November 14th, 2006, Ms. Badenhorst applied through her insurance broker for disability insurance with GWL. Part one of the application was completed in person with the broker, who read the questions and filled in Ms. Badenhorst’s responses. At that time, she answered “no” to the following questions: 7. Have you ever received treatment or counselling for or had any known indication of burnout, chronic fatigue, anxiety, depression; or any psychiatric disorder? 8. Have you taken any prescribed medication or received any treatment or therapy in the past year? 9. In the past five years have you: had a consultation with a physician, chiropractor, psychologist, or

INSURANCEBUSINESS.CA

therapist not mentioned in question no. 6 or 7? On November 27, 2006, she had her first individual appointment with Schwartz. The following day, a GWL representative contacted Ms. Badenhorst by telephone. At that time, she was asked the following questions: “Have you ever consulted a psychiatrist, psychologist, or counsellor for any reason? “Have you ever had any symptoms of anxiety, depression, stress or fatigue?” She answered “no” to both. On December 2, 2006 another GWL representative contacted Ms. Badenhorst to complete part two of the application. She again answered “no” to the questions included in part one of the application. Ms. Badenhorst continued to see Dr. Schwartz and, in October 2007, he diagnosed her with chronic depression. She struggled with the depression, eventually being forced to leave her job temporarily. In April 2008, following a severe major depressive episode, she made a claim to GWL for total disability benefits. Following an internal review, GWL found that Ms. Badenhorst had withheld relevant facts from her application when she failed to disclose her appointments with Prober in 2006 and voided the policy. Ms. Badenhorst brought an action for total disability benefits, as well as damages for mental distress and aggravated and punitive damages. At trial, Ms. Badenhorst had argued that she did not understand that the questions asked by GWL referred to marriage counselling. She did not believe marriage counselling was relevant to her health, nor was it “treatment” or “therapy.” The trial judge agreed, and found that not only did Ms. Badenhorst not understand that the questions were intended to include marriage counselling, the reasonable person reading those questions would not have understood they should disclose that information. The Court allowed the action and awarded $30,000 in damages. The court of Appeal disagreed with the trial judge’s decision. The issue in this case was not whether or not Ms. Badenhorst understood that the questions intended her to disclose that she

Truth is rarely pure and never simple Oscar Wilde

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FEATURE / LEGAL

The Court of Appeal did not find that Ms. Badenhorst had acted with any intent to deceive or mislead GWL. It did not find that she had deliberately withheld information. It simply found that none of those factors was relevant

Rob Purdy

received marriage counselling. It was simply whether or not her having received marriage counselling was material to the issuance of the policy. Expert witnesses for both sides had agreed that if Ms. Badenhorst had disclosed her history of marriage counselling, a “reasonable insurer” would not have issued the policy. It did not matter that Ms. Badenhorst believed she was answering the questions correctly; she did not answer them correctly and, in doing so, failed to disclose material information. The Appeal Court found that GWL was entitled to void the policy. The trial judge had relied on a 1923 decision of the Supreme Court of Canada, Ontario Metal Products Co. vs. Mutual Life Ins. Co. ([1924] SCR 35), which was factually very similar to this case. The applicant had failed to disclose that he had received a series of injections in 1916 and 1917 containing iron, arsenic, and strychnine. The questions on the application had referred to diseases for which he had been treated or consulted a doctor, and he had requested the injections for no specific illness or condition. In that case, the Supreme Court had found that, when reading the questions on the application together, the applicant’s answers were consistent with those expected of the “reasonable applicant.” But as the Court of Appeal noted in its decision, the Privy Council had later rejected the Supreme

