The Renewal Trap What’S the Value of Your IBAA Membership?

THE ALBERTRT A

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Why Did I Become an Insurance Broker? The Renewal Trap What’s the Value of Your IBAA Membership?

October - November 2011 Cdn Publication Mail Registration 40018149

out the province suddenly realize that licence renewal is upon us and hours must be secured. As a result, there is a mad dash by some to meet the requirement without much thought about the quality of the education they are receiving. Dean Bailey What if we all took the time to plan our education for the upcoming year ahead of time? We would be able to take courses that are of interest and relevant to our job rather than Message from focus on how many hours each course will provide so we can meet the licence requirement. The strength of the broker distribution channel is the people working within it. Our pro- the President fessionalism is what sets us apart from other distributors and why the majority of consumers choose our channel for their October and November are two of my favourite insurance needs. In order to maintain our dominant position, months of the year. The CFL is winding down with each of us must obtain the best education available to further playoffs on the horizon, the NFL is in full swing and develop our skills. my Giants are still in contention. The NHL is up and running and the Flames and Oilers are battling for first What if we all took the time to plan overall. (Please note that this article was written a while back and the previous sentence may not be entirely accurate.) our education for the upcoming year Major League Baseball’s fall classic is upon us with hope- ahead of time? fully my Yankees destroying whoever the National League pennant winner might be. The leaves are changing and the The IBAA professional development (PD) department of- fall colours and crispness in the air can only mean one thing: fers courses that meet the needs of all brokers in the province, soon the ski hills will be opening as the first flakes of a new delivered in the manner of your choice. My brokerage is winter appear. You may be wondering why I am so focused located 120 kilometres from Calgary, and we use a combina- on all things non-insurance related? tion of webinars, online courses and attendance at seminars I can because I planned ahead and have already secured my to meet the training needs of our staff. Each staff member educational hour credits before the October crush. It seems determines what courses and seminars he or she wishes to that every year, as October 31st approaches, brokers through- attend, and we map out an action plan for each staff member continued on page 4

October - November 2011 IN THIS ISSUE

The Alberta Broker is the official publication of the

3010 Calgary Trail, 3 Message from 22 The Advocate Edmonton, AB T6J 6V4 T: 780.424.3320 •1.800.318.0197 the President What Does Your Membership F: 780.424.7418 • www.ibaa.ca Do For You? President Dean Bailey 4 Message from the Editor Chief Executive Officer George Hodgson 6 Score with the Bipper 24 PYIB Perspective Why Did I Become Published six times annually by: 12 Legal-Ease an Insurance Broker? Court Rules Replacement of Defective Concrete Not Covered 26 Know E&O The Renewal Trap 9249-48 Street Edmonton, Alberta T6B 2R9 14 WICC Alberta T: 780.448.0936 • F: 780.465.6201 Commercial Break E: [email protected] Fanning the Flame 28 An Event to Remember Publisher and Editor Annette Hubick 16 The Tax Man Printing McCallum Printing Group 30 Chinook Country Report Design and Layout Ron Leckelt 20 The Anatomy of Advertising Michele Schuldhaus 780.448.2890 [email protected] a Complaint 32 Education Update The Alberta Broker welcomes articles about the insurance industry Working Hard to Earn Your Business and its people. Letters to the Editor are welcome.The opinions and viewpoints expressed in The Alberta Broker may not necessarily be 34 Who’s Next? those of the association and its members. IBAC to Focus on Broker Perpetuation Material in The Alberta Broker may be reproduced with the credit to the author and the following: “Reprinted from the Insurance Brokers Cover Story: Association of Alberta’s magazine - The Alberta Broker (date).” 6 Score with the Bipper Please send a copy to the publisher. The Alberta Broker October - November 2011 3 Message from the President continued from page 3 in November for the upcoming year. This allows the office to what brokers would look like in the future and most impor- manage staffing levels throughout the year while enabling all tantly, what IBAA needed to do to meet the changing needs employees to arrange quality education that is relevant and of brokers. I want to thank all who attended the focus groups interesting to them. for their participation in this important project. Your board Lori Bartlett and the IBAA PD department can assist bro- of directors and the IBAA staff are currently reviewing the kers with mapping out their own plan, either individually or focus group’s findings and drafting strategies to help adapt the at a brokerage level. I encourage all members to take a look at association to the changing needs of our members. the IBAA courses that are available. You will find them to be Throughout the remainder of this year, I will be travel- exceptional in quality and competitive in price. ing around the province to meet with the local councils to update our members on what the focus groups revealed and Member Input to validate that these findings are what our members want the In late August, IBAA conducted a series of focus groups association to focus on over the next few years. I encourage all with leading brokers in Alberta. We wanted their advice on members of IBAA to take an active role in these discussions, what changes they saw for the industry in the next five years, and I look forward to meeting all of you during my travels.

Annette Hubick “Northern Exposure” will be back next issue. • Lori Bartlett who has added “write magazine column” to her task list as the IBAA’s new professional develop- Message from the Editor ment manager. She updates you on what IBAA has been up to in its effort to serve your education needs (page 32). It’s October and hockey season MacWilliam, John Knotek and the These fine people regularly deliver the is upon us – an exciting time people at Swiss Re who dispense magazine’s editorial content and I hope for fans of hockey action. invaluable advice and share their you’ll join me in thank them for their (Personally, I’ll be spending knowledge about the law, taxes/ time, effort and energy. more time watching my five-year-old accounting, commercial insurance, I’d be remiss if I did not thank the Timbit-er than the Oilers as I’ve banking/finance and E & O risk others on the The Alberta Broker produc- recently joined the hockey mom ranks.) management respectively. tion team: our graphic designer, Ron How many times have you heard, “He • An organization like WICC that is Leckelt, and the fine folks at McCallum scored the insurance goal,” and doesn’t championing the cause of finding a printing who, year in, year out do their a tie-in with the insurance brokerage cure for cancer. Find out what they’ve best to deliver a great product, usually industry seem like such a natural, “I been up to on “our” behalf (page 14). with me rushing them along. can’t believe no-one has done this • George Hodgson, who shares our Last, but not least, the magazine before!” no-brainer idea? That’s what passion to create a valuable reading could not exist without the support and I thought when I heard about the Insur- experience for you – an extension of investment of our advertisers — and the ance Goal of the Game, a program that the IBAA’s goal to deliver value to tenacity of our advertising sales guru, originated in Manitoba and is being its members as George outlines in his Michele Schuldhaus, who makes sure we replicated by IBAC, IBAA and possibly, column (page 22). have them. by you. Find out how you can “Score • Young brokers like Chad Hudson who Happy Thanksgiving to you and yours! with the Bipper” with this program and take the time to offer their unique more in our cover story (page 6). perspective about their industry. This October is the time of year when we issue Chad answers the question of Win $500 for Charity take time to reflect on all we have to “Why did I become an insurance Enter the “Making a Difference” contest be grateful for. Even just in my role as broker?” (page 24) by October 31, 2011 and you could win the publisher and editor of The Alberta • Darrell Verbonac and Chris Lewis $500 for your charity and be featured in Broker, my gratitude list is plentiful. I’m who keep us all in tune with what the the February/March 2012 issue of The thankful for … people in this people industry are up Alberta Broker. Go to www.ibaa.ca under • Experts like Terry Williams and to. Darrell’s “Chinook Country Community Relations for information and the entry form. Shelley Miller, Bob McColl, Karen Report” is on page 30 and Chris’s 4 The Alberta Broker October - November 2011

