Broker Professionalism & Ethics
Brokers/Agents protects clients & helps them manage risks
Successful brokerages focus on customer-relationship management (helps retain customers & get
referrals)
o Retention = cheaper than new business
 Respond quickly
 Personal service
 Customers first
- 4 Aspects of CRM: policy management, claims management, conflict resolution, limitations
o Insurance-policy management: to ensure existing clients stay
 Keep renewal list (to notify them of upcoming renewals)
 Prioritize files that need remarketing, more info, changes, etc.
 Remarket if there is a big change in premiums or products
 Broker’s Abeyance System: should be current w/ realistic F/U dates
 Follow the “once and done” rule: files are touched once and all actions are
taken.
 Reduces delays & E&O
o Claims-process management: explain coverage, deductible & impact of claim (i.e. higher
premiums)
 Claims service = crucial selling point of a broker
 Educate & guide clients through RE: rights/responsibilities,
expectations, procedures
 Resolving conflicts between adjuster & client: take care of things if things go
wrong
 If dispute RE: value/extent of repairs, file for dispute-resolution in writing
 Each one hires an appraiser → the 2 appraisers appoint an umpire →
the 3 make a decision
 Claims Process: loss → insured reports to broker → broker reports to insurer →
adjuster contacts client → broker follows up (if necessary) → claim closes
o Resolving conflict:
 Don’t take it personally
 Stay calm & listen
 Don’t blame others
 Ask Q’s to fully understand the issue
 Empathize & apologize
 Seek resolution: what do they want? Ask for their suggestion & refer to
someone else if necessary
 Be open to feedback: complaints = a place to improve
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Binding limits:
 Know the insurance products you sell: conditions, exclusions, insurer, etc.
 Binding Authority: brokers role & the acceptable risks
 If you can’t bind:
o Contact underwriter for coverage; OR
o Remarket to another insurer where you can bind
Customer Service needs to go ↑ because of internet
o Explain advantage of brokers
o Be available 24/7
Use internet for promotions & online resource; Use online chat to close more business
Risk Management = reducing financial consequences of a loss
- Weigh cost of loss vs cost of protection & find the cheapest option
- Broker guides clients on best protection (incl. risk management techniques & insurance)
o Understand your client’s risks, your products & alternatives
- Risk Management Steps: ID, Analyze, Select, Implement, Monitor
o ID: exposures that might affect client
o Analyze: the risks identified
o Select: the risk management techniques possible
o Implement: the chosen technique
o Monitor: the results & modify where necessary
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Identify Exposures: via observations & questionnaires
 2 types of risk:
 Speculative risk = there is a chance of gain (i.e. gambling/investing)
 Pure risk = can only lose
 For commercial risks, run a “Risk Inventory”: risk assessment surveys, loss
histories, financial statements, accounting records, org charts, consultants, etc.
 Investigate:
 Loss history: what claims were there in the past?
 Physical characteristics: size, construction, occupancy, neighbours, etc.
 Protection: proximity to fire hydrant, sprinklers, alarms, etc. (safety
equipment)
 Liability: contractual obligations, bylaws, losses by under/uninsured
parties, product/completed operations liability, etc. (more in Ch 6)
 Exposed Property:
 Tangible property: land, property, personal property
 Intangible property: copyrights, trademarks, designs, trade secrets,
contracts, etc.
 Net income: losses can increase expenses & lower revenues (biz int)
 Key personnel: their deaths/injuries could damage the business
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Liability Exposures: workers compensation, premises & operations, etc.
