Insurance Journal — April 2020 by journal-assurance

$10

Vol. 24 No. 03

April 2020

COVID-19

Advisors and clients adapt to the new normal Special Report Chronic pain is an invisible condition that exacts an enormous toll Distribution MGAs navigate multiple challenges Financial planning Prenups can provide a sense of safety and comfort

Vol. 24 No. 03 — April 2020

AN EXPANSIVE RANGE OF PRODUCTS TO SERVE YOUR NEEDS! Created in 1992, the Insurance Journal Publishing Group now counts ten products in three formats: print magazines, industry events and Web information services.

Digital services As part of our digital transformation, our company has created the Insurance Portal, a one-stop shop that will eventually bring together all of our information services and products. It has customization and keyword search functions. It will also host the services of other organizations and companies interested in offering their products to financial services industry professionals. A true insurance business centre, the Portal is a powerful tool for helping industry professionals grow their businesses. Available online, InsuranceINTEL is a market intelligence centre for the life and health insurance industry in Canada. The database is constantly updated and provides the features of more than 470 insurance and investment products through easy to analyze comparative tables. Users can also access 3,000 marketing documents, as well as 350 insurance applications. Various levels of membership are available for insurance companies, banks, MGAs and advisors to enable them to stay on the forefront of new industry developments. InsuranceINTEL Weekly monitors the trends and changes in the life & health insurance industry in Canada: product launches, changes in premium rates, modifications to commission schedules, technological developments and marketing campaigns.

Print Insurance Journal and Journal de l’assurance publish in-depth articles to enable insurance industry professionals to stay on top of industry developments. This knowledge will assist our readers with their goal of helping Canadians get the insurance coverage they need to protect their families, their wealth and their dreams.Our magazines are available by subscription across Canada. The Répertoire des fournisseurs en assurance de dommages provides an excellent overview of the products and services offered by professionals in restoration and non-standard risks in the P&C industry.

Events The Canada Sales Congress, a conference held annually in Toronto, focuses on sales and business development. It brings together approximately 1,200 participants, 20 speakers and about 65 exhibitors and sponsors. Tuesday, September 15, 2020 [NEW] Acquired in March 2020, the Group Conference is a niche event promoting group health insurance. Thursday, October 22, 2020 Each year, at Montreal’s Palais des congrès, the Life Insurance Convention brings together more than 1,300 participants & over 30 speakers and 65 exhibitors. Tuesday, November 17, 2020 P&C Day held annually attracts some 900 participants, 30 speakers and 70 exhibitors and sponsors. Tuesday, March 10, 2021

Serge Therrien serge.therrien@insurance-journal.ca 514 289-9595, ext. 224 Editorial Donna Glasgow donna.glasgow@insurance-journal.ca 514 289-9595, ext. 236 Events Julie Viau julie.viau@insurance.journal.ca 514 289-9595, ext. 246

INSURANCE JOURNAL APRIL 2020

Editor-in-Chief Donna Glasgow Director, Life Insurance & Investment Products Information Alain Thériault Head of Web Content Aurélia Morvan Director, Comparative Market Intelligence & Analysis Ian Bolduc Production Manager Myriam Lauzon Event Manager Julie Viau Director of Finance and Administration Chantale Lussier Digital Growth Manager Philippe Le Roux Contributors Alain Castonguay, Frédérique De Simone, Charles Mathieu, Kate McCaffery, Aurélia Morvan, Hubert Roy, Jim Ruta, Alain Thériault, Susan Yellin Graphic Designer Marjorie Poirier Marketing and Communications Coordinator Maïté Trénou Administrative Assistant Nedjine Eugène Photographer Réjean Meloche

Insurance journal is published by Les Éditions du Journal de l’assurance inc.

A neutral, objective and independent source of information

Publisher Serge Therrien

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MESSAGE FROM THE PUBLISHER

Information you need to prepare for the future BY SERGE THERRIEN, PRESIDENT AND PUBLISHER

n the midst of the COVID-19 crisis, all members of the Insurance Journal team are working hard to keep the industry informed. Now scattered across the country, working from their homes but connected online, members of the Insurance Journal Publishing Group team are continuing to report the news via the Insurance Portal and the Portail de l’assurance. Most of our content on COVID-19 is available for free on our Portals. However, we have recently hit a major hurdle: due to the government measures, our printer was forced to temporarily suspend operations. We reacted immediately by adopting digital tools to produce our April editions of both the Insurance Journal and Journal de l’assurance magazines. In fact, the digital world is much more conducive to sharing than print. To take full advantage of this opportunity, we decided to make these editions available for free during the COVID-19 crisis, in several ways: • The digital versions of our April editions can be downloaded from our Portals for free; • A download link will be sent to print

subscribers; • All of our industry contacts will also receive this download link and will be invited to distribute our digital versions for free in their networks; • We have launched a massive social media campaign. Our Portals and digital versions will keep over 100,000 readers informed of the impacts of this crisis, along with the major issues and other topics that form the bedrock of their profession: insurance! This is an essential service because the insurance industry will surely rebound after the crisis. After major upheavals, people often say that the world will never be the same again. And yet… • The financial product crisis triggered by subprime non-bank assets in September 2008 cost 9 million Americans their jobs and homes. What’s more, stock markets plunged by 50%; they would recover only in April 2009. • September 11, 2001 marked us all indelibly. • The burst of the tech bubble in 2000 seemed earth shattering: Some markets lost $6 trillion in less than one month.