By Annette Hubick

The Insurance Goal of the Into its second year of sponsorship Game (IGG), a new Bipper- with Manitoba Junior Hockey, the IGG branded program takes aim at will be announced at 300 games and Canadians where they live: the ing out advertising will be on the league teams’ that, “Thirty rink boards and in programs across the hockey arena. The concept leverages million Canadians province. IBAM’s package includes the well-known sports term “insurance watched the last Olympic gold medal game tickets that brokers can donate to goal” — the goal scored after the game game out of total population of 37 minor hockey teams so they can watch winner, insuring a team’s win — into a million. That’s significant.” the big boys play. promotional campaign that resonates with hockey audiences from Timbits parents to NHL fans and everything in between. IGG is the brainchild of Peter Tessier, the current president of the Insurance Brokers Association of Manitoba (IBAM). The concept is simple: at the end of a game, “the Insurance Goal of the Game, brought to you by your local insurance broker, was scored by Joe hockey player at 3:53 of the third period,” is announced. “We further extend the program with rink board and program advertising with the headline “Score your insurance goal,’’ explains Dave Schioler, IBAM CEO. IBAC supported the program by providing its ad agency’s creative services for the ads, which are now available to other provincial associations and member brokers across the country (shown on this page). “With the reach of hockey, it’s a great medium to attach your message to,” says Schioler, point- IGG Print Ad IBAM intends to develop and refine the program. “We’re working on the plan to provide more opportunities for individual brokers to leverage the program,” says Schioler. “I see it expanding to minor league hockey tournaments all the way to big leagues and even into other sports such as soccer and base- IGG Rink Board Ad ball.” continued on page 8 6 The Alberta Broker October - November 2011 The Alberta Broker October - November 2011 7 continued from page 6 Junior Hockey League, which has branded in order to differentiate the 16 teams located across the province. brokerage channel and communicate its IBAC has already taken the ball, IBAA CEO envisions a program unique value proposition: brokers work or puck, and run with it by securing whereby a donation is made in the for their customers, not the insurance airtime in Sportsnet’s Monday-Sunday name of the IGG player to the local companies, so Canadians can rest as- coverage of NHL action and sponsor- Alberta Victims Services program, sured that their interests are paramount. ship of a special “Insurance Goal of forging a synergy between two signifi- As a recently produced IBAC video the Week” segment in Hockeycentral cant provincial BIPPER community explains, “A brand represents what you Saturday, “brought to you by your local relations efforts (more on that later). can expect from the product or service insurance broker.” Individual broker members can also that is presented to you.” The BIP icon For its part, IBAA has already re- take advantage of this opportunity by (the Bipper), the individual wrapped in ceived the pass and (at time of writ- negotiating IGG programs with local the magenta blanket, was created to ing) is in negotiations with the Alberta hockey teams or leagues. For those who convey the security brokers provide. do, IBAC is there to assist by funding There was another factor at work in BIP Campaign Goals the customization of the artwork. the BIP’s genesis: the simple reality Public This coordinated, layered market- that the banks’ marketing budgets • Awareness of brokers and their ing approach — brokers, provincial dwarfed that of any individual broker unique role associations and IBAC capitalizing on or provincial association. The only way • Enhance the reputation of each other’s marketing efforts through that these Davids could mount an brokers as insurance professionals unified messaging — mirrors the whole offensive against Goliath was to pool • Promote trust in the insurance strategy of the BIP (Broker Identity their resources — a fact that remains broker because of the service a Program) itself. true today. broker provides The BIP was born out of IBAC’s ad- Since inception, $30 million has vocacy efforts as a means of harnessing been invested in the BIP brand at a Politicians & Regulators the people power of the brokerage net- national level through advertising and • Make presence known as a work of 33,000 members. Two decades sponsorships. The goal of the campaign national, community-based ago, IBAC was in the throws of its is to promote the trust that brokers organization battle to prevent banks from retailing want people to have in the brand and • Impart knowledge and general insurance from their branches is aimed at two primary audiences: the information about the brokers’ and quickly realized that many politi- public, and politicians and regulators. national role cians didn’t understand the role of • Win their support for our Advertising cause on behalf of consumers insurance brokers with consumers and • Give our cause priority their communities. So it was decided Buoyed by results of 12 focus groups that the profession itself needed to be conducted in spring 2011, the 2011-12 plan includes the continuation of the national television “Sleep Easy” campaign that began in 2009. “Overall, participants clearly understood the value-added offered by insurance brokers and that they work for you, not the insurance companies,” reports Janine Cavin, IBAC manager of marketing and advertising. “The phrase ‘you can sleep easy’ resonated well with the participants. They liked the feeling of security, comfort and trust they get knowing their insurance broker is taking care of their insurance for them.” The IBAC media buy includes commercials on news (CBC, CTV and Global national news), sports (figure skating, Ottawa Airport Billboard continued on page 10 8 The Alberta Broker October - November 2011 The Alberta Broker August - September 2011 9 continued from page 8 hockey, CFL football, The Memorial Cup) and high-rated dramas such as The Good Wife, as well as the Weather Channel. It should be noted that IBAC has produced commercials where the final five seconds can be customized to individual brokerages (contact IBAA for more information). Cavin adds that in order to reach politicians, “We also advertise on political shows such as The Power of Politics, Question Period, etc., and have two billboards at the Ottawa airport (shown on page 8). The program is showing signs of success. IBAC representatives are often referred to by those on Parliament Hill as “the blanket guys” and the logo scored well in an October 2010 consumer survey. In the survey, 1355 Members of the IBAA executive team took time out from its strategic planning meetings in Rocky Mountain House to meet with the local Victims Services unit. L to R.: Gord Enders, IBAA VP; consumers were shown a few logos or Nicole Laut, Victim Services Response Team Co-ordinator, Constable Todd Depaigie, Rocky symbols such as the Intel logo, CSA Mountain House RCMP; Dean Bailey, IBAA president; Mardene Watson, IBAA past president; symbol, the Better Business Bureau Marsie Tyson, Victim Services Director. logo, etc., and the Bipper. Key findings In addition to implementing an included: supplied the Ski Patrol with various Insurance Goal of the Game program • 83% had some familiarity with the posters and banners for their ski cha- with Alberta Junior Hockey (AJHL), Bipper. lets,” adds Cavin. IBAA has chosen to support Alberta • 37% of those who were aware of the Skate Canada Victims Services (AVS). The organiza- Bipper associated it with insurance. tion was chosen for several reasons. “This is a pretty good number consid- In addition to commercials running “It is community-based and province- ering that the slogan was not includ- during the Canadian and International wide, like our membership,” says IBAA ed at that time,” says Janine Cavin, Championships broadcasts, the IBAC CEO George Hodgson. “Its mandate IBAC manager of marketing and partnership includes: of ‘Working together helping victims advertising. • 30-second commercials in the venue of crime and tragedy’ is closely aligned • 76% thought the blanket was most • PA announcements with what the insurance brokerage highly appropriate as a marketing • Rink boards and program ads profession does,” he adds. The IBAA’s device. • “Volunteer Break of the Day,” where a couple volunteers are given a co- support of Alberta Victims Services Sponsorships branded blanket and allowed to sit in includes: • Donating blankets to AVS’s 121 units, The blanket’s use as a symbol of the the venue to watch the competition, which operate out of local RCMP insurance broker has been extended be- which they never have a chance to do. detachments, yond advertising creative and has been For 2012, IBAC is also investigating • Producing Bipper and AVS co- incorporated into IBAC’s sponsorships. the development of web-based videos that brokers could incorporate into branded My Mom Says child safety Canadian Ski Patrol (CSP) their social marketing strategies. booklets, • Monetary donations – as noted earlier, “This is a great sponsorship,” says Adding Layers IBAA is hoping to incorporate a Cavin. “We are entering into year four donation to AVS as part of the Insur- of a five-year commitment with the Ski Playing off the profile of national ance Goal of the Game program with Patrol.” The first year, IBAC donated branding efforts, provincial associations the AJHL. 4000 blankets to CSP and has replaced develop programs to meet regional The third layer in the BIP market- about 2000 per year since. “We also needs. ing strategy is comprised of individual 10 The Alberta Broker October - November 2011 brokerages themselves. Each and every broker has a part to play, simply because • Property • Auto Physical Damage each and every broker is a piece of the • CGL (Incl. Truckers) (Incl. Logging) brand. Brokers are encouraged to dis- • Cargo • COC • Special Events play the BIP logo on their letterhead, • Umbrella/Excess • CEF • Aviation • Fine Arts • High Value Homes business cards, signage and website. The • Product Recall • E&O • D&O BIP logo usage guide is available on the • Cross Border IBAA website (under member services/ customer relations toolkit). “In an ideal WHOLESALE BROKER FOR BROKERS world, every office across the country Tel: 780.442.2240 • Toll Free: 1.866.328.1314 would be using the BIP brand in all E: [email protected] their marketing materials,” says IBAC’s auroraunderwriting.com Cavin. “Imagine the impact of 33,000 brokers displaying the BIP — the im- pressions would be in the millions,” she says. Other opportunities for brokers to make the most of the BIP brand power include: • Calendars (go to www.ibaa.ca and look under Member Benefits/Teldon Marketing Products) • Blankets (include them in picnic baskets for event prizes, donate them to organizations in need, present to a client to thank them for business or referrals – use as part of a winter emergency kit) • Other merchandise: window shades, air fresheners, pins • “Sleep Easy” TV commercials that can be branded for individual brokerages (25 seconds of national version + 5 seconds for the broker). Note: Brokerages can use these commercials with paid TV airtime and/or put them on their websites. • Insurance Goal of the Game To find out more about these programs, go to www.ibaa.ca and click on Member Services or contact the IBAA by phone or email. As IBAC’s Dan Danyluk says, “Just like you build your business client by client, you build your brand impression by impression.” And, as hockey coaches will tell you, you miss 100% of the shots you don’t take. So the question is: Will you score with the Bipper?