Court’s reasoning with respect to the treatment of the application in Ontario Metal. It found that each question on the application should be considered individually, not grouped with other questions, to determine if it was answered correctly. The Privy Council had upheld the decision, but on the grounds that the incorrect answers had not been material to the application. The Court of Appeal also relied on two later decisions from the SCC: Kierman vs. Metropolitan Life Ins. Co. ([1925] SCR 600) and Henwood vs. Prudential Insurance Co. of America ([1967] SCR 720). Though the Supreme Court did not explicitly overturn Ontario Metals in Kierman, it held that even if there was an innocent misrepresentation of a material fact, the insurer was entitled to void the policy. In Henwood, the court further clarified that materiality was to be defined from the perspective of the insurer, not the insured. Badenhorst serves as a valuable caution to insurers who are taking insurance applications from potential clients. The Court of Appeal did not find that Ms. Badenhorst had acted with any intent to deceive or mislead GWL. It did not find that she had deliberately withheld information. It simply found that none of those factors was relevant. Her answers to the questions were incorrect, and the answers were material to the insurance risk. It was not open to Ms. Badenhorst to decide if the fact of her having attended marriage counselling was important or significant to her application for benefits. In some ways, this creates a Catch-22 for clients. As the Appeal Court noted, clients are unlikely to know what constitutes a “material” fact from the point of view of the insurer, and yet failure to disclose such a fact allows the insurer to void the insurance policy. Even if applications may seem straightforward to the insurer, it should be worth taking a few extra minutes to confirm that the client understands their responsibilities and obligations when providing information. Those few extra minutes can help ensure that the information provided is both truthful and correct.

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SOCIAL

A FABULOUS FIVE YEARS Berkley Canada celebrated its five-year anniversary at the Ivey ING Leadership Centre. Founded in 1967, Berkley Canada has offices in Toronto, Montreal and Vancouver.

Peter Bryant (Jones Brown), Ashley Beales (BerkleyPro)

Arushi Lakhanpal and Winnie Wong (Berkley Canada operations department)

Steven Cade ( regional vice president in Berkley Canada’s Vancouver office), Elizabeth Lopez (Gallagher Lambert), Graeme Finnell (AVP Commercial Lines, Berkley Canada)

ROM AND RSA SHARE THE WONDERS OF ANCIENT MESOPOTAMIA

RSA hosted an exclusive broker preview of this year’s visiting exhibition at the Royal Ontario Museum, The Wonders of Ancient Mesopotamia, for which RSA was the presenting sponsor. In addition to a private viewing of the exhibition, brokers enjoyed a cocktail reception and hors d’oeuvres from the Middle East, while hearing from Rowan Saunders, RSA’s president and CEO, and Tony Hayes, vice president, Sales & Marketing.

FORE! NICC

Those attending the National Institute Conference of Canada in Gatineau, Quebec talked about catastrophe, and the grave exposure these hazards pose to society in general and the industry in particular. A large part of the agenda was taken up with talk of earthquakes, hailstorms, supply chain disruptions – and of course, the need for flood insurance in Canada. But it wasn’t all work and no play, as conference attendees took time out to get in a little golfing, courtesy of NICC organizers.

DECEMBER 2013 | 51

BUSINESS STRATEGY / SALES

SALES SCREW-UPS YOU CAN

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INSURANCEBUSINESS.CA

AVOID Doug Mathlin explores how avoiding common missteps can boost sales and energize your business DOING SHORT-TERM NEEDS ANALYSIS AND PROVIDING SHORT-TERM SOLUTIONS The average rate of client advocacy is low in many industries and the insurance broking industry is no different. Clients can come to realize in the first few years that their arrangements are not right for them in the long term (or their situation changes). Unfortunately, this can create doubt about the value/ worth of the original broker and many clients walk as a consequence. Brokers should understand the short and long-term goals of each client to ensure that they can provide the best structure at the outset and for the future. They should also ensure that the client understands that if their circumstances change, they should meet with their broker to discuss new strategies.

NOT EDUCATING CLIENTS THAT YOU’RE SELLING RELATIONSHIPS AND ADVICE, RATHER THAN TRANSACTIONS Most clients contact a broker because they’ve decided they need to examine their insurance needs. Brokers don’t really need to sell product; the client has already bought into that. Clients will often only focus on what they need now and not even think about what brokers really do. The broker’s job is to fully understand their clients’ needs, provide advice where appropriate, and educate their client on how they will assist them with insurance for the long term. I hear some brokers tell their clients that they are their ‘personal broker’ – which hopefully means that the client will turn to the broker first when they next want to insure.

