Nobody likes a faltering economy, but business and professional associations have a particular dread of slowing trading conditions and shaky confidence.

When the economy sneezes, membership-based associations tend to catch a cold: member renewals are harder to score, new members are scarce, and usually reliable revenue streams dry up. 

It will come as cold comfort to the National Insurance Brokers Association (NIBA) that it won’t be the only member body doing it tough.

And NIBA is doing it particularly tough at the moment.

Its financial report for last year reveals just how dire things are: NIBA has posted a migraine-inducing deficit – that is, a loss – of $591,148 for the year to October 31. That’s on top of the previous year’s loss of $52,755. Which is to say, things were bad then but they’re considerably worse now.

Membership figures tell the same story: 310 principal (corporate) members at the end of last year, compared with 400 five years ago. NIBA also has about 3800 individual members.

The deficit blowout has resulted in some wrenching decisions, most notably last November’s move to quit the broker education market and close NIBA College.

Instead, NIBA has appointed a former rival, the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), as its preferred supplier of broker education.

Also for the chop is NIBA’s flagship Insurance & Risk Professional (IRP) magazine. The bimonthly publication’s February-March issue will be the last print edition.

NIBA President Graham Stevens says in a letter to members that “the economics of magazine publishing have changed dramatically in the past two years”. IRP will nominally merge with the monthly NIBA Gazette.

In the same letter Mr Stevens is frank about NIBA’s predicament. “We experienced a serious decline in enrolment for NIBA College [last year], as well as a decline in advertising revenue in our publications. Our receipts from member subscriptions also reduced during the year, primarily as a result of ongoing mergers and acquisitions across the industry.”

Speaking to insuranceNEWS.com.au, CEO Dallas Booth is equally candid.

“The revenue position of NIBA became a concern halfway through [last year] and became an even greater concern during the course of the year,” he says.

Like most modern industry associations, NIBA is a multi-pronged business enterprise as well as a membership-driven resource and lobby group. When times are good, revenue streams such as training and education, publishing and events can be very lucrative, and provide member benefits.

But the Australian economy, while growing, is doing so in fits and starts; it has never fully recovered from the 2007/08 global financial crisis. A decade of economic flux – recently compounded by the mining slump – and a persistently slow global insurance market have not made things easy for NIBA.

The association’s challenge is to home in on its reason for being, which inevitably means paring back the business side, such as NIBA College and IRP magazine.

“We’ve had to respond to the nature of the business,” Mr Booth said. “Serious steps have been taken by the NIBA board, and are still being taken, to change the business.

“We have spent a lot of time looking at the issues, challenges, causes and opportunities that have to be addressed to manage the financial position presented to us. One major outcome of that process was the collaboration with ANZIIF; that was a decision taken by the board to limit and ultimately remove exposure to financial consequences in that area.

“[This year] an important challenge for us is to look long and hard at our operational activities and that was the decision we had to make last year: how important is it to maintain NIBA College and to remain in magazine publishing?

“The decision was to concentrate on what brokers want from us, and that’s primarily our industry representation role.”

NIBA is expected to retain its strong focus on events, including its centrepiece annual convention and “hugely popular” joint expos with the Underwriting Agencies Council. But as the Prime Minister Malcolm Turnbull is fond of saying, everything is on the table.

“We’re monitoring our events all the time,” Mr Booth says.

He admits the board hasn’t finished its review of NIBA’s operations, flagging further “serious thinking and discussion” over the next two or three board meetings “to ensure we’re doing the very best we can for our members with the resources available to us”.

Mr Booth also notes the representation role is not only for the benefit of members, but the whole broker industry. This poses a conundrum: industry participants can enjoy the fruits of NIBA’s lobbying efforts without having to invest in its future.

A case in point is the association’s success in showing the Federal Government last year that its proposal to raise education standards for financial advisers should not apply to insurance brokers.

That said, NIBA claims to have 90% of eligible principal members, which is not a bad strike rate. Capturing some of that elusive 10% would bolster the coffers, but an even bigger problem than non-joiners is industry consolidation, which diminishes the membership pool.

“Every time somebody takes over somebody else, we lose a membership fee,” Mr Booth notes ruefully.

When all is said and done, it all comes down to that disastrous financial result. That’s why they call it the bottom line. How does NIBA maintain its role as an effective lobbying group representing the interests of the broking industry while burdened with such a massive deficit?

Like the Federal Government, the association has both a spending and revenue problem. It has dealt decisively with expenditure by removing two business lines – both substantial drains on finances and ultimately luxuries it can do without, at least until more propitious economic times return.

But as NIBA contemplates its $600,000 black hole, it must do so in the knowledge it has struck out on most of the six key performance measures in its directors’ report: government affairs and industry liaison; membership; finance and administration; education and training; communications and publications; and the NIBA Convention.

This year may well be the most critical since NIBA’s formation in 1982. It must create a business model that is financially viable and meets its objectives as a professional body representing insurance brokers across multiple stakeholder groups – government, regulators, business, the media and the community.

It may be that like the insurance industry, the answer lies with consolidation. Most professional and industry bodies at some point consider amalgamation with others, either to expand or stave off collapse. Not that there’s an obvious merger partner for NIBA.

For now, there’s no talk of mergers, but to keep such talk at bay this needs to be a decisive year. When the board completes its reviews in the next few months, members spooked by the latest financial results will want to see a business model – and a plan – that places NIBA well on the road to recovery.

It may not be fair, but NIBA may have to prove its value to skittish members all over again. Mr Booth has more than earned his stripes as CEO, but he may find this to be his make-or-break year.