The Alberta Broker August - September 2011 11 Legal-Ease Shelley L. Miller and Terry J. Williams

Court Rules Replacement of Defective Concrete CONCRETE Not Covered

Commonwealth Policy specifically excluded “the cost of making good faulty EXAMPLE workmanship, construction materi- The Court of Queen’s Bench of Alberta recently decided als or design unless physical damage a lawsuit by Inland Concrete Ltd. (Inland) against Com- not otherwise excluded by this policy results, in which event this policy shall monwealth Insurance Company (Commonwealth) under a insure such resulting damage.” How- Builders Risk Property Insurance Policy (the Policy). Inland ever, Inland argued that its product, the unsolidified concrete, was incorpo- claimed approximately $1.4 million, representing its con- rated by others into a design structure tribution to settle a lawsuit brought against Inland by PCL that did not, for a combination of not Maxum (PCL) alleging defective concrete. fully understood factors, measure up to the design requirements and as a result In 2000, the Northern Alberta than 1% of the products marketed by the customer lost confidence in the Institute of Technology (NAIT) began Inland. concrete pilings. Inland argued that construction on a new building at its The trial judge observed that big this design failure was an accident (a Edmonton campus. NAIT retained construction means big risk. It is fortuitous event) for which Common- PCL as general contractor. PCL hired therefore not uncommon for large wealth had issued insurance. Central Caissons to do the foundation construction projects to be bid on the Commonwealth’s Policy stated that work. Central Caissons contracted basis that the contractors and suppli- it “… insures against ALL RISKS of Inland to supply concrete. EBA En- ers have some litigation safety nets to direct physical loss of or damage to the gineering Ltd. (EBA) was hired to minimize those risks. One common property insured… .” The term “prop- supervise the concrete placement and safety net is for the owner, NAIT in erty insured” was defined to include perform quality control assurance tests. this case, to purchase a builder’s risk “the structure being constructed or The building design required 602 pil- policy. The trial judge observed that demolished and its material sub- ings as part of the foundation struc- a common feature of a builder’s risk components,” and “property, includ- ture. EBA became concerned about property insurance policy is that all the strength of the concrete in the of the subcontractors working on the pilings. NAIT eventually accepted a project are automatically insured and solution that involved the replacement entitled to the benefit of the policy. As of approximately 212 of the pilings. stated by the Supreme Court of Can- Concrete is a recipe of sand, ag- ada in a previous case, the function of gregate material (small stones and this type of policy is to provide to the gravel), cement (a gray icing sugar- owner the promise that the contractors like powder) and water. Because of will have the funds to rebuild in case the type of piling on the project, an of loss and to protect the contractors in-place dynamic piling, the concrete against the crippling cost of start- had to be supplied without any addi- ing afresh in such an event. For the tives and with a minimum amount of NAIT project, Commonwealth issued water. This type of concrete is called the Policy under which the named “zero slump” concrete since if a sample insureds were PCL and NAIT. of the concrete is put into a container, A builder’s risk property insurance the concrete will retain the same shape policy does not include warranty and have no measurable slump if the replacement. In this regard, Com- container is tipped upside down and monwealth asserted that Inland was removed. “Zero slump” concrete is an seeking coverage for supplying a faulty unusual material and represents less product, i.e., defective concrete. The 12 The Alberta Broker October - November 2011 ing materials and supplies, that are losses occurred by Inland related to its to other property but the value of the intended for the construction project.” faulty product. In addition, the losses concrete supplied itself. Among the items of loss claimed by claimed were not resulting damage Inland was a cash payment to settle with PCL, a credit given to PCL on future concrete purchases and its legal SHELLEY L. MILLER, Q.C. and TERRY J. WILLIAMS costs of defending the PCL lawsuit. are lawyers with However, the trial judge held that Fraser Milner Casgrain LLP and practice in the these losses were not recoverable under professional liability insurance area. the policy because they did not involve [email protected] [email protected] a “direct physical loss.” The trial judge stated that coverage for that type of loss was the domain of liability insurance, not property insurance. The only remaining claim was the cost of the actual concrete supplied by Inland. In this regard, an exclusion clause in the Policy stated, “This policy does not insure … the cost of making good faulty workmanship, construction materials or design unless physical damage not otherwise excluded by this Policy results, in which event this Policy shall ensure such resulting damage.” The trial judge interpreted this clause to mean that if defective material was installed then the cost to directly repair that defective material would not be covered. However, if that repair or replacement had additional associated damages that were independent of the defective material, then those would be “resulting damages,” which would fall within the exception to the exclusion clause. The trial judge stated that Inland could also have a claim if there was no fault with the concrete supplied, for example, if the weak pilings were caused by Central Caissons’ improper compaction of the concrete. On this point, the factual pattern that all of the failed pilings were created with concrete from one of three discrete concrete sources led the trial judge to conclude on a balance of prob- abilities that the problem was due to a defectively mixed product supplied by Inland. There was also expert opin- ion evidence that there was a mixing problem with the concrete. Com- monwealth had therefore proven an exclusion to coverage, namely that the