ONLY MEETING CLIENT NEEDS RATHER THAN EXCEEDING THEM Experienced brokers are often guilty of just doing enough to complete the transaction and not finding a way to do the 1 per cent extra. DECEMBER 2013 | 53

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BUSINESS STRATEGY / SALES

Experienced brokers are often guilty of just doing enough to complete the transaction and not doing the 1 per cent extra Client satisfaction comes from needs being met; client loyalty begins when client expectations are exceeded. Top performers will often check to make sure that they over deliver to every client.

EXPECTING THE PROSPECT/ CLIENT TO DO THE WORK FOR YOU Sending a detailed needs analysis to a prospect who doesn’t know you and expecting them to complete it is not a good way to engage with them. Firstly, some people will not be willing to complete it due to the personal nature of the questions, while others won’t have the information required at their disposal. Most brokers’ value propositions are about saving clients time and money. Brokers should make it easy for people to do business with them. Have someone help the client complete

the fact find and you will more likely have a very pleased client who is willing to recommend your services. Sending a high-level fact find to identify the client and to ensure that they are a serious buyer is fine – but not using a 10-plus page questionnaire.

NOT HAVING A SYSTEM OR PROCESS TO FOLLOW AT THE POINT OF SALE OR BEYOND IT Winging it is never a good presentation plan. Salespeople need to be professional communicators who can articulate their message clearly. Many brokers turn up to client appointments and ask ‘how can I help?’ and make it up from there. Take control of f uture meetings by setting the agenda and keep clients on track with what you are doing. You are the one being paid for this meeting, therefore you should control it. Great salespeople have anecdotes to back up their experience and to sell their knowledge. Top performing salespeople have a sales presentation plan and structure that they follow and have the ability to adjust it to the differing personality styles of their prospects. Keep a record of the questions that you need to ask each client. Prepare to deliver your key messages

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INSURANCEBUSINESS.CA

(value proposition, your personal experience, your referral program) and anticipate any unasked questions.

NO URGENCY TO PERFORM One of the things that brokers can do to outperform the competition is to provide a truly personal service to each client and referrer. The energy and enthusiasm of the salesperson are the things that the client will remember well beyond the premium rate. Quickly reacting to client needs (and anticipating them) is a great way to demonstrate your care and commitment to them. Set yourself a benchmark to respond to all client enquiries in less than an hour on average. Answer all inbound calls where possible. These are the little details that clients will remember.

NOT MANAGING CLIENT EXPECTATIONS One of the things that clients get annoyed, frustrated or confused about is not knowing what’s happening with their policy or claim. Brokers are engaged in this work all the time, whereas clients tackle this a few times in their lives. As this is a really important process for the

client and is a stressful time, the least the broker can do is to keep them informed about what is happening. It’s important to provide clients with a flow chart on how things will progress in taking out a policy or making a claim. It’s also important to stay in contact with the client directly (by phone or email). In the early stages, it will pay dividends to call the client almost every day to let them know what is happening, to explain the next steps, and to ask this question: ‘when would you like to hear from me again?’

THE INABILITY TO SELL YOURSELF AND YOUR REFERRAL PROGRAM If you rely on repeat and referral business from clients, it is critical that you tell your clients about this. I’m always staggered by the number of brokers who hope for referrals and recommendations rather than being direct about it. Tell your clients why you are going to do the best you can for them and tell them how you generate business (ie, client referrals). Don’t ask for specific names of people that you can call but make sure they know how to repay you for your great service

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BUSINESS STRATEGY / COMMUNICATION

CLIENT COMMUNICATION: DIGITAL VS. TRADITIONAL As blogs, newsletters and videos become normal modes of client communication, financial services professionals are heading into a brave new world of digitization. But, as Anders Sorman-Nilsson argues, while new online communication channels can’t be ignored, old school communications are key to connecting with your customers’ enduringly traditional, emotional hearts

