After a testing 2015 for the association, NIBA CEO Dallas Booth has a challenging year ahead to reinvigorate the NIBA value proposition and the business bottom line. He talks about how NIBA is facing up to its responsibilities, and what its focus will be for the coming months.
Insurance Adviser: As has been reported in the industry press, NIBA’s last financial year was a difficult one, which resulted in a deficit of more than $500,000 for the year up to 31 October 2015. What steps is NIBA taking to address this?
Dallas Booth: The figures made for quite grim reading due to a number of factors, but steps are already being put in place to return NIBA to a sound financial footing and we’re facing up to the realities of the market we operate in.
Chiefly, our activities in the broker education and publishing were no longer covering their costs. After many months of due diligence, we addressed the financial risks associated with NIBA College by entering into our collaboration with ANZIIF. We’re currently doing a “teach out” as we meet our commitments to existing students of NIBA College, and we are also working closely with ANZIIF to ensure their new broker qualifications and training meet the needs of brokers now and in the future.
We also made the decision to address the financial risks associated with our publications, which is why we’ve merged NIBA Gazette and Insurance & Risk Professional into a single title, which is being managed in-house. This is a more cost-effective means for us to communicate with our members, and with the wider intermediated insurance community.
Looking to the future, the team at NIBA will continue to do its very best to meet the expectations of our members, but we also have an obligation to operate within the resources available to us.
We’ve taken some big steps already and will continue to do so as we review our goals and objectives over the next year and develop a clear framework for providing the best services to our members in a financially responsible manner.
It’s also worth pointing out that NIBA has comfortable financial reserves due to sensible house-keeping over a period of many years. NIBA’s existence is not under threat, but we accept that there’s no room for complacency.
NIBA’s role in representing the interests of brokers remains as relevant and as crucial as it has ever been.
IA: With NIBA College winding down and the streamlining of publications, does this mean a greater focus on NIBA’s representation role?
DB: Yes. There’s overwhelming support for NIBA to be strong in representing our members’ interests and that remains NIBA’s principal reason for being. Right now there are more than a dozen big issues that we are actively managing or monitoring very closely and all of these could become a burden for brokers if not handled properly.
It’s a big responsibility, but one which I and the Board take very seriously. But more than that, we’ve had some very real successes on behalf of brokers in recent years – by avoiding the ban on commissions in the FOFA legislation, and notably in late 2015 when general insurance brokers were carved out of new legislation requiring financial advisers to have university degrees.
NIBA’s role in representing the interests of brokers, therefore, remains as relevant and as crucial as it has ever been.
IA: The old argument persists that if all brokers benefit from NIBA’s work whether they’re members or not, what is the incentive for brokerages to pay their annual subscription? And how do you prove that value?
DB: There is no doubt that all brokers do receive the benefits of the work we put in. In an ideal world, we do believe that that all brokers should support their industry body so that we can continue to carry out this important work.
In tougher economic times that annual subscription may seem like a less appealing proposition, but it all boils down to the debate about price versus value – which is a conversation brokers have with clients and potential clients every day.
We work very hard to make sure that NIBA provides real value to its members and what is reassuring to me is that those brokers who are engaged with NIBA activities, and who do take notice of the work we do in representing their interests very clearly see the value we provide. And they come from all over Australia, from Far North Queensland right through to regional WA.
Just as an example, if brokers had not been carved out of the legislation for professionalism in financial advice, it could have cost brokers across Australia millions of dollars. That really shows that the work we do is valuable.
Also, there’s no one else out there who is playing the role NIBA does. Companies can have their own government relations teams, but in my experience governments prefer to deal with industry bodies over companies, who are seen as being heavily influenced by their own commercial interests. And of course, the cost to companies to fund government relations departments or consultants would be far in excess of the NIBA membership fee.
In tougher economic times the NIBA subscription may seem a less appealing proposition, but it all boils down to the debate about price versus value – a conversation brokers have with clients every day.
IA: How is the regulatory landscape looking in the longer term?