The Alberta Broker October - November 2011 13 WICC Alberta Amy Foggin

Diane, Vice President Marketing and Sales at Silvercrest Insurance Group, Fanning explains their purpose in choosing WICC. “Our inspiration for supporting WICC was our good friend Sherre the Flame Newell. Watching her strength, courage and humour during her battle with breast cancer made us want to fight cancer with her in any way we could. By WICC fall events were fueled by the contribute to increased WICC exposure supporting WICC with our charity golf August news that cancer researchers in Alberta, as well as contributions to tournament and participating in the were experiencing their first clear cancer research, Boyd has embarked on Relay for Life, we are doing just that. success using gene therapy to treat a social media campaign. In the fall of Silvercrest believes in and supports the leukemia. “It worked great. We were 2011, Boyd has launched a Facebook research projects that WICC is aligned surprised it worked as well as it did,” page dedicated to WICC — a key with. Silvercrest will continue support- said Dr. Carl June, a gene therapy ex- initiative in the insurance industry and ing and fighting alongside WICC until pert at the University of Pennsylvania. community at large. For every ‘like’ a cure is found.” “We’re just a year out now. We need to the Facebook page receives, Boyd will find out how long these remissions last.” donate $1 until 5000 ‘likes’ are reached. The research we are Dr. June led the study, which was On reaching the milestone of 5000 funding may just be the published in two medical journals. The ‘likes,’ Boyd will make a $5000 dona- study involved three men with very tion to WICC. Boyd will be promoting project that has the next advanced cases of chronic lymphocytic this social media campaign with their leukemia. Their only hope for a cure is staff and customers throughout its 12 breakthrough! bone marrow or stem cell transplants, Alberta locations. For more informa- which don’t always work and carry a tion on the program, please visit www. high risk of death. Scientists have been boydgroup.com.” WICC is always looking for inspi- working for years to find ways to boost rational stories and industry speakers the immune system’s ability to fight for our events. If you are an insurance cancer. Earlier attempts at genetically community member and would like to modifying bloodstream soldiers called share your cancer survivor story, please T-cells have had limited success; the contact [email protected]. modified cells didn’t reproduce well and The 8th Annual WICC Gold Flame quickly disappeared. Awards Luncheon is fast approaching. WICC Alberta has been funding Mark your calendars for January 19, research into the efficacy of “Killer 2012. Our venue once again is the T-cells” in fighting cancer cell devel- Palomino Room in the BMO Centre. opment. The success of this related Please be sure you get your table research into what are dubbed “serial booked for the best attended Calgary killer” cells inspires us to forge on. The insurance industry event of the year. research we are funding may just be the Tickets can be ordered from me at: project that has the next breakthrough! [email protected]. This brings us to celebrating our supporters. Two particularly active WICC supporters in Alberta are Boyd Auto- body & Glass and the partnership of Silvercrest Insurance Group and Ding & Bradley Financial Services. AMY FOGGIN Boyd Autobody & Glass takes its so- Regional Manager, cial responsibility very seriously. WICC General Investigations is an organization that Boyd supports Diane Jones, Vice President Marketing CANPRO Global in its efforts to raise funds for the fight and Sales at Silvercrest Insurance Group [email protected] against cancer. was a winner of a 2010 Gold Flame Trista Anger, Recruitment and Train- award and is pictured here with Mike ing at Boyd, explains, “In an effort to Bradley of Ding & Bradley.

14 The Alberta Broker October - November 2011 STAND OUT with Alberta’s brokers by advertising in

Call Michele Schuldaus at: T: 780.448.2890 E: [email protected]

The Alberta Broker October - November 2011 15 The Tax Man Bob McColl

Owner-Manager Remuneration Strategies Integration Revisited

At one time, when planning tax- limit in a corporation compared to effective owner-manager remuneration paying such funds to the owner- strategies, there was an almost univer- manager as remuneration, there sally accepted belief that paying out are two components to consider. bonuses to owner managers to reduce The first is that if Alberta corporate corporate income to be at or just below tax rates are 26.5% and personal the small business limit was the way to tax rates are 39.0%, there is a go (the small business limit is currently deferral advantage if income is $500,000 federally and in all provinces initially taxed in the corpor- except Manitoba and Nova Scotia). This ation and retained there for was because income in the company some period of time. The taxed at the small business rate, and second consideration is the then paid out as dividends to an indi- overall tax cost of retaining vidual, would cost the owner-manager funds and eventually paying an approximately the same amount of tax eligible dividend to owner-managers as if that income were paid as remuner- compared to the overall tax cost of pay- Because the personal tax rates on divi- ation. But income taxed at the general ing remuneration in the year the funds dends are not scheduled to change after business rate would be subject to a are earned. Where the tax deferral is 2012, this is an issue for 2011 only. higher overall amount of tax once the long enough, the deferral benefit can As the Alberta corporate general tax net income was paid out as a dividend more than offset the higher integrated rate will continue to decline to a com- to the individual owner-managers. That tax cost that results if the income is bined federal and provincial tax rate is, “integration” would be achieved at initially retained in the business. The of 25% by July 1, 2013, the integration the lower small business corporate tax break-even point will be dependent cost will be reduced to less than 1% by rate, but would not be achieved at the on your company’s cost of capital. Of 2014. higher general corporate tax rate. This course, any such calculation is just an Of course, a decision to bonus or pay was because the federal government estimate, but it is important to under- dividends is based on several factors and most provinces placed a priority stand the two parts to the analysis. other than the immediate income tax on ensuring small business income was In 2011, the deferral factor in Alberta cost. These other considerations often integrated. will be 12.5% on funds subject to the include determining whether a salary However, the corporate tax system general rate of income tax, meaning should be paid to the owner-manager was substantially changed in 2006 with that there will be an initial benefit of to allow maximum Registered Retire- the introduction of the eligible dividend 12.5% of retaining income. The integra- ment Savings Plan (RRSP) contribu- rules as an initial step to counter the tion factor is 0.52%, meaning that the tions and to allow Canada Pension stampede of corporate conversions to total integration cost after the flow Plan contributions to be made. Another income trusts. At the same time, the through of the dividends in 2011 is consideration is that paying a salary federal government and some provincial 0.52%. sets up the ability to create an Individ- governments started a gradual process A complicating factor to this analysis ual Pension Plan, but these plans will of lowering general corporate tax rates. is the fact that the personal tax rate on become much less popular due to the Soon it became clear that, as the gen- dividends will increase between 2011 2011 budget proposal that will elimi- eral tax rate changes were phased in, the and 2012, and then is projected to renate or greatly reduce deductible past tax cost of keeping “high-taxed” general main at the 2012 rate. This means that service contributions by employers. corporate income in Canadian-con- income earned in 2011, and paid out as We believe that these tax changes will trolled private corporations was going a dividend in 2012 or future years, will create a significant increase in the use to decline dramatically, particularly in have a higher integration cost than if it of investment holding companies as a those provinces that also undertook to is paid out as a dividend in 2011. The primary retirement savings vehicle and reduce provincial corporate tax rates. integration factor in Alberta for 2011 in the use of corporations that carry on In evaluating the tax costs of keeping income paid out in 2012, for income a personal services business. business income over the small business earned after July 1, 2011, is 1.68%. continued on page 18 16 The Alberta Broker October - November 2011 The Alberta Broker October - November 2011 17 continued from page 16 • The timing of dividends paid from company. For example, say that John is Holding Company for Your the corporation is entirely discretionary, the president of A Co and a resident of Retirement Portfolio unlike a Registered Retirement Income Alberta. As an officer of the company, If a decision has been made that Fund, which has mandatory minimum he is an employee. John sets up an it is better to retain earnings in your payments. Thus dividend payments can Alberta service company, owned by corporation, rather than to bonus out be controlled to ensure that Old Age him, called John’s Services Ltd. (JSL). the funds, a decision needs to be made Security and certain income-based JSL then bills A Co. for “executive of how to invest such funds if they credits are not clawed back, especially if services.” The executive services income are surplus to the current needs of the immediate cash is not needed. is taxed in JSL, or it can be paid to John business. If the funds are surplus to the • It may be possible to split income as an employee of JSL. needs of the business, often a holding with adult children and a spouse (sub- Because JSL only has one employee, company will be set up and the excess ject to specific conditions). John, and because of the nature of the funds can be distributed to the holding • The amount of dividends that can services provided to A Co, JSL will be company via a tax-free inter-corporate be received tax-free each year is much a corporation operating a personal ser- dividend. The holding company can higher in many provinces than the vices business. Any income of JSL not be used to separate investment funds amount of RRSP income, due to the paid as employment income to John or from the risks of the operating business dividend tax credit and due to the fact as certain employment related expenses, and can also be used as an incorpo- that investment income in an RRSP will be taxed in JSL at the general rated investment portfolio. Also, where is taxed as ordinary income when paid corporate rate, or 26.5% in 2011. To there are multiple shareholders, each out. the extent that this income is surplus to shareholder can set up their own hold- • If there is value remaining in the John’s current year needs, it can be kept ing companies to allow for maximum holding company at death, that value in the company and a deferral of 12.5% flexibility. will be subject to tax as a capital gain has been achieved. Mixing investment earnings in (subject to postmortem planning). In order for this tax deferral planning to be most effective, any employment a holding company with eligible Personal Services Businesses dividends received from the operating or personal expenses not allowed to company can also enhance the deferral Another idea that needs to be looked be deducted in JSL (e.g., office in the benefit. This is because the investment at differently with the reduction in gen- home or child care expenses) should be income is subject to a refundable tax, eral tax rates is the idea that retaining incurred by John personally, and a salary which is refunded on the payment income in a corporation operating large enough to deduct these expenses of a dividend. If the dividend refund a personal services business is detri- on John’s personal tax return should be can be triggered by flowing an eligible mental. paid. As John will need at least some dividend from the operating company A personal services business means money to live on, he’ll need to decide through the holding company to share- a business of providing services where on whether he should receive these holders, this could result in a significant an individual who performs services on additional funds as a salary or as divi- tax deferral on the investment income behalf of the corporation (or a re- dends. In addition to tax rate consider- earned by the holding company. In an lated person) owns at least 10% of the ations and creating a dividend refund if ideal situation, the cash paid out as corporation and the individual would a dividend is paid, he’ll need to con- an eligible dividend will be just large reasonably be regarded as an officer or sider other issues, such as whether he enough to cover personal costs and to employee of the business to whom the wants to make CPP contributions and trigger a full refund of the refundable services were provided if it were not whether salary should be used to cre- tax. for the existence of the corporation. ate earned income to allow for RRSP The significant deferral on general There are exceptions if the corpora- contributions. rate income that is now available may tion employs more than five full-time make maintaining investments in a cor- employees in the business throughout poration a more tax-efficient solution the year or the services were rendered to to retirement savings than paying salary an associated corporation. or bonuses to make the maximum an- With the new tax rate environment, employees may wish to incorporate BOB McCOLL, CA nual RRSP contribution. Again, such Partner an analysis must be made based on their services so that their service company provides their services to their BDO Canada LLP individual circumstances. However, fac- [email protected] tors in favour of using an incorporated former employer, and they now provide investment portfolio include: the same services that they used to provide directly, but through their service