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INSURANCEBUSINESS.CA

We are entering a world of digital disruption: the idea that everything that can be digitized will eventually be digitized. This includes the customer service and marketing touchpoints that are essential tools for financial services professionals seeking to win the hearts and minds of tomorrow’s customer. Digital disruption is a force to be reckoned with for financial services professionals such as mortgage professionals, financial advisers, and insurance brokers, but it doesn’t mean that everything that can be digitized should necessarily be digitized. It’s essential to pay careful attention to your communications mix so that you don’t throw out the traditional baby with the digital bathwater. While the digital world represents a shiny new penny that is key to engaging with the customer’s increasingly digitized, rational mind, old-school communications remain vital to connecting with the customer’s enduringly traditional , emotional heart. The digital world disintermediates the relationship between financial and bricks-andmortar investments and the end consumer, and that consumer is increasingly doing their due diligence digitally. This means that you run the risk of being digitally disintermediated unless you start providing more value to the customer, via both digital and traditional channels. Think about it this way: digital is phenomenal for attracting new clients, and traditional is great for retaining (cross-selling and closing) existing clients. Thus, you need to become a thought leader in the way that you provide informational, rational value to clients’ increasingly digital minds, while still connecting emotionally while still connecting with them emotionally. To be able to compete with digital comparison portals and to protect yourself against digital disintermediation, it’s critical that you figure out which touchpoints you should digitize and which ones you shouldn’t digitize. This isn’t a choice between either the digital or the traditional channel. Instead, you must go ‘digilogue.’ Here’s how you can do this:

PROVIDE VALUE TO DIGITAL MINDS Put your industry thought leadership and professional expertise on the digital-line by creating a great blog, newsletter, and well designed, interactive website. Create a four-two-one digital content schedule: blogging four times per month, sending two digital newsletters per month, and creating engaging and educational video content at least once per quarter. For example, a mortgage broker in Coal Harbour, Vancouver, could create a four-two-one digital content schedule to provide informational value to clients’ (and prospective clients’) digital minds, while also boosting their Google rankings. It would look

FOUR-TWO-ONE DIGITAL CONTENT SCHEDULE

BLOG

1. “The impact of the central bank decision on home loans in Coal Harbour” 2. “3 things to think about when buying in Coal Harbour” 3. “Do’s and don’ts when talking about home loans with the major banks” 4. “Top 7 questions to ask yourself when choosing a home loan in Coal Harbour”

DIGITAL NEWSLETTER

1. “3 tips to ensure a thicker wallet with the right home loan” 2. “Coal Harbour property trends – why the time is right!”

VIDEO

1. Interviews with happy clients who now reside in Coal Harbour, or video footage of lifestyle factors such as cafes and restaurants in the area

It’s absolutely necessary to make each tangible traditional encounter with clients and prospective clients world class DECEMBER 2013 | 57

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BUSINESS STRATEGY / COMMUNICATION

something like this:

BEING SEEN You must be seen in the digital world. Your prospects need to start trusting you as a thought leader in the digital world before making an approach to see you in the traditional world. In the digital world, where clients are doing their digital due diligence, offering engaging content is king. Creating search engine optimization, localized content that can be easily accessed by a prospect via mobile devices will be key to your success in winning digital minds. For example, have content on offer that your clients can view while they’re walking up the street in your area and checking out property.

Big deals are usually still sealed with a handshake. There is something about the ritual of signing on the dotted line … that the digital world still cannot mirror. CONNECT WITH TRADITIONAL HEARTS

Anders SormanNilsson is a global futurist, innovation strategist, keynote speaker at TEDx and author of the new book, Digilogue: How to Win the Digital Minds and Traditional Hearts of Tomorrow’s Customer.

While it is critical that you, as a finance professional, are digitally accessible and provide value to digital minds, you also have to ensure that you connect deeply with traditional hearts. Traditionally and enduringly, most transactions take place in the traditional , face-to-face world. Big deals are usually still sealed with a handshake. There is something about the ritual of signing on the dotted line with a Montblanc pen, for example, that the digital world still cannot mirror. It’s absolutely necessary to make each tangible traditional encounter with clients, and prospective clients, world class. If a client, or prospective client, decides to spend traditional , face-to-face time with you, you must show incredible respect for the time

they invest with you by connecting deeply with their traditional hearts. In June 2013, when I spoke at the Million Dollar Round Table for global financial advisers and insurance professionals in Philadelphia, I gave the following

