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Brokers caught napping in the classroom

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It is rare for a conference speech to be discussed long after it was delivered, let alone set in motion the impetus for radical change.

But the 450 delegates at last month’s Austbrokers & IBNA Members Services (AIMS) conference in Barcelona likely witnessed such a seminal moment.

AIMS GM Martin McAvenna retires on June 30, but he was far from retiring when he addressed the issue of broker education.

He called for an overhaul of the way education is delivered, and issued a challenge to the National Insurance Brokers Association (NIBA) and the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), both of which produce broker education programs. 

“Why are there two professional organisations… competing in this space in the Australian market?” he demanded.

It is not so much that the insurance veteran was raising a new matter – discontent has been simmering for some time, and NIBA and ANZIIF know it.

But sometimes it takes the right person, in the right time and place, marshalling forces of reason and conviction that can move mountains.

All the elements came together in Barcelona.

Mr McAvenna’s challenge to NIBA and ANZIIF was clear: sort out your differences and place the interests of brokers at the forefront of your deliberations. But he also raised an even greater imperative for the future of broker education – its future ultimately must lie not with NIBA and ANZIIF, but with the industry itself.

He believes the industry must make it a priority to modernise, strengthen and enhance the education offering, to equip brokers for the 21st century.   

“If our industry makes the educational choice to be broader and more rigorous and more than vocational training, we can shape the outcome,” Mr McAvenna said.

It is not easy turning an “industry” into a “profession”, and that is where broking finds itself.

Insurance is an industry that is arguably like no other. Built on centuries of tradition, its diverse practitioners share a passion for the business.

Over lifelong careers they amass deep reserves of knowledge and expertise, and they hold firm a belief in the contribution that insurance makes to individuals, families, businesses and the economy.

So where’s the problem? The problem is that time has caught up with insurance.

The fundamentals of insurance remain largely intact, but vast changes in society, the economy and technology have altered the way business is done.

New business models, technology, structural changes affecting whole industries, shifting consumer behaviour, intricate regulatory frameworks, globalisation and even climate change have combined to transform the way insurance is applied, marketed and consumed. And the change is not only continuous but also rapid.

It’s no wonder Mr McAvenna’s dramatic intervention on education has struck a chord.

The penny has dropped that the broking sector has been caught napping, and it must now redouble its previously less-than-convincing efforts to get up to date.

Gold Seal MD Sheila Baker, a leading industry educator, supports Mr McAvenna’s calls to act decisively.

Gold Seal, like NIBA and ANZIIF, is one of a small number of registered training organisations working in the sector. It offers training in Regulatory Guide 146 compliance, and qualification courses including the Diploma of Insurance Broking and the Certificate IV in Insurance Broking.

Ms Baker’s support is telling. It would have been easy, as the leading private provider of insurance education, to sit back and wait for others to take the lead. Gold Seal has provided programs for brokers since 2005. But she, too, recognises the need for change.

She congratulates Mr McAvenna for “championing the cause of better education for the industry and challenging the industry bodies to rethink their approach”.

Ms Baker raises a critical point: that the industry – partly coerced by heavy-handed government regulation, but also due to a misapprehension of what constitutes professionalism – has made compliance the primary driver of broker education.

“Since the implementation of RG146 in 2004, the focus of the educators has been on demonstrating compliance with the prescribed competencies,” she says. “There is a gap, though, between those competencies and commercial practice.”

Brokers recognise that the education system has been skewed by heavy compliance burdens placed on the industry, and they do not like it.

Ms Baker has committed Gold Seal to help devise “a more forward-thinking approach” to broker education. “Gold Seal has a great deal of valuable information about where brokers feel the system lets them down,” she says.

In the meantime, the key to the future of broker education is breaking from the past. She urges the industry to speak up.

“It’s certain that if we continue to do what we’ve always done, we’ll end up with what we’ve always had,” Ms Baker says. “The discussion needs to be a good deal broader than that which can be offered solely by the two industry bodies.

“With the debate opened up, now is the time for the industry to work together to develop a way forward that is focused on how best to turn out a generation of effectively trained operators.”

The offering of professional qualifications for insurance practitioners is sparse. Deakin University in Victoria used to offer a Graduate Diploma of Insurance, which became a Graduate Diploma of Financial Services, but now even that has been discontinued.

The closest thing to a bachelor’s degree in insurance is the Bachelor of Business (Insurance) offered by NSW-based Charles Sturt University, which was jointly designed with ANZIIF.

Victoria University offers a Graduate Certificate in Insurance Law and Practice, but it abandoned plans to introduce a Master of Insurance Law and Practice.

The master’s degree was championed by LMI Group MD Allan Manning, who is an adjunct professor at the university’s faculty of law and justice.

Professor Manning is a strong proponent of university-level insurance qualifications. He designed the proposed master’s degree with input from NIBA, the Underwriting Agencies Council and several major insurers including Zurich, IAG, CGU and Suncorp.

Professor Manning told the university decided not to proceed with the degree program due to a lack of government funding.

“The university was very keen on it, but it couldn’t get the funding for it, so it’s just sitting there, just waiting until it’s able to get the funding. But in the present funding environment I’m not confident that will happen.”

Despite this, Professor Manning believes there is demand among young insurance professionals for a substantial postgraduate degree.

“There’s a great thirst for knowledge. They’re anxious to be taught; they want to excel at their profession.” 

Professor Manning is concerned many senior insurance specialists such as underwriters and claims managers will retire in the next several years, taking with them a huge body of knowledge and expertise.

He warns the industry is becoming more complex, more specialised and is moving too quickly for practitioners to acquire knowledge over time.

“There is a generational change under way as senior specialists retire, and I wonder where the specialists of the future will come from.”

Alan Wilson, principal of Alan Wilson Insurance Brokers in Traralgon, Victoria, is on the same wavelength. A critic of the current education system, he asks: “Where are the next Allan Mannings going to come from? That’s what we should be producing for the future.”

Mr Wilson told broker education has moved too far away from a previous emphasis on technical aspects of insurance towards a focus on compliance training.

He does not blame the big three industry trainers – NIBA, ANZIIF and Gold Seal – because they are only fulfilling regulatory requirements. 

“It’s all about compliance now,” Mr Wilson says. “The courses teach you to make sure the consumer is protected, which is right, but it’s at the expense of everything else.

“I’d like to see more about the basics of insurance, the science of insurance. There’s no point coming out with a diploma and not having the basic principles of insurance.”

Mr Wilson welcomes any move towards an industry-wide discussion on broker education, and if it results in demand for more robust diploma programs, that will be fine by him.

“If it were to become harder to get a diploma, I wouldn’t mind that. It should be a challenge. There’s no point being able to go straight through and know [very little] at the end of it.

“Our industry has let our standards slide a little bit. I think it’s good for all these issues to come up for discussion.

“Let’s throw some ideas around. We have to come up with something better than what we have now.”