18 The Alberta Broker October - November 2011 The Alberta Broker October - November 19 The Anatomy of a Complaint

other licensees and other provincial times that a complainant will attempt agencies or regulatory bodies. The to use a complaint and possible finding AIC will also receive anonymous of a violation by Council to further a complaints and will conduct an civil action. As such, our investigators investigation if allegations are are always mindful of the AIC’s limited sufficiently detailed. Finally, the AIC authority. By Joanne Abram can also initiate investigations if it Additionally, the individuals tasked believes that the Act or regulations with conducting AIC investigations The Alberta Insurance Council (AIC) have been breached in some man- must be impartial, fair and objective. is the licensing and regulatory authority ner. For example, while conducting an The investigator’s job is to gather the of insurance intermediaries in Alberta investigation AIC may find evidence of facts only, not to judge and not to be an and is a Crown-controlled organiza- wrongdoing unrelated to the original advocate for the complainant. tion that receives its authority through complaint. In the event that an investigator be- a delegation from the Minister of The first step in any compliance lieves that there are reasonable grounds Finance and Enterprise. The AIC is process is the gathering of information to suggest that the Act or regulations responsible for providing service and starting with the complaint itself. have been breached, he or she prepares support to three industry-specific • What are the allegations and the a document setting out those allega- Councils: the Life Insurance Council nature of the complaint? tions and provides it to the agent to (LIC), the General Insurance Council • What laws or regulations may have allow him or her to submit any further (GIC) and the Insurance Adjusters been violated? evidence and make submissions. The Council (IAC). • Does the AIC have jurisdiction over entire package is then presented to the The GIC has the delegation to ap- the allegations? appropriate council for adjudication. prove or refuse applications for Certifi- • What evidence will be necessary to In order to conclude that the Act or cates of Authority for general insurance support the allegations? regulations have been breached, the agents and to conduct hearings when The investigator assigned to the GIC must be satisfied that there is allegations under the Insurance Act or specific complaint will identify what sufficient clear and cogent evidence to regulations have been brought against records and/or documents are needed, prove the allegations. Unlike criminal a certificate holder or former certificate who will need to be interviewed and proceedings where the standard of holder. After reviewing all of the evi- how the evidence will be collected and proof is “beyond a reasonable doubt,” dence and submissions of the AIC and maintained. The investigator will also the applicable standard of proof in mat- the Agent, the GIC has the responsibil- attempt to distill precisely what issues ters before the GIC is that of a “balance ity to determine if the allegations are are in play as there are times when of probability.” In other words, the GIC proven and, if so, what, if any, sanction complaints are vague or incomplete. must be satisfied that it is more likely is appropriate. This is where the func- Investigators must be cognizant at all than not that the agent or adjuster tions of the Councils differ in that the times that the jurisdiction of the Coun- breached the Act or regulations. function of the AIC is investigative and cil is limited to matters arising out of Proceedings of administrative tri- administrative and the function of the statute or regulation. As such, investiga- bunals have many advantages. GIC is adjudicative. tors avoid getting involved in issues that Administrative tribunals are efficient The AIC receives complaints from a are personal issues between parties or and effective. They deal in very specific variety of sources including consumers, contractual in nature. Indeed, there are areas and, unlike the courts, rely on the 20 The Alberta Broker October - November 2011 expertise of member licensees in order Further information, including com- to arrive at their decision. Adminis- pliance statistics from the AIC Annual JOANNE ABRAM trative tribunals such as the GIC are Report, can be obtained from the AIC Chief Executive Officer, Alberta Insurance also masters of their own processes. In website at www.abcouncil.ab.ca or by Council doing this they are obliged to adhere contacting the AIC offices in either [email protected] to the principles of natural justice and Edmonton or Calgary. to act fairly and within their statutory authority. Administrative tribunals must be independent. The persons who hear the case, and only those persons, must decide. A decision by a quasi-judicial tribunal such as the GIC is formal and binding and is not final until it is rendered in writing. Once the GIC renders a decision, it has no jurisdiction to go back and reconsider its findings, and the only avenue to further the matter is an appeal made under the Act or an application to the appropriate court. Any person adversely affected by a decision of the Council has the right to file an appeal. This appeal is heard by a three-member appeal panel in accordance with the Act and Insurance Councils Regulation.