RECOMMENDATIONS • Scenario planning and consulting on a one-on-one basis with your client: My financial advisers at Sentinel Wealth do this incredibly well. We sit down each quarter face-to-face and revisit goals and the long-term plan. They provide me with hindsight, insight and foresight based on our plan, while providing a sense of partnership during these conversations. • Writing a handwritten card: This will remind the client of their investment and savings goal, or congratulate them on goals achieved. When I was working with mortgage brokers who sold Advantedge products, one broker said that handwritten notes was his key way of adding traditional value and ensuring he retained his clients’ loyalty. • Hosting investment and financial literacy workshops for clients and their friends: This is a great way of adding value to existing relationships, while also building a pipeline of trusted referrals. • Speaking at industry conferences: This will boost your personal brand and thought leadership credentials, and harness your financial networks (accountants, mortgage professionals, stockbrokers, banks, etc.) both for speaking opportunities and face-to-face introductions. If you become a trusted adviser and thought leader within your industry, the likelihood is that the industry will talk about you. This in turn can generate positive PR and recommendations.

recommendations. Have a think about them: There is a time to be digital and there is a time to be traditional . Financial services professionals must ensure they find the correct blend. Digital is phenomenal for attracting new clients and for boosting your own digitally amplified branding, while traditional can be great for building enduring trust, retaining business, and closing deals. Increasingly, you must learn to shift seamlessly between the digital and traditional worlds. In one word, you must start becoming ‘digilogue’.

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STATISTICS

IRREPLACEABLE?

Who is replacing Canada’s baby boomer brokers? INSURANCE INDUSTRY - AGE GROUP DIFFERENTIAL

GROUP OF 20 COMPANIES, FULL-TIME EMPLOYEES (N) 2007 - 2012

Differential (N)

2,000 1,500 1,000 500 0 -500 <20

Age Group

Change (N)

Change (%)

2007

2012

2007-12

141

263

122

Underwriter

2,111

2,856

745

Claims

5,125

6,881

1,756

Information technology

1,335

1,507

172

Sales and service

3,067

4,648

1,581

Management

Occupation Actuarial

Broker/Agent

1,936

2,918

982

Senior management

309

331

Middle management

912

1,133

221

Other management

715

1,454

739

103

Risk management

164

13,736

19,265

5,529

40%

Total

10 8 % Share of Total

20 COMPANIES TO INCREASE NUMBER OF EMPLOYEES BY 40% IN 5 YEARS

DEMOGRAPHIC FOOTPRINT

P&C INSURANCE INDUSTRY VS. CANADA’S LABOUR FORCE

6 4 General labour force

2 0%

20 25 30

35 40 45 50 Age Group

55 60 65

70+

P&C

10 8 % Share of Total

Richard Loreto, the author of the study, Insight into Canada’s Labour Market, and How it is Impacting the Insurance Industry, shared his findings in a recent webinar on the aging of the industry and what is needed to encourage an infusion of youth.

75+

A full 44 per cent of those in the industry told us that they got their start through a referral from a family member or friend who was working in insurance. And accommodating work-life balance issues has increased considerably from 2007 to 2012, from 21 per cent to 54 per cent. The stats on the left show the large shift of baby boomers from full-time to part-time employment.

6 4 General labour force

2 0%

20 25 30

35 40 45 50 Age Group

55 60 65

70+

P&C

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BUSINESS STRATEGY / BUSINESS BUILDING

BETTER LUCK NEXT TIME:

INCREASING THE ODDS OF SUCCESS AFTER AN APPLICATION IS REJECTED

No one likes rejection. Gary Hirst, the national director of Burns & Wilcox Canada, explains how you can protect your winning streak

Clients look to brokers to find them coverage no matter what their risk profile. And brokers build a business by being able to find the right mix of insurance products to cover even the most risky of businesses. They also quickly navigate the complex world of commercial insurance on behalf of their clients. When an application for coverage is rejected, it can result in a loss of income and a damaged reputation for brokers. After being rejected for coverage, it is important that brokers reapply with a clean application to ensure that their clientsâ&#x20AC;&#x2122; needs are met as quickly as possible as a delay in insurance can mean a delay in operations. Managing general agents (MGA) and carriers see many applications for coverage that were

previously rejected, and all too often, the applications include mistakes that make it harder to process, leaving clients without coverage for an even longer period. But, thereâ&#x20AC;&#x2122;s good news: the most common mistakes on most applications are easily fixed. By taking the time to properly complete an application, the process will proceed more smoothly and clients will get the coverage they need.