In hindsight, we can see that life eventually returns to normal. However, we must make sure that the business world can once again rest on solid foundations. This means thinking long term, supporting good values, and believing in businesses that care about their customers and protect their employees. As the current crisis rages, we applaud the dedicated advisors and brokers who continue to call their customers in order to guide them, reassure them and invite them to reflect on essential values by asking these key questions: • Are your loved ones well protected if anything were to happen to you? • Have you prepared your will so that you leave your estate to those who matter most to you, and have you taken steps to ensure the smooth transmission of the inheritance? • Have you thought out your business succession to provide your employees with a solid future? More than ever before, advisors and brokers are becoming critical players. They are playing instrumental roles in ensuring the continuity of thousands of small businesses in Canada that drive the creation of tens of thousands of jobs!

INSURANCE JOURNAL

SPECIAL THANKS TO OUR ADVERTISERS AND SUBSCRIBERS I extend my heartfelt thanks to our advertisers who, even in this time of crisis, are continuing to support our digital issues. I would also like to thank the readers who have subscribed to the PRO level of our Portals.

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Our news company is independent of all regulatory organizations in Canada. Over the past two years, we have undertaken a major transformation by enhancing our digital offering, and you have responded. Your support counts for us. We will ensure that we multiply your visibility and the benefits that you derive from contributing to our publications. Thank you.

APRIL 2020

INSURANCE JOURNAL 3

Something to think about… “I’m hearing that when we ask advisors where their clients went, it’s never to another advisor. It’s always to one of the big banks, which control about 85% of the clientele in Canada.” — François Desjardins See The C-Suite interview on pages 6 to 8.

In this issue… A

Advocis 24

Financial Horizons Group

AFL Groupe Financier

AGF Trust APEXA

8 30, 34

Aurrea Signature

National Bank

Guardian Capital

HUB International 6

29, 34 29

Patry, Poulin, Trahan & Associés

PPI

iA Financial Group

30, 34

Qualified Financial Services

Blackstar Wealth

IDC Worldsource Insurance Network

29, 34

Canada Life

11, 29, 34 29, 30, 34

Canada Protection Plan Canadian Pain Task Force

9 37, 40

Creative Planning Financial Group

D Desjardins

7, 19

E Empire Life Épargne Placements Québec

INSURANCE JOURNAL APRIL 2020

34 7

International Association for the Study of Pain

L Laurentian Bank Financial Group LIMRA

6 44, 45, 46

LSM Insurance

M Mackenzie Financial Corporation Manulife

30, 34

CAILBA

Pain BC

Benefex Consulting C

N 29

HUB Financial

15, 29

M.R.S. Trust

Groupe Cloutier

Azur 29 B2B Bank

Morneau Shepell 29, 33, 34

8 7, 10, 34

McMaster Faculty of Health Sciences

Medavie Blue Cross

Mercer 15

RHC Insurance Brokers

S Sirius Financial Services Sun Life

12 30, 34, 40

Synergy Life Financial

T Torce 30 V Vance 30 W Williams HR Law Professional Corp World Health Organization

11 39

Vol. 24 No. 03

April 2020

Health

CHRONIC PAIN

An invisible condition that exacts an enormous toll

Society

Entrepreneurship

Insurers provide help through group plans

Multi-pronged approach required

Insurance companies are offering programs that provide customized pain relief.

Failure to manage chronic pain can lead to sleeplessness, depression, anxiety and isolation.

Adapting to the COVID-19 era

Pandemic Pandemonium

Advisors need to determine how to interact with clients in a meaningful manner.

Life Insurance

Jim Ruta shares his advice for how to keep selling life insurance during these difficult times.

Special report on MGAs

Whole life drives premium growth

CI insurance sees modest sales growth

MGAs are betting on the acquisition of smaller firms to grow and bring in new blood.

Vigorous whole life sales fuelled premium growth in the Canadian life insurance sector in 2019.

Critical illness insurance sales stagnated in Q4 but rose for 2019 overall.

The C-Suite Interview

Prenups can provide safety and a sense of comfort

The blue collar market

For those entering a second marriage, a prenup may prove necessary, especially for entrepreneurs

The blue collar market is underserved by advisors yet offers high potential.

François Desjardins wants to help financial advisors become one stop shops for all their customers’ financial and banking needs.

APRIL 2020

INSURANCE JOURNAL 5

The C-Suite INTERVIEW

Laurentian Bank aims to position advisors as one stop shops François Desjardins has a sky-high dream. The Laurentian Bank Financial Group CEO wants to help financial advisors become indispensable one stop shops for all their customers’ needs, providing financial and banking services alike.