The Alberta Broker October - November 2011 21 The Advocate George Hodgson

have had a role to play in the current strength of the Canadian economy. IBAA also functions as an advocate for insurance brokers with insurance regulators such as the Superintendent of Insurance, the Alberta Insurance Rate Board and the Alberta Insurance Council. Through strong, long-held relationships with these people, IBAA has had a positive effect on the regulatory environment for brokers. Over the years, IBAA member brokers and executive have attended many political events throughout the province and the nation. Most recently, IBAA president Dean Bailey and I, along with other members of IBAC, attended the Council of the Federation on behalf of member brokers. Our participation in this event, which included meeting our provincial premiers and IBAC’s plati- The questions I am num sponsorship of the social event often asked by brokers following the Council meeting, will serve consumers and brokers well when are, “What does my brokerage indus- membership do for me?” industry-related issues arise at both the try would suffer. provincial and federal levels. and, “What am I getting An example of the effectiveness for my money?” These are of our government relations revolves questions asked of many around the Bank Act. For quite some member associations — be time, the banking industry—perhaps they a political party, service one of the most effective and oldest group, fraternal organization, government lobbies in the world— community league or a condo has been trying to merge the two association. financial silos of banking and insur- It is often difficult to put a ance. Its assertion is that a one-stop dollar value on membership in shop where the consumer can bank, an organization; in most cases get a mortgage or an automobile the non-monetary value is its loan and buy P & C insurance is greatest value. Fortunately, the convenient for consumers. value of membership in IBAA The counter argument to that has can be measured in both mon- been very effectively articulated etary and non-monetary terms. by the insurance lobby consisting of IBAC and provincial associations such Government Relations IBAA CEO George Hodgson (left) with as IBAA. This argument has stated in Premier Ed Stelmach at the Government Relations is the primary part that retailing insurance out of the Council of the Federation. reason the Insurance Brokers Asso- same premises, and most likely by the ciation of Alberta exists. In fact, when same person selling the loan or mort- Professional Development IBAA and IBAC were formed 90 years gage in a bank, will lead to tied selling, High quality professional develop- ago, the explicit reason for their genesis which is not in the best interests of the ment is key to the success of both was to represent brokers to govern- consumer. How much would it cost you the individual broker and the broker ment. At both the provincial and federal to compete on such an uneven playing industry as a whole. All brokers are levels, the insurance broker industry has field? required to take 15 hours of mandatory one of the most effective lobbies in the The survival of the Canadian financial continuing education (MCE) in order country. institutions in the face of the outright to maintain a license in Alberta. In ad- While it is often a challenge to put a global meltdown of its counterparts dition, many brokers want to remain at dollar value on an effective lobby, it is in jurisdictions that have allowed the the top of their game and devote more not difficult to see that without that merging of these two silos suggest than the minimum time to professional representation, the consumer and the that the efforts of IBAC and IBAA development. 22 The Alberta Broker October - November 2011 Whichever the case, to meet a variety at a very competitive rate. This program promotes the perpetuation of the bro- of education needs, IBAA offers an is one of the few that offers a deduct- ker channel that continues to serve the increasingly greater variety of immer- ible reduction endorsement, making it interests of consumers so well. sion, online and in-the-field courses, rather unique in the Canadian market, In the end, whenever I am asked seminars, videos, webinars and other and is part of one of the largest pro- about the value of membership in formats. Whether one wants to limit grams of its kind in North America. an organization such as IBAA, I am oneself to the required MCE or reach reminded of the “ask not what your for something better, IBAA offers one The Broker Identity Program country can do for you” words in the of the most comprehensive professional The Broker Identity Program, also John F. Kennedy inaugural address. development menus in the brokerage known as the BIP or the Bipper, is the These immortal words remind all of us industry. insurance broker symbol that was devel- that our contribution to our families, A significant benefit to members, oped in 1989 as a registered trademark associations, society and country mat- aside from the superior quality of the to differentiate brokers from other ters far more than what we get from courses, is the member price, which is insurance professionals and to reinforce those groups and organizations. half of the non-member price. Here, recognition of the insurance broker I would suggest, then, that those one can calculate in real dollars the profession among consumers. The BIP brokers who are questioning the value value of a membership in IBAA. symbolizes quality insurance — know- of IBAA membership would do a great IBAA, along with its provincial ledge, choice and professional unbiased, service to the insurance consumer and counterparts as well as IBAC, offer “rest easy,” “on-your-side” advice — to the insurance brokerage industry as a professional designations: the Canadian consumers. This symbol has become whole by getting involved in IBAA. Accredited Insurance Broker (CAIB), one of the most recognizable corporate There are many avenues open for your the Canadian Professional Insurance symbols in Canada and is the envy of involvement such as the local councils, Broker (CPIB) and the Canadian Cer- many insurance brokerage and agents the IBAA board of directors and the tified Insurance Broker (CCIB). These organizations worldwide. Professional Young Insurance Brokers, designations, which further enhance Recently IBAC, along with IBAA as well as the opportunity to participate both the professional abilities and and many of its sister organizations in various ad hoc committees. In the the image of the insurance broker, are across Canada, has been working on end, the greatest and most endearing recognized across Canada. The courses further enhancing the visibility of the value of membership in any organiza- needed to complete these designations BIP with advertising initiatives such tion, including IBAA, is in what you are offered in Alberta exclusively by as the “Sleep Easy” and the “Insurance bring to the association. IBAA. In order to keep designations Goal of the Game” campaigns. Alberta current, one has to maintain member- brokerages must be IBAA members to ship in IBAA. capitalize on the power of the Bipper brand. Errors and Omissions Insurance IBAA, through a wholly owned Other Benefits corporation, offers errors and omissions As with all member organizations, GEORGE HODGSON insurance exclusively to its members the overall benefit of membership is the CEO, IBAA through Swiss Re/Westport. It is one of positive sense of belonging to a group [email protected] the most comprehensive E&O insur- of professionals with common goals ance products for brokers in the busi- and aspirations that has at its heart, the ness and is offered to IBAA members best interests of the consumers. IBAA

The Alberta Broker October - November 23 PYIB Perspective Chad Hudson Why Did I Become an Insurance Broker? When I first started in insur- When asked now “what do you do?” This begs the question: not why ance, I was told I was there to help well, I still push paper and answer did we choose the broker profession people. We do; we help with things calls all day, but I am comfortable as a career; rather, why did we stay a like a burned down home, a vehicle knowing that I protect people broker once we started? accident or corporate liability issue, against life’s uncertainties but at the end of the day we sell and that most don’t under- What started out as a something intangible: we sell peace stand what we do, or the summer job has become of mind. value we provide, until some- That’s not where any of us started thing unexpected happens to a lifelong passion. out. Not many grew up with the them. At the end of the day, hopes and dreams of someday when we set up a policy properly, As young brokers, we think the becoming an insurance professional the claims process is as seamless as answer is simple. We love the chal- but nevertheless, here we all are. possible, and that is rewarding for lenge. We are motivated by the vast When asked the question, “What each of us, as customer satisfaction scope, sometimes overwhelming, of made you decide to become an is our business. daily responsibilities. Throughout insurance broker?” the automatic response from most of us is a big smile and a laugh. Our answers are similar; we somehow fell into the industry. Many of us were introduced by family members and friends, and many took an entry- level position, which turned into a career. We have made being an insurance broker our career, and we stress the word career. As professionals, we believe that we should view ourselves as just that: professional. Referring to the work that we do as a career is a small yet powerful indication of how we see what we do. The word career is described in the dictionary as: “An occupation or profession, especially one requiring special training, followed as one’s lifework.” However, the definition of a job is: “A specific task done as part of the routine of one’s occupation.” What started out as a summer job has become a lifelong passion.

24 The Alberta Broker October - November 2011 for your charityWin our careers we strive to improve our 2nd Annual $500 skills through experience, continued education and assistance from our colleagues. We serve our clients to Making a Difference our utmost abilities. There are few careers with such opportunity, both financially and in terms of career CONTEST path options. What difference have you made? For many of us, we didn’t expect to end up here but we stay because Tell us about it and you could win: we see the vital roles we play in many homes, lives and businesses. $500 for your charity or non-profit One $500 prize will be awarded in each of the five categories: People need to be prepared for the unexpected curve balls that life Youth • Sport • Social • Health • The Power of One throws at us, and we truly believe a good broker makes all the differ- PLUS you’ll be featured in the cover story of the ence. February/March issue of The Alberta Broker For contest information and entry form: sponsored by • Go to www.ibaa.ca/about us/community relations • Email [email protected] CHAD HUDSON TH E ALBE RTA PYIB President-Elect • Watch for notices in IBAA E-News Access Insurance Group [email protected] Contest closes October 31, 2011