COMPLETE YOUR APPLICATION MGAs and carriers understand that brokers are busy and that completing an application can be an onerous task, especially when the

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information requested isn’t readily available. But when an application is submitted without all the requested information, it cannot be processed. The underwriter examining applications is simply unable provide coverage if they don’t have a full and comprehensive understanding of the risks involved. Providing a fully completed application gives the underwriter a complete understanding of the risk, which makes his or her job easier and, more importantly, allows them to process the application more quickly.

While it might seem counterintuitive, one of the best strategies for overcoming a previously rejected application is to address why the coverage was originally rejected

TAKING ADVANTAGE OF TECHNOLOGY As the popularity and power of the Internet has grown over the past 20 years, so too have the number of tools to make applications more efficient. Most major MGAs and carriers offer the option to submit applications online but, while most brokers have taken to using electronic applications when applying for coverage, there are still some holdouts that submit handwritten applications. This simply adds to the overall processing time. In some cases the writing is illegible, which can add even more time to the process. Brokers can avoid that problem by taking advantage of electronic applications, or by filling out the applications carefully to ensure that the information is legible.

FULL DISCLOSURE While it might seem counter intuitive, one of the best strategies for overcoming a previously rejected application is to address why the coverage was originally rejected and, if possible, explain why that point is not relevant or how steps have been taken to eliminate or mitigate the problem. Underwriters will generally examine the information in front of them and if a broker isn’t providing context, then all the underwriter has to go on is the data and the knowledge that someone else rejected the original application. If circumstances have changed — perhaps the client has added additional security cameras at the warehouse they’re trying to cover, or they’ve

introduced a new employee safety training program — then the underwriter needs to know. Don’t misrepresent information provided in an application. Doing so immediately raises red flags. If an underwriter finds erroneous or confusing information in an application, they immediately suspect the integrity of the remaining information. At the very least, they’re going to have to go back to the broker for clarification and additional verification to ensure that they adequately assess the risk on the coverage being requested. Again, that means additional time that the client has to wait for coverage. Even more likely, they’ll reject the application outright and the entire process will begin again. Even if the error slips by the notice of the underwriter and the application is approved, if it becomes exposed at a later time, the client will lose their coverage, perhaps when they need it most. That kind of error can end a business relationship and permanently damage a broker’s reputation. It’s just not worth the risk.

Gary Hirst

WORK WITH THE RIGHT PARTNER While working with the right partner will go a long way in helping the application process move smoothly, it is ultimately up to the broker to deliver for their client. By using the tips above, brokers will be better able to manage the application process to ensure that their clients receive the coverage they need, when they need it. DECEMBER 2013 | 61

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FAVOURITE THINGS / ALAN HOLLINGSWORTH

Favourite things... Alan Hollingsworth, vice president and partner, entertainment practice, HUB International HKMB Limited

Music: My absolute passion is music. Obviously, coming from Ireland, U2 and The Pogues have always been favourites. I’m a huge fan of live music in the indiealternative & singer-songwriter genres. My favourite live acts are My Morning Jacket, Ryan Adams, Glen Hansard, Lord Huron, Avett Brothers and old favorites like Springsteen, Pearl Jam, Neil Young, to name but a few.

Book: Anything by Roddy Doyle - an Irish author from the North side of Dublin, who usually writes in dialogue format using local slang. His stories are generally very funny. The Commitments, The Van and The Snapper are my favourites. I’m also a fan of business books. Stephen Covey, Jim Collins, Malcolm Gladwell are my favourite writers.

Favourite Food: I’m not too picky on the food side My favourite would probably be sushi, but I also like a nice steak.

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Best thing about working in insurance: Opportunity. If you truly apply yourself you can go to whatever level you aspire to reach - not many industries offer that opportunity. I’ve been fortunate to have the opportunity to apply my insurance knowledge to a passion that I have a keen interest in. For the past 15 years I’ve specialized in providing insurance to the sports, media and entertainment industry here in Canada - I absolutely love connecting with my clients because I have a sincere interest in their business. Finally, the industry attracts great people. I’ve worked side-by-side with some terrific people over the years here at HUB. Not too many people leave the industry so I’ve made many life-long friends.