 Perils exposed: natural, human & economics
Risk Analysis: determine financial consequences of loss
 Calculate severity of risk by: frequency & cost
 Ex: high cost but rare = not that bad (i.e. earthquake)
Select & Implement RM Technique:
 Brokers recommend insurance or other techniques
 Value add: explain, recommend & implement loss prevention methods
o Some might be required by the policies
 4 methods of risk management: CART
 Control: the risk (i.e. fire extinguisher)
 Avoid: some risk are unavoidable (no delivery vs earthquake)
 Retain: pay out of pocket (use if uninsurable or if OK w/ risk)
o I.E. shoplifting
 Transfer: by buying insurance or w/ hold harmless/indemnity
agreements (i.e. used in leases)
Monitoring: monitor for effectiveness & modify to improve loss ratios & keep up with
changes
 Broker should stay up to date w/ new products/procedures
Ethics/Professionalism: brokers are responsible for other people’s assets/info
- Mistakes can VOID policy/deny coverage = E&O claim
- Take CE credits to stay up to date
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Finances: maintain records of funds received from clients & remit to insurer
o Remember “one touch rule”? Do financial accounting @ same time as policy service in
BMS (Broker Management System)
 IE: return unearned premiums/commissions
 Hold it in a separate account from operating funds
o Put controls in place to ensure funds are handled & documented properly
o 2 Types of Billing: direct & agency
 Direct Billing: insurer bills client directly & sends commissions to broker w/
monthly statement
 Less admin work BUT… 1 less touch point
 Agency Bill: brokerage bills & remits $ to insurer
 May need a lender to help w/ financing plan (esp for larger premiums)
(premium financing company)
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Errors & Omissions: every broker/brokerage in AB must carry malpractice (E&O) insurance
o Common causes:
 Inadequate coverage (or failing to offer adequate coverage)
 Failing to make changes accurately or in time
o Avoid E&O by:
 Following binding authority
 Thorough documentation (+ having clients sign off on declined coverages)
 Timely processing of client requests
 Having consistent procedures for the above (in case of lawsuits)
 Stay up to date w/ new products
o Notify E&O insurer promptly of (potential) claims
Privacy: broker deals w/ customer’s confidential info
o Only collect personal info when purpose is disclosed & consented
 Use application, consent form or verbal consent
o Only send underwriting info to insurer
o Only keep info for as long as needed & only for consented purposes
o PIPA & PIPEDA require that client info be protected (lock or password) & only be
accessible to brokerage employees
 Client can request a copy of the info you have on them
 Only enter accurate & professional info
 PIPA = Alberta Legislation similar to PIPEDA
Career Development: increases job satisfaction & competitive position of brokerage
o Have contingency plan to replace key personnel (i.e. cross train staff)
o Promote from inside whenever possible:
 Costs of recruitment, selection, hiring are lower
 Less training time: already know skills/habits/policies
 Motivates staff
o Education: more knowledge/skills = more promotions
 Licensing + CE + product/operations knowledge helps clients
 Trade magazines, mentorships, workshops, educational incentives &
professional designations are good
o IBAA = IBAC member
 Offers national designations (CAIB, CPIB, etc.)
 Educates brokers
 CAIB = Canadian Accredited Insurance Broker = 4 part program covering:
personal lines, commercial lines & brokerage mgmt.
 CPIB = Canadian Professional Insurance Broker = senior designation (universitylevel)
 3 Streams: personal lines, commercial lines & brokerage management
 Pre-requisites: CAIB or CIP designations, 3 mandatory IBAC courses, 3
electives @ university or IBAA
 CCIB = Canadian Certified Insurance Broker = highest level or practical & theory
o Insurance Institute of Canada: provides CIP & FCIP education
 Chartered Insurance Professionals (CIP) = pre-requisite to FCIP
 10 courses: 5 mandatory, 3 applied, 2 electives from a list of ≥ 20
 Fellow Chartered Insurance Professional (FCIP): 6-course executivedevelopment program
 Covers: strategy, leadership, financial mgmt., risk mgmt. & global issues
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CE requirements: AB brokers need 15 hrs of CE per year (can carry 7.5 hrs to next year)
 Accredited CE course providers issue cert. w/ # of hours, licenses it applies to
 Brokers: make sure they do/document their hours (random audits)