The Alberta Broker October - November 25 Know E&O Alison VanDyke

the coverage was fully reviewed with the client prior to renewal will be in a strong position to prove that he discussed whether any changes should be made. A similar scenario can occur in the commercial context. Consider the case The of the broker who procured a commercial general liability policy for a dance studio. Though the client requested $1 Renewal million in limits, the broker mistakenly secured limits of $500,000. The broker failed to review the policy at the next renewal and the lower limits remained in Trap place. While visiting the studio to watch his child perform in a dance recital, a surgeon fell and injured his right hand, preventing him from performing sur- gery. He filed a claim against the studio seeking damages in excess of $1 million. By Alison VanDyke the client to review coverage at least The studio is looking to its broker for three months before a client’s account the shortfall in coverage. Although the The renewal process presents both renews. If the nature of the client’s risk broker placed the wrong limits initially, opportunities and hazards to insurance has changed or the current carrier will he had the chance to correct his mistake, brokers. Offering additional coverage no longer offer the coverage, the broker if only he had reviewed the policy before and cross-selling products at renewal will need adequate time to market the renewal. time is an excellent way for brokers to account to find an appropriate insurer It is always a good idea to ask clients increase revenues. Yet many brokers to underwrite the risk. Some complex at renewal about any renovations or don’t realize how often the renewal commercial risks may require even more additions to existing structures. Discuss process sets the scene for an E&O time to locate alternative markets for whether the policy provides coverage claim. In fact, 20% of claims reported coverage. by Canadian insurance brokers in Swiss 2. Review policy limits and Re Corporate Solutions’ Broker E&O consider offering higher limits Program occurred in the context of a at each renewal renewal. What process do you follow before Some brokers fall into a trap of com- renewing a policy? Brokers who renew placency by assuming that if the client accounts without reviewing the coverage doesn’t request any changes at renewal, in place and inquiring about any changes all is well. This is not always the case. in the client’s circumstances are at an Many brokers are all too familiar with increased risk for E&O claims. Because the client who was silent at renewal most brokers are busy, utilizing check- but later claims he “told” his broker to lists when renewing both personal and increase policy limits. commercial risks is an effective tool to Consider the following example. A help safeguard against E&O claims. broker procured homeowner’s insur- Here are some key considerations when ance for his client in 2003. The policy approaching renewals: renewed for eight years without any changes to the coverage or increases in 1. Allow adequate time to limits. Earlier this year, the home burned review the client’s coverage to the ground. The client now claims before renewal that he was underinsured. The broker, The renewal process should begin who merely renewed the policy each year with a review of the current policy. For without discussing whether the limits or new clients, it is especially critical that coverage should be changed, will have brokers thoroughly review the policy in difficultly defending the E&O claim. place before simply renewing it “as is.” On the other hand, the broker with a It is a good practice to meet with checklist in the file documenting that

26 The Alberta Broker October - November 2011 for replacement cost or actual cash value and explain the difference to your client, along with the application of co- insurance rules. Finally, tell your client about the value of obtaining a current appraisal. While the standard of care for brokers may differ province by province, reviewing coverage and limits with your clients on an annual basis is a best practice in any locale. If the client does opt to make a change, confirm those changes in writing.

3. Watch for any changes to coverage implemented by the carrier As all brokers know, carriers sometimes modify their policies to limit or eliminate certain types of coverage. One example involves a client who employed domestic workers. The client’s homeowner’s policy had been in place for ten years, but prior to the last renewal the carrier changed its form and eliminated coverage for employees. The broker failed to notice the change and the policy was renewed without this important coverage. If a claim arises involving an employee, it will be more difficult for the broker to defend his failure to notice the change and recommend alternative coverage. As in any business, mistakes will hap- pen. Brokers who approach the renewal process carefully by utilizing best prac- tices will be well equipped to defend an E&O claim while delivering top-notch service to their clients.

ALISON VANDYKE, J.D. Claims Specialist, Swiss Re Corporate Solutions [email protected]

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The Alberta Broker October - November 27 Commercial Break Karen MacWilliam

An Event to Remember

As I write this, I am still trying to exceeding their snow removal budgets, rate what is covered from what might clean the mud off of my shoes and plagues of beetles, holes-in-one, injury be covered with special products, from clothing from the U2 360° Concert to former NHL player-greats, terror- what cannot be insured. Tour stop in Moncton, New Bruns- ism insurance for Vancouver’s LRT wick—a great outdoor show for 75,000 during the 2010 Winter Olympics, and Make it easier for the fans, but almost disastrous for the band performer no-shows. If money can be 6 underwriter to understand and the crowd because of heavy rain made, there may be a market. the risk. When I was arranging and lightning in the hours before the weather insurance, I got in touch with concert. Do your homework. Get to the great folks at Environment Canada I’ll get over the mud, but what are 3 know the event details, the key to understand what type of weather the risks and insurance solutions for risks, and advise your client to assess conditions were “normal” and which promoters and hosts of large (and the risks and include a budget for in- were “unusual.” Armed with 60 years small) events across Canada? surance, or contingencies, or both. Any of weather data, underwriters became Unfortunately, we have seen tragic stage bride planning an outdoor wedding more comfortable and prices became collapses and injuries due to crowd be- in Alberta should KNOW that snow more manageable. haviour at numerous events across the can (and has) fallen during any of the country. From an insurance perspective, 12 months of the year. Yes, this risk is Utilize the expertise of these situations appear to fall into the insurable. 7 other brokers and insurers CGL coverage realm, but I’m guessing who specialize in these prod- that there would likely be multiple de- Understand that there ucts. I recall with amusement having fendants and some interesting discus- 4 may be a loss of revenue lunch with a broker at Lloyd’s who sions around who is ultimately liable. if an event must be cancelled, told me that there was a lot of money Some of the harder to grasp and but that the extra expenses still to be made in Afghanistan and tougher to insure issues are related to may exceed the revenue loss. Iraq on terrorism and war risk cover- weather, poor ticket sales, performer Is the facility fee non-refundable? Will age. “Of course,” he said, “every couple illness or injury, or uncontrollable situa- the event be re-scheduled? Is a rain- of months we have a rather large loss.” tions like pandemics. out date planned in advance? Is there Understanding those risks and pricing Here are some of my thoughts on an alternate facility? How will seats them appropriately was his job and he event insurance: be re-assigned? How will the spon- knew his business. While he thought sor get word out to the public? (Not there were some good political risk op- Plan well in advance. A risk everyone tweets or stays glued to the portunities in war torn areas, he wasn’t 1 management and insurance plan event’s Facebook site.) Professional PR insuring Lindsay Lohan’s health or should exist prior to the event being and advertising may be necessary costs. sobriety on movie shoots. announced or ticket sales commenc- Take the time to price out the extra ing. I have seen more than one event expense costs with your client. Make sure your client is cancelled because no one budgeted for 8 forthcoming with financial insurance or contingency planning. Understand what insurance information. Event promoters are 5 can and cannot do. Most so-called because they like to hype up Don’t assume that it’s events will not be cancelled as a result events. Getting 100,000 people to buy 2 uninsurable. I have procured of classic “insurance-triggering” events concert tickets is not a slam dunk, and insurance for municipal governments that are accidental, so you need to sepa- unless promoters/organizers have a 28 The Alberta Broker October - November 2011 proven track record, underwriters will Be patient in your quest for special be uncomfortable. If public funds are event coverage. To quote Bono, with involved, understand the conditions some events, “I still haven’t found what KAREN MacWILLIAM applicable to the funding. I’m looking for …” is a insurance and risk management consultant Make it your practice to [email protected] 9 ask your clients if they are planning any “special events” during the year. A boat cruise on Sylvan Lake, a hot air balloon ride over Banff, or a company sponsored golf tournament may not fit nicely within the underwriter’s perception of the company’s business operations, so all of these may require specialized insurance coverage.

Assess the need for host 10 liquor liability and product liability coverage. We Canadians enjoy a burger and a beer every now and then. Sometimes mayhem results — either from the results of too much alcohol or from serious food borne illnesses like e-coli or salmonella.