BY ALAIN THÉRIAULT AND SERGE THERRIEN | PHOTO BY RÉJEAN MELOCHE

This strategy will encourage advisors to think of rançois Desjardins’ lofty dream is for LauLaurentian Bank when they meet their next client, rentian Bank Financial Group to be not only Desjardins says. The bank also just enhanced the line the bank of choice for independent advisors, of traditional banking products offered by B2B Bank. but also to provide them with indispensable support. He wants each independent advisor to have Protecting advisors from large banks the best possible business relationship with each of This strategy has a dual advantage, Desjardins says. their clients. It grants advisors access to low cost products that help “Clients reach out to their advisors to buy insurance them consolidate their client relations, and in turn clibut also to get advice. We want to position ourselves ents will be less tempted to transfer their assets to a as the bank of independent advisors, he told Insurance large bank. Journal. Desjardins explains that banks have an advantage: This vision is long cherished, Desjardins says. He they sell both investment and banking products. Injoined Laurentian Bank in 1991. In 2004 he became dependent advisors are often limited to investment director of B2B Bank (then known as B2B Trust), the or insurance products. He is bank’s subsidiary for advisconvinced that advisors’ cliors. He was appointed CEO ents will not turn to the large of Laurentian Bank in 2015, a banks if they can obtain all position he holds today. their banking products from Laurentian Bank recently their advisor. launched a direct online ser“Many studies show that the vice offering, under its LBC With assets of $44.3 billion, more advisors forge strong Digital brand. Desjardins is Laurentian Bank Financial Group ties with their clients, and the counting on independent adis ranked seventh among the more products they have with visors’ ability to grow their large federally chartered banks. them, the more difficult it is business by referring customHowever, if you include the for a competitor to lure them ers to its online banking prodDesjardins Group, a provincially away. Advisors who forget ucts and services. “When a chartered bank, in the equation, that their clients are also the client goes to the site to open Laurentian Bank is bumped to eighth place in Canada. customers of a large bank will a chequing account, for exDesjardins, with assets of $313 eventually lose them.” ample, and were referred by billion, soars to fifth place, He adds that the large fian advisor, the advisor will behind BMO Financial Group nancial institutions acquired receive a commission,” he and CIBC. a powerful marketing and explains. cross-selling machine over The customer may then proSource: 2019 annual reports of banks cited the years and can now more cure other products without easily impinge on independent needing the advisor’s help. advisors’ turf. “The advisor will be compen“I’m hearing that when we ask advisors where their sated again, even if they did not mention any other clients went, it’s never to another advisor. It’s always product to their client because the client came to us to one of the big banks, which control about 85% of through their referral.” the clientele in Canada,” Desjardins underlines. If while doing data mining among its web clientele, the bank lands a new sale with a client who was No cross-selling brought in by an advisor, then that advisor will be François Desjardins is not only shielding advisors compensated. “If the client has a chequing account but from competition from large banks. He has pledged not a savings account, we can offer them one, and the not to compete with advisors. advisor will be compensated if the client goes ahead “There will be no cross-selling with clients that with it.”

7th or 8th?

INSURANCE JOURNAL APRIL 2020

advisors recommend to our website,” he says. Advisors can top up their pay this way, Desjardins continues. The bank is also refraining from selling the same products as those of advisors He is ensuring that advisors employed in his 83 “financial clinics” in Québec do not compete with the independent advisors. “Before we had a branch network. We now have a financial clinic network. Advisors in these clinics are employees. It’s a distinct channel that does not compete with independent advisors. The two networks work with completely separate customer lists, which is our strength,” Desjardins explains. The one-stop shop strategy for independent advisors is driving its subsidiary B2B Bank to intensify and expand its role of supplier of banking products and services for independent advisors: mutual fund representatives, investment advisor, financial security advisors working for MGAs, unaffiliated deposit brokers specializing in guaranteed investment certificates (GIC), and mortgage brokers. “Advisors must benefit from a global offering that includes all the banking products the client may need,” he says. The bank currently offers mortgage loans, investment loans and RRSPs, and registered and unregistered investment accounts (GIC). The new web offering includes chequing accounts, high interest savings accounts, GICs and a debit card. “We have just launched our digital offering. There are still a few products missing but they are on the way,” Desjardins says. “Our cash back credit card will be available soon. We are also adding a mobile application.” François Desjardins admits that the path to realizing his vision is rife with roadblocks. First, B2B Bank is not alone in its niche. Manulife

François Desjardins

Bank is often named as the main competitor. This bank deals with independent advisors and offers a wide range of bank products. Épargne Placements Québec often jockeys with B2B Bank to offer independent advisors GICs. National Bank also sells banking products to independent advisors. The success of the one-stop shop also hinges on individual relations. François Desjardins knows that although he has signed distribution agreements with small and large distribution companies, there

ASSETS AND REVENUES OF THE MAIN FEDERALLY CHARTERED BANKS AND THE DESJARDINS GROUP TOTAL REVENUE

TOTAL ASSETS

(IN MILLIONS OF DOLLARS)

Royal Bank of Canada

46,002

1,428,935

TD Bank Group

41,065

1,415,300

Scotia Bank

31,034

1,086,161

BMO Financial Group

25,483

852,195

Desjardins Group

20,792

313,000

CIBC

18,611

651,604

National Bank of Canada

7,432

281,458

Laurentian Bank Financial Group

969

44,353

BANKS

Compilation: Insurance Journal. | Source: Banks’ 2019 annual reports. Results for fiscal year ended October 31, 2019, except for the Desjardins Group, whose year ends on December 31

