The association made the announcement after a busy week of town halls held across the province and its annual general meeting. IBAO CEO Colin Simpson attributed market movement as a reason why it was the right time to institute the category.
“We are seeing a fair amount of consolidation across the broker network and have for a number of years,” he said. “We’re seeing somewhere between 6% and 8% of our member businesses consolidate year on year, so it’s not that we are getting any less licensed brokers being members, but the number of businesses shrinks and they get bigger.”
IBAO was on the lookout for ways to attract new entrants into the industry because there are a significant number of brokers becoming licensed every year, and they sometimes face a financial barrier-of-entry in paying IBAO membership fees. Out of 25 brokerages that met the criteria for the category, only three joined the association last year and the 22 that didn’t cited cost as the main reason.
“We decided that we wanted to address that and try to make it easier for brokers who are just starting up to have access to our services and the benefits of the association while they’re building up their businesses,” explained Simpson.
In order to qualify for the start-up category, the brokerage must be newly registered with the Registered Insurance Brokers of Ontario (RIBO) in the last 24 months, and they will receive the price incentive once over a three-year period. In the first year, start-up members will only have to pay 25% of the going IBAO rate, 50% in their second year and 75% in the third year, with standard rates applying in the fourth year.
There are benefits to be gained for the association in having fresh faces signing up for memberships.
“Because they’re start-ups, they tend to be more of the entrepreneurial as opposed to the employee-type, and they’re the type of people we want involved in the association to make sure that we remain focused and relevant in the future,” said Simpson.
Many of these brokerages are tech-heavy and run their business entirely online, which aligns with IBAO’s plans to become more digital, starting with making IBAC-sponsored licensing exams accessible online by mid-year.
The provincial association has a busy few months ahead – the new Financial Services Regulatory Authority is in the process of being established and the provincial election, which requires IBAO outreach to political leaders and their platforms, is coming up in June.
“Two of the parties have focused on the rating territory issue in Ontario,” said Simpson, pointing to the PCs and Liberals specifically. “We have continued outreach to the political parties to make sure they understand the consumers’ perspective on insurance and also our members’ perspective.”