The Alberta Broker October - November 29 Who? What? Where? Darrell Verbonac

son left AMA Insurance and moved to Edmonton with Johnson Inc. AMAC Consultants Inc. out of Vancouver has announced a change in Two new brokers joined the A-WIN more office that is being staffed by that each of i’s shareholders will now Insurance Ltd. network in and around industry veteran Heather Roberts. operate separate consulting firms. Re- Calgary; Randy Buschmann opened • James Delegarde joined Aon, coming nate Mueller will remain in Vancouver up shop in Okotoks, coming over from over from Western Financial’s High under the name of Renate M. Mueller Western Financial Group’s Okotoks of- River branch. Consultants Inc., while John McAr- fice; and Anthony Bentley left Anthony • Lena Keon is new at Rogers Insur- thur will operate in Toronto as John C. Clark Insurance to open an A-WIN ance in the personal lines department. McArthur & Associates Inc. office in the Temple area in the north • Geoff Boughton moved to Canyon Belated condolences to IBAA’s previ- east part of Calgary. Insurance from Airdrie Insurance ous CEO Ginny Bannerman and her Western Financial Group (WFG) Congratulations to Heather Ivan of family, on the passing of her father, Bob has had a fair bit of change, including Airdrie Insurance and Dylan Backs on Bannerman on June 1, 2011. Mr. Ban- the announcement of three manage- the birth of their son, Rylan James on nerman was a pillar of the insurance th ment moves. Dustin Bunney, who has June 19 . community and like his daughter, also been the manager in Bassano for the served as IBAA and IBAC president. past several years, is moving down to Other News Lethbridge to take over that office, and Best wishes go to Christiaan van Jen Huard was appointed to replace Blommestein who retired from Jardine Dustin in Bassano. Jen has been with Lloyd Thompson. On a sad note, long DARRELL VERBONAC the Bassano office for a number of time broker Ken Cummings has passed Marketing Manager, years. Vicki Penney transferred from away. Calgary Branch WFG’s Brooks office to manage the On the company side of things, new Axa Pacific Insurance one in Grande Cache. in commercial lines at RSA is Asha [email protected] In other Western Financial news: Thomas, new at Travellers Insurance is • Michelle Strauss, Jessica Freake and Melanie Hansen, and Marlene Dick- Larry Cook are new to the Strathmore office. • New staff in Olds includes Ashley Haaland, who transferred from the WFG head office; Kimberley Dunn who transferred from Fort Nelson, BC; and Dina Middlebrook from Wawane- sa Insurance. • Kim Visosky joined the WFG head office in-house underwriting unit. Up in Lacombe, Leanne Simpson joined Sims & Associates Insurance, having previously been with Brown & Ward Insurance. In Red Deer, Keisha Bunnell moved from Procom Insurance to All Service Insurance.

Calgary news and moves: • Action Insurance Group, which is based out of Calgary, opened a Strath- 30 The Alberta Broker October - November 2011

Education Update Lori Bartlett Working Hard to Earn Your Business Updating, Increasing and Promoting IBAA PD October 31st — that date used Over the summer, Brian to make me think of ghosts, Spiers and Rikki McBride goblins, princesses and pirates. revamped the Levels 1 & 2 Now, along with that many other Licensing immersion brokers, I think, “Did I get enough courses to ensure our hours to maintain my license so I can students will be well continue working?” In fact, you need prepared for the AIC not scramble in the last month to ob- exam. tain your credits. Throughout the year, The Sunshine seminar IBAA offers many seminars, webinars, will once again see some core courses, and online course access. of our members trek off to the a great number of our members receive Visit www.ibaa.ca to keep informed sun in the south while obtaining some our emails only to discard them. It is about the professional development CE hours. For those of you that love little wonder that we have had to cancel (PD) we offer. the snow (not me), we will be plan- or postpone classes when we have not As I write this article, many IBAA ning a Snowshine seminar right here in been able to attract the people who will members will be making decisions on Alberta. We will head to the mountains most benefit from our services. When what education programs they should for some skiing and CE hours. Sorry, employees of member brokerages take take to ensure they meet the AIC the hours won’t be earned on the hills, their education through the IBAA, they requirements to maintain their licenses. though! not only do so at a discounted price but The professional development staff I have had the opportunity to talk also in turn help to maintain current has worked hard over the summer to with a number of our members over the membership prices. I encourage all increase the wide variety and quality of past couple of months and have learned principals and managers to support all seminars, webinars, and online courses, that the IBAA PD team needs to re- IBAA programs. updating them and making them more vamp our method of communicating. I I am expecting my first year as the appealing. was a little disheartened to find out that director of education to be a very busy This fall we have implemented a few new things. The early bird did catch the worm: those who registered for seminars and webinars received a 10% discount during the month of August. The first 100 people to purchase a VOLT (online) package as of September 1 will be entered into a draw to win an iPad 2. We also now offer an annual subscrip- tion to the Captus (online) library for only $150. We have also implemented a price discount for associate members. These are individuals who have earned an IBAC designation such as CAIB but no longer work for a member broker. Associate membership allows individuals to use their designation. We want to support association loyalty and education through IBAA.

32 The Alberta Broker October - November 2011 The first 100 people to purchase a VOLT (online) package as of September 1 will be entered into a draw to win an iPad 2. one. I hope to have an opportunity to speak to many of our members as I know the decisions our members make hold the key to a successful year in education. While I can attempt to guess the education needs of you and your employees, it is far better and far more accurate for you, the frontline broker, to fill me in on those needs. Please feel free to contact me as input from you, the members, is invaluable. Keep an eye on our website at www. ibaa.ca, visit us on Facebook, or follow us on Twitter for upcoming events and promotions.

LORI BARTLETT Director of Education, IBAA [email protected]

The Alberta Broker33 Viewpoint Fraser Lyle Who’s Next? IBAC to Focus on Broker Perpetuation

If we are to attract and retain the best people to the brokerage side of the industry, there needs to be opportunities for personal growth and financial success. Innovative financing arrangements to fund expansion of existing brokerages and opening of new brokerages need Recently we have witnessed some brokerage owners and those who want more attention. Technological advances fairly dramatic changes in the insurance to start their own offices to consider will also assist brokers in becoming landscape with consolidation — both using different strategies to grow or more effective as we serve our evolving from the insurance company side and expand their operations. customers’ needs. We need to maintain the brokerage side. Consolidation oc- Strategic partnerships have emerged the “emotional connection” or “personal curs for any number of reasons; econo- between brokers and even with insurers contact” with our customers that we, as mies of scale, competitive advantages, as the need to adapt and grow becomes brokers, are well known for, as well as corporate fit, growth and profitability, more necessary in order to prosper. Ev- make it is easy for our customers to do and specialized niche marketing op- ery three years, IBAC engages in a new business with us. portunities. The list goes on. One thing strategic planning exercise that charts A new, sharper focus on broker per- that I feel will remain constant in the the organization’s path. In the latest petuation will help to offer some solu- foreseeable future is the need for change (February 2011), broker perpetuation tions but this will only partially address in our industry as challenges emerge. was identified as a key strategic goal to our challenges. Now would be a good Some may see consolidation as a po- be addressed. What is significant here is time to re-examine or even formalize tential threat. That it will stifle competi- that this goal was absent in the previous your succession plans if you have not tion, or not serve our customers as well planning session. Some of this new goal already done so. Let’s get the conversa- as they should be served. Or that it will has been addressed with professional tion re-started at the brokerage level. ultimately drive independent brokers development initiatives such as the out of business and restrict the appear- online H.B. Com. and MBA programs ance of new broker partnerships. If we through Laurentian University, as well FRASER LYLE only consider the economic realities of as our Producer Academy program. Chairman, rationalization then I suppose the argu- However, there still needs to be better Insurance Brokers ment becomes an evolutionary one-only exchange of ownership/partnership Association of Canada the strong will indeed survive. From opportunities among brokers within the [email protected] this arises the challenge for existing brokerage community.

34 The Alberta Broker August - September 2011 Who’s Next? IBAC to Focus on Broker Perpetuation