DB: All the indicators are that in the next 5 years there will be more regulatory activity rather than less, and some of that could potentially seriously hamper broker activity. The need for a strong NIBA certainly won’t be diminished.
The ‘Treating Customers Fairly’ principal, which is a new concept in the UK, looks like it will be implemented in Australia based on the recommendations of the Financial System Inquiry. Just what obligations this would entail, and how the penalties for breaches would work, remain to be seen, but that’s shaping up to be a biggie for brokers.
Similarly, how the Government approaches making businesses fund ASIC will be of critical importance to brokers. The first proposed funding model was shown to be deficient and would have disproportionately impacted brokers.
We have argued that sectors requiring higher levels of regulator attention (i.e. financial planning and investment advice) should pay more than those that require less attention (i.e. insurance brokers), and it is very pleasing that in conversations with government on this matter we seem to be being heard.
I do feel that NIBA is listened to by governments and regulators, that we are regarded as credible, and that we are able to influence positive outcomes for brokers. And that, of course, is a testament to the high levels of professionalism and ethics evident in the general insurance broker sector over many years.
IA: With the amount of broker mergers going on at the moment, and the number of NIBA Principal members therefore shrinking, can NIBA remain sustainable in the long term?
DB: The issue of the increased level of broker mergers, and the eating away of NIBA membership revenue as a result, isn’t going to go away and we may be reaching the point where we will need to think about possible alternate ways of funding the association.
What we will be doing as a priority this year is engaging with our insurance broking industry leaders and our members to discuss the most appropriate ways of funding and resourcing NIBA, so that we can carry out the things they want us to do. It is quite conceivable that in 2-3 years’ time, there may be a different funding model for NIBA entirely.
IA: How will NIBA maintain its role in setting standards for broker education under the new arrangements with ANZIIF?
DB: Our collaboration requires us to work closely together to ensure the education and training standards for brokers remain high and that will continue to happen in the months and years ahead.
We are conscious that the world is changing rapidly and that the successful broker businesses of tomorrow will need well trained, adaptable and capable people. Both NIBA and ANZIIF are committed to achieving that, which is really positive for our future brokers.
It is quite conceivable that in 2-3 years’ time, there may be a different funding model for NIBA entirely.
IA: How will the value of QPIB be maintained if NIBA isn’t actively providing education and training?
DB: QPIB is not just an education qualification. It is an indication to clients and others that you have the formal qualifications, a commitment to continuing professional development, and a strong commitment to the provision of professional and ethical services for your clients. In other words, QPIB is the status of an industry recognised professional.
We want brokers to be proud to be a QPIB, and to highlight to their clients and broader communities the high standards and dedication to professionalism and on-going excellence it stands for.
With the resources available to us, we’re not able to embark on a big-money advertising campaign like the CPA is able to do, but we are aiming to reinvigorate awareness of the benefits of QPIB among brokers, and showcase its value to the insurance buying public.
We are doing that through the Need a Broker website, and will continue to do so. Only brokers with an in-house QPIB are eligible to be listed on the Need a Broker site, which is a great incentive in its own right.
We have upgraded the site substantially in the last year and we continue to work hard to help it grow, and to provide more, and better leads to our members. In the last month alone, more than 16,000 users either called the Need a Broker hotline, used the site to call a broker directly, or found out more about our members’ products and services.
That’s a great level of activity and it only takes a few of those leads to be converted over the course of a year to show what a valuable service it can be.
IA: 2015 was a tough year for NIBA. How positive do you feel about the association’s future?
DB: Very positive indeed. NIBA will continue to play an important role in safeguarding brokers’ business interests. We do have challenges ahead, but the same can be said for the whole intermediated insurance industry, and most parts of the Australian economy.
I see NIBA as remaining a crucial component of the intermediated insurance community for years to come and we are committed to helping our members achieve their business aspirations through whatever means we have at our disposal.
NIBA is a small association, but we continue to deliver major successes. That should be a very reassuring thought for brokers across Australia.