Vacation spot: I love to travel to new places and tend to not go back to a place I’ve already visited. A couple of years ago, my wife and I celebrated our 10-year wedding anniversary in Sedona, Arizona. If there was ever a place that I would absolutely go back to for a second time, it would be Sedona. It is a stunning place to see. Between the red rock formations, the Grand Canyon, which is just north of Sedona, the Painted Desert-visually it is the most impressive place I have ever visited. A close second would be the Upper Columbia Valley in B.C. - beautiful place.

Movie: My wife and I watch a lot of movies - picking one that stands out as my favourite is a bit of a challenge to be honest. I’m a big Martin Scorsese fan - in particular, Gangs of New York and The Departed. I also enjoy Canadian director David Cronenberg’s work - Eastern Promises and A History of Violence would be two of my favourites.

Favourite sport or pastime: I was born in Dublin, Ireland and moved to Canada when I was 13. Similar to how kids play Hockey on the street here in Canada, in Ireland, soccer (or football, as it is called over there) was the sport of choice across neighbourhood streets in Dublin. I continue to coach and play (although not as well as I did in my younger years) to this day. Having spent over two-thirds of my life here in Canada, I’ve obviously become a huge fan of North American sports with hockey and basketball being to two favourites.

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EXPERT ADVICE

WHAT MAKES AN ELITE BROKER?

Can you build an elite broker? Tony Hayes, vice president of sales and marketing with RSA Insurance, shares a template that has proven successful with brokers

W Tony Hayes Vice president, sales & marketing, RSA Insurance

64 | DECEMBER 2013

What qualifies a broker for elite status? The word itself implies something special and while there are easily quantifiable measures that would make a brokerage stand taller than the rest, elite brokers will also have distinct qualities against which few others can compare. RSA’s elite broker program, ELECTUS, defines members as ‘an elite few who have demonstrated unrivaled commitment to driving the insurance industry forward.’ The program also recognizes members as making a significant contribution to the Canadian insurance industry. One of the key words in this statement is commitment. Financial performance can vary greatly depending on a number of internal and external influences, especially a competitive market and challenging economic environment. Elite brokers are those with a steadfast commitment to outperform. Like a skilled sailor adjusting his or her sails to the wind, a superior broker will adapt to the ever-changing landscape and respond accordingly. I believe brokerages committed to excellence are those invested in developing their people. After all, a brokerage is only as strong as its roster. Top brokerages will provide their up-and-comers with plenty of opportunities to build meaningful and productive careers in insurance. This includes facilitating access to quality insurance markets, flexibility to make decisions regarding prospecting and placement, and educational opportunities, both internally and externally. Broker education is a key differentiator on so many levels. A brokerage offering development opportunities will be attractive to progressive brokers focused on high achievement, making it a win-win for both sides. Furthermore, quality educational opportunities can pay dividends by equipping high performers with the tools they need to effectively manage their portfolios, provide superior client service, and ultimately close more deals. When it comes to succession planning, the

right educational opportunities can be fundamental to continued prosperity for the brokerage. An important advantage to being an elite brokerage is attractiveness to key insurance markets interested in partnering with exceptional brokers. This also means that strong insurers will be invested in the success of top performing brokers, which extends to greater opportunities for growth, and more support for achieving this. RSA’s Making Partner program, in partnership with Queen’s University, is one example of an investment in education for brokers who are eligible for an equity position in their companies. In addition to helping brokers with succession planning, the program provides participants with the broad business skills necessary for senior management, while also facilitating valuable peer-to-peer networking with brokers from across the country. Another example, currently exclusive to ELECTUS brokers, is Sales Producer Training program, which equips participants with the ability to apply key principles of the consultative selling approach to sales opportunities. The brokers develop a unique individual value proposition geared to their target market, adapting networking best practices to create interest in and demand for their services. These are just a few examples of some of the significant opportunities that can come with outstanding broker achievement and partnership with insurers who recognize the importance of investing in their top brokers. Achieving elite broker status is a challenge – if it was easy, everyone would be doing it. That said it is a worthwhile and rewarding journey filled with tremendous opportunity, learning, growth and lots of support from peers and partners invested in your continued success. I would suggest it is always worth the added effort to excel in your career. The world is your oyster – seize every opportunity you can, and always strive for excellence.

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