APRIL 2020

INSURANCE JOURNAL 7

THE C-SUITE INTERVIEW

is no guarantee that his offer will have a large-scale positive effect. “This type of contract is only the first step. It does not automatically bring in customers. Not all advisors will get on board on day 1. We have to meet with advisors, knock on their doors one by one to spread the positive news about our global offering, to encourage them to participate in this distribution contract. It’s an exercise for the long haul. We have teams across Canada that are doing only that,” he says. What’s more, banking products are not always on advisors’ radar. “Advisors who sell insurance, mutual funds and GICs will not necessarily think that their customers have other needs like a chequing account, credit card or mortgage loan,” he says. The bank hopes its new debit card will appeal to

COMBINING DIGITAL AND HUMAN INTERACTION In the president’s message in the 2019 annual report, Laurentian Bank President & CEO François Desjardins wrote that he is convinced that all transactions will eventually become digital. “Most customers will want to engage with human beings to make lifechanging decisions that influence financial health,” the message reads. This is why the bank chose to be better on advisors and customer-facing technologies. Desjardins thinks the first major campaign directed at bank customers achieved very good results. The simplicity of the offering is an asset, he says. Accounts can be opened online, without a signature required. “The banking site is very convenient; there is no need to sign or go to a branch. Customers can interact with a completely digital bank.

advisors. This product is their gateway to offering clients everyday services. “It’s a transactional product that clients have in their pocket every day, when they go buy a coffee or groceries. With GICs you get an account statement once a month. A debit card creates a much more intimate business relationship, also one of proximity,” Desjardins says. About 25,000 advisors deal with Laurentian Bank across Canada, Desjardins says. “Do they all sell our products? No, not yet! There’s quite a lot of work to do to boost advisor participation in our global offering. Most advisors sell one or another product category with us. Few of them sell more than one category.” One main reason: the acquisitions of major competitors orchestrated by B2B bank, including M.R.S. Trust from Mackenzie Financial Corporation in 2011, and AGF Trust in 2012. “These advisors came to us through different doors. Our job today is to teach them about our global offering,” Desjardins explains. Another problem is that “financial advisors are submerged in information from different sources, from hundreds of mutual fund companies,” he continues. “When one of our directors goes to see an advisor, the advisor is often surprised by the line of products we can offer their clients. It’s a first step.” The advisor will also have the challenge of unearthing more of their clients’ needs. “Clients are naturally hesitant to talk about their financial affairs. In the era of social media where appearance is often more important than reality, they don’t feel comfortable talking about their debt problems. Advisors have to break down this wall.”

Customers are seeking ease, speed and contracts with fewer papers, he continues. “For convenience’s sake, most customers want to deal with only one financial institution.” Convenience is quickly becoming immediacy, he adds. “Today, customers want to get the product in 20 seconds.” The digital track will also protect the link between advisors and clients. “Advisors become their clients’ confidents. If they show up later with a tsunami of complicated forms to buy a bank product, it can shatter the relationship of trust. This is why clients should be encouraged to open an online account,” Desjardins explains. (Alain Thériault)

INSURANCE JOURNAL APRIL 2020

MAGAZINE SUPPLEMENT • B2B Bank loans make a strong comeback This magazine supplement is available online for PRO subscribers! Read this article on insurance-portal.ca

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APRIL 2020

INSURANCE JOURNAL 9

GROUP INSURANCE

Read the contracts you sell with care It may seem only logical if you sell group insurance, or any other kind of insurance, but Dave Patriache urged those attending the March meeting of the Canadian Group Insurance Brokers to ensure they thoroughly read the 40-60 pages of a group insurance contract before selling it – or potentially get sued. BY SUSAN YELLIN | PHOTO BY FREEPIK

“C

ontracts are not sexy,” said Dave Patriarche. “They are boring, but they are what we sell. And I feel most people have never read them. I’m not saying you should spend your Saturday afternoons reading contracts, but if you’re going to sell them, you should know what’s in it.” He cautioned that failing to do so could get advisors sued if they misinterpret or omit important information. Contracts come in all lengths and sizes of print. And just because one insurer writes a group plan one way, doesn’t mean another insurer will be exactly the same. Patriarche said he often gets calls from advisors about particular situations. The first question he asks is who put together the contract. “If you come to me and say: I’ve got a Manulife contract – well, is it a Manulife contract? Or is it a Manulife Standard Life contract? A Manulife-Zurich contract?” They’re all different. What many advisors don’t know is that some insurers have also started putting in direct marketing approvals to clients. For example, Patriarche said one of the country’s biggest insurers imbeds in its contracts the ability to sell to the employer’s current and former staff. The contract allows the insurer to do direct

INSURANCE JOURNAL APRIL 2020

marketing on the basis that the employer allowed the insurer to do it and that employees agreed because they signed on when they enrolled. Patriarche followed up with the insurer and was told it can make changes whenever it wants, such as sending a note directly to the employer, saying if the employer doesn’t agree with its changes within 60 days it will automatically get added to the plan. The advisor would not see a copy of this amendment and therefore can’t advise on what amounts to a negative option billing plan, he said. Tongue-in-cheek, Patriarche said the process makes it a lot easier to be an advisor. “It saves you from being involved in the whole amendment process. You don’t have to know when a contract is resold or changing. You don’t have to go in and explain rates. You don’t have to make changes – the insurance company will do it for you. And you don’t have to worry about selling individual stuff to your members and sponsors because they’ll do it for you.” On top of that, Patriache said this kind of plan, should anything go awry, will not affect his E&O insurance. But when in doubt, he said, advisors should ask a ton of questions and fight back if they don’t like what’s been put in the contract. Often, said Patriarche,

challenging an issue will lead the insurer to respond. He also said advisors who work from home should take a look at their home insurance contracts. Many advisors, he said, have a home insurance policy saying the policy is null and void if they run a business from their home. Patriarche suggested asking the property and casualty insurer to cut that line from their policy. “[Otherwise] when your house burns down because the computer in your office shorted you could potentially have a problem.” Legal issues dealing with cannabis and harassment Legal issues dealing with cannabis and harassment are also becoming more important nowadays in the areas of cannabis and harassment. Laura Williams of Williams HR Law Professional Corp. told the CGIB meeting that there are laws that limit the use of products such as cannabis in the workplace since marijuana became legal for recreational and medicinal purposes in Canada in October 2018. While some may think the laws deal only with no smoking cannabis at the workplace, they should know that the laws also restrict edibles and topicals – lotions, balms and oils – as well as any product that can cause impairment, including prescription medication. Williams said that statistics showed that when cannabis was first legalized there was an “experimental” spike in usage, but then tapered off. She said what’s challenging about cannabis edibles and topicals in the workplace now is that they’re hard to detect, including that they don’t have the same manifestations of impairment that smoking marijuana has. For example, if someone smokes cannabis, there’s often a smell and different reactions like dilated pupils, but consuming edibles and oils doesn’t have those obvious effects, she said. “The one thing that employers have to focus on when managing cannabis or any substance in the workplace is making sure to state what’s acceptable and what’s not acceptable [to employees],” she said. In the beginning, lawyers were inundated by calls after employers failed to make a distinction at holiday parties between drinking and smoking marijuana. “Employers found themselves flat-footed because they hadn’t stipulated what’s acceptable.” Harassment issues are often problematic because they aren’t training front-line managers to deal with situations when an individual comes to them and says there is harassment happening but doesn’t want to get into specifics, she said. But Williams said that as of 2016 in Ontario, if an employer knows there is harassment taking place in the workplace, it is the employer’s duty to look after the issue. Health and Safety legislation covers harassment laws and employers should know that fines and penalties for this legislation have increased significantly from $500,000 per offence to $1.5 million per offence for employers. Supervisors, she said, also have a duty to make sure harassment does not take place in the workplace. Their individual liabilities have increased from $25,000 to $100,000 per offence.

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APRIL 2020

INSURANCE JOURNAL 11

FINANCIAL PLANNING

Prenups can provide a sense of safety and comfort Just the mention of prenuptial agreements is enough to put off many people, but for those entering a second marriage, a shareholder’s agreement or a family enterprise, prenuptials have become not only a necessary staple but a source of safety and comfort. BY SUSAN YELLIN

“A prenup is all about protecting the family wealth. But it’s not just financial. It’s also emotional.” — Phil Kriszenfeld

“A

prenup is all about protecting the family wealth,” says Phil Kriszenfeld, a business family advisor and mediator in Burlington, ON. “But it’s not just financial. It’s also emotional.” In fact, it can be so emotional that people clam up or give the potential mate the evil eye if a prenuptial agreement is even suggested. Those entering a first marriage often say they don’t need a prenuptial agreement, but those who have been through a marriage are sometimes adamant about getting one. Blair Corkum, a chartered financial divorce specialist in Charlottetown, P.E.I., says he’s seen the result of almost 40% of marriages that end in divorce. While splitting up can get messy in many situations, prenups have saved tens of thousands of dollars in legal fees and the parties generally know upfront what they’re getting when/if the marriage dissolves. “I do recommend prenups just to make life a lot easier should something happen down the road,” says Corkum. “My practice is to kind of roll into the topic with a financial planning angle which I think gives financial people a step up on lawyers. It plants the seed. I don’t know if the couple goes away and talks about it, but I try to influence a little bit.” (How prenuptial and cohabitation agreements are structured, what they’re called and what they can and not contain are the purview of provincial governments and can vary widely from one jurisdiction to another.) Corkum has come up with a next-best alternative to prenups by recommending a spousal RRSP for the higher-income earner to contribute to the spouse’s retirement. And he counsels people to ensure inheritances are kept separate from other assets, never put in joint name and identified separately so the money always stays with the beneficiary. If a client likes these ideas, then he takes the next step and mentions that a prenuptial might be a good idea for them. “There is no way we can force [prenuptial agreements] on people obviously, but I think we have a role and that is to raise the issue. I’m not sure we have that many opportunities to do that.” Shareholder agreements When it comes to a shareholder’s agreement, however, having a prenuptial agreement is almost de rigueur nowadays. Kriszenfeld gives the example of one of his clients who apparently loved the idea of being married, but wasn’t that keen on staying married. After one

INSURANCE JOURNAL APRIL 2020

divorce, he’s found a new potential mate, but realizes that the last dissolution of his marriage was not only expensive, but intrusive and invasive. This time he realized the company he shared with his partners couldn’t go through the upheaval all over again and he needed to protect himself. The answer: make a prenuptial agreement a stipulation in the shareholder agreement. “We literally put it in the shareholder agreement that any unmarried partners at the time of signing or going forward, getting married again, must have a prenuptial agreement to the satisfaction of the corporation. They all agreed,” said Kriszenfeld. Should a partner not want to get a prenuptial agreement then the shareholder agreement stipulates that that person will have to sell their shares back to the corporation no later than the wedding day. “It’s a deal breaker. You have to have it,” he says. “I’ve yet to find a guy who loves a woman so much that he’ll give up his equity in his company to get married.” The advisor’s role Kriszenfeld suggests an advisor’s role can be an important coaching piece of advice – bringing up the subject of a prenup, especially when a business is involved and particularly if it’s a second marriage. When an outside third party with no vested interest raises the subject it’s an easier discussion to have especially when it’s in the context of the overall financial planning process. When it comes to larger family enterprises where there could be second and even third generations involved, Susan St. Amand always raises the subject of matrimonial contracts and co-habitation agreements and suggests that a young couple discuss it with a family lawyer. St. Amand, founder and president of Sirius Financial Services in Ottawa and a specialist in continuity planning for families, says it’s only fair that potential mates know what’s ahead for them. “When you have the rules of the game set out ahead of you and it’s disclosed exactly how the rules are to be played – whether it’s soccer, tennis or basketball – then you follow the rules. And when the ref says you’re offside, you’re offside. But at the end of the day you figure out what fair play is by following the rules of the game.” In family enterprises those rules are based on the values that have been discussed since the original company was established. Once in a while, St. Amand raises the question of whether those values still hold

true. This will affect not only people contemplating getting married but also couples who have already been married for a number of years. Those who don’t want to stick to the rules of the game can be bought out. When it comes to a prenup in a family business, assets like a shared property or a shared business would be split. But there are some families that are adamant that the shares of any business assets and any financial assets stemming from the business can only be held by family that is through the blood line or adopted. “So if I was married to someone who was involved in a family enterprise then I wouldn’t necessarily be ever able to own the shares directly,” she says. “My children could own the shares; I could perhaps work in the business if that’s in the rules, but I cannot be allowed to own shares. So if I separate or divorce then somebody has to make up for the fact that I’m losing the part of the value that has become a family value in my nuclear family.” Some families agree that a newly married member of the family can become a shareholder. In this case, if the couple gets a divorce, there has to be a way of buying out those shares. Advisors often recommend life insurance for a spouse in case the shareholder dies to ensure the family is not disadvantaged financially but gets something that’s fair. Depending on the family rules, the shares may be put into a trust for the children with any income from that trust shared with the immediate

family for the benefit of young children. All of this gets even more complicated as second and third generations come into play and some want to be in the business and some may have other ideas for their futures. “At each step as a family enterprise expands, it’s important to step back and look at the original premise behind the agreements and ask if we are still going to be able to agree or do they need revision. And if they need revision, who is going to be at the table to revise them?” Ask the right questions St. Amand says asking the right questions and getting members of the family to think about all the alternatives and the right path for their family is the critical piece about advising family enterprises. She believes that families that go through this process often stay together longer because they’re happy to have the opportunity to be able to discuss issues in an open environment. St. Amand doesn’t do any investing for the family, but does help put together family programs with financial planning instilled in them. “So each nuclear family gets its own unique financial planning strategy within the overall picture.”

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SPECIAL REPORT MENTAL HEALTH

Mental health: The challenge facing employers With workers confined to their homes by the COVID-19 pandemic, taking care of your mental health takes on a whole new meaning. Renowned psychologist Rose-Marie Charest recommends keeping up with the latest developments to keep your mind sharp during periods of change such as the one we’re experiencing now. What do workers expect of their employers at a time like this? How can employers contain the costs of group insurance? Insurance Journal has some of the answers ARTICLES BY AURÉLIA MORVAN AND ALAIN CASTONGUAY DATA JOURNALISM: AURÉLIA MORVAN | PHOTO LAYOUT: MARJORIE POIRIER

INSURANCE JOURNAL APRIL 2020

Digital offerings: A must for employers We all know that money can’t buy happiness. In fact, a majority of Canadian employees say they would accept lower pay in return for enhanced well-being support. BY AURÉLIA MORVAN

ore than three-quarters of all Canadian employees – 77% to be exact – would consider leaving their current organization for the same pay if their new workplace offered better support for their personal wellbeing and their mental, physical, social, and financial health. These are the results of the 2020 workplace mental health and well-being survey carried out by Morneau Shepell among 8,000 employees in Canada, the United Kingdom, and the United States.

53% of Canadian employees saying they would be willing to engage in talk therapy and 39% indicating a willingness to take prescription medication. But the idea of digital solutions is gaining ground. Some 43% of Canadian employees say they would make use of digital mindfulness or meditation and 38% say they would try digital skill building or cognitive behavioural therapy. According to Morneau Shepell, these results show that digital programs are becoming more widely accepted.

Confirmation Money isn’t everything This trend was confirmed by the And what if the new salary first Health on Demand Canada rewas 10% lower? Sixty percent port by Mercer Marsh Benefits, of Canadian employees say they Mercer and Oliver Wyman, based That’s the annual cost of would still be willing to leave on answers from 1,000 workers mental health problems for if their new workplace offered and 100 Canadian employers. every person in Canada. better support for their personal According to this report, 26 % of That’s “more than $50 well-being. Canadian workers are more likely billion annually for the It turns out the human aspect to stay with employers offering Canadian economy,” is more important than the finandigital health solutions, and 48 % according to the Mental cial aspect, even among the less are more confident in digital health Health Commission of well off. In fact, 51% of Cansolutions promoted or sponsored Canada (MHCC). adian employees reporting high by employers. financial stress would be willing According to Julie Duchesne, to leave their current employer Mercer Marsh Benefits Leader in if they were offered less money but more support for Canada, investing in digital health solutions would their personal well-being. be “cost effective” for employers. “Health benefits Respondents report that mental health support has compare favourably to other benefits in their ability the greatest impact on their overall health, and that’s to influence employment decisions. So it’s not surpriswhat they want most from employers. Digital healthing that more than half (54%) of Canadian employers care solutions should thus not be overlooked. plan to invest more in digital health solutions in the Traditional methods of treating depression or anxiety next five years.” resulting from added stressors are still popular, with

$1400

ON WHICH ASPECT OF THEIR HEALTH DO CANADIANS PLACE THE MOST IMPORTANCE?

Mental health

32%

Physical health

23%

Social health

Financial health

19%

15%

Source: Morneau Shepell, enquête sur la santé mentale et le mieux-être au travail, 2020.

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INSURANCE JOURNAL 15

SPECIAL REPORT MENTAL HEALTH

Connected health: Patients at the helm While there are many digital healthcare innovations, they all have one thing in common: they empower employees to manage their own physical and mental health.

DIGITAL HEALTHCARE INNOVATIONS: WHAT APPEALS TO EMPLOYEES Applications to find the right doctor or medical care

42%

Electronic and portable medical records

41%

Telemedecine for simple health issues (e.g., rash)

36%

Wearable technology to self-manage health conditions

36%

Application to find an expert doctor anywhere in the world

35%

Telemedecine for serious health problems (e.g., diabetes)

34%

Virtual mental health counselling

33%

Wearable technology to self-manage well-being

31%

Customized treatment and medicines based on biogenetic sequence

31%

New ways to help people follow medication plans (implants, smart pill bottles)

29%

Tools that predict the likelihood of certain illnesses

29%

Companion robots or digital avatars that help the elderly stay healthy

28%

Diagnosis of simple medical conditions using (AI) chat and data provided

27%

Virtual/augmented reality solutions to provide self-care

An app to find and interact with others who share the same health issues Source: Mercer Marsh Benefits, Mercer and Oliver Wyman, Health on Demand 2020 survey.

INSURANCE JOURNAL APRIL 2020

26%

23%

Don't miss our Special Reports! Research, strategic interviews and analyses of current trends published exclusively via the Insurance Portal

Brokerage growth strategies: P&C brokers set sights high The property and casualty insurance distribution network is experiencing rapid consolidation. Insurance Portal spoke with two leaders in this sector.

Navigating sudden wealth requires a solid plan At a time when family and friends will all have an opinion about what they should do with their money, recipients of sudden wealth need advisors who wonâ&#x20AC;&#x2122;t rush things.

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Telemedicine:

a valuable asset for employers Desjardins Insurance has launched a service that could go a long way to helping employers attract and retain employees: a practical virtual healthcare service that gives plan members and their families 24/7 remote access to a healthcare professional. Desjardins Insurance’s new telemedicine service provides confidential, personalized medical support anytime, anywhere, without the wait. Not only do employees get quick answers to their questions, they also avoid stressful wait times and don’t have to miss work to go to a doctor’s appointment. Having ready access to professional care can also enhance their physical and mental well-being.

complications), minor injuries, anxiety, depression and insomnia. Members can also get advice on how to quit smoking or lose weight.

Pilot project takes off “We first offered this service as a pilot project to our own employees, who are insured by Desjardins Insurance. Its immediate success prompted us to integrate it into our group insurance plan and offer it to all 43,000 of our employees across Canada,” says Marc-André Malboeuf, Vice-President of HR solutions development at Desjardins Group.

the most satisfied users were employees who received consultations both for themselves and for a family member – either a spouse or a child. “This suggests that the service is particularly useful for families,” the VP points out. Not only is the satisfaction rate very encouraging, but the service is also incredibly easy to use. About 60% of the consultations were handled using only text messages. Research has found that about 80% of consultations can be resolved via telemedicine, eliminating the need to go to a clinic. It’s hard to beat that for efficiency and time saved!

Desjardins télémédecine (dps)

“For non-urgent mental or physical health problems, members and their families now have access to confidential, personalized medical support 24/7,” says Louis Kerba, Vice-President of product development, marketing and business intelligence, at Desjardins Insurance. “It’s accessible by smart phone, tablet or computer, from the employee’s home, workplace or wherever they happen to be! Consultations are carried out via secure text and video chat,” he explains.

Telemedicine gives members peace of mind. A 2013 study by Truven Health Analytics found that 50% to 70% of visits to emergency or a doctor’s office could be replaced by virtual consultation without reducing the quality of care. “Non-urgent” conditions include skin rashes, digestion problems, coughs, colds, flu (without

For the pilot project, 5,000 Desjardins employees were invited to sign up for the telemedicine service, starting in November 2018. Nine months later, some 3,000 employees (about 60%) had activated their accounts. Most of the promotion was just by word-of-mouth. “We were getting new registrations every day, without having to send out any reminders,” Malboeuf says. “People used the service and then told other people about it.” During this period, 1,675 employees took advantage of the service, for a total of 3,700 consultations. The user satisfaction rate was sky-high. “For example, 93% of users gave it an 8 out of 10 or higher, and 99% of users said they would use it again,” Malboeuf explains. Interestingly,

Telemedicine: benefits all around Employees • On-demand access to a healthcare profesional for non-urgent problems night and day, 365 days a year • New or renewed prescriptions in a few minutes • Requests for laboratory analyses • Recommendations from specialists • Virtual follow-up as needed, with no appointment • Saved time • Reduced absenteeism by making healthcare accessible on evenings and weekends • Transmission of files to the employee’s attending physician at the patient’s request For employers • Promotes prevention by granting quick, practical, and effective access to health care professionals • Increases productivity and reduces absenteeism • Boosts employee retention (three-quarters of employees thought the service adds real value to the health and wellness program) • Strong selling point for recruitment

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“Given the resounding success of the pilot project, we decided to build on our experience to offer the same service externally, that is to all employers who have their group benefits plans with us,” Kerba adds.

An ally for employers In Canada, a medical consultation usually only lasts about 15 minutes. But the wait time may take hours. A 2018 study by French firm Wello found that, on average, Canadians miss up to six days per year due to medical appointments – and people with children miss twice that amount. At a time when each employee’s wellness and presence at work counts more than ever, this effective tool can deliver sizable gains for employers! Employers are struggling to attract and retain employees. In this competitive job market, telemedicine is a very attractive service, not only for tech-savvy young people, but also for parents with young children, not to mention baby boomers who may be suffering from a chronic illness or condition. “Mental health problems are the leading cause of short- and long-term disability, and the number of people affected by chronic illnesses and conditions is steadily increasing,” Malboeuf adds. “All this drives up the cost of group insurance plans. Easy acess to healthcare professionals not only helps maintain the health of our workforce, it also prevents deterioration in the health of employees who are already dealing with medical problems. Telemedicine lets them manage their conditions better by giving

them ready access to medical consultations. They can also follow their prescribed treatments more easily because they can

Testimonials that say it all Survey participants highlighted three main advantages of the service: it saved time, it meant less time missed at work and it gave them peace of mind. Here are a few testimonials. “It’s a real time saver! I get good advice and personalized prescriptions without having to miss any work hours. Knowing you can count on the service eliminates so much stress!” “This service fits in perfectly with our new reality, where everything is instantaneous!” “We can even consult it at night: impressive!” “I have two young children. Ready access to this service lets me get care quickly. Most importantly it simplifies family logistics. So I’m absent from work much less. I have only good things to say about it!” “It’s reassuring to know that I can get medical advice any time I need it.” “Even though I have a family doctor, thanks to telemedicine I can consult a healthcare professional on the weekend and avoid two trips: one to the clinic and one to the pharmacy.”

renew their prescriptions through the service. It’s a huge stress reliever!” By simplifying access to healthcare professionals, organizations gain a valuable asset: assurance that their employees with health problems will get immediate help. The service offers several benefits: not only does telemedicine meet an important need for employees, but it also promotes peace of mind and productivity. The service also has broad repercussions on the quality of life at work. The Virtual Healthcare Industry Report, published in 2019 by Medisys, found that 71% of Canadians would swap their current benefits for telemedicine, and 1 in 3 would be willing to pay a portion of the access fees. Clearly, this service can boost employee retention and attraction! Yet only 9% of Canadian employers currently offer it to their employees.

A unique turnkey solution The advantages of Desjardins Insurance’s telemedicine service go well beyond the medical services offered: it also gives employers additional peace of mind in the way it’s implemented. “We take care of all the onboarding and continuous management of the service,” Louis Kerba explains. This means that organizations don’t need to assign a dedicated team to handle logistics, set up new processes or update an existing

system… “We take care of everything! We offer turnkey tools to promote the service to employees and encourage them to register. We automatically manage incoming and outgoing employees for the employer, so no additional action is needed. Billing is integrated into their group insurance plan. On top of that, employers don’t need to coordinate with the telemedicine supplier to stage mass email campaigns inviting employees to sign on to the service,” Kerba continues. “In short, you get all the advantages of telemedicine without having to deal with the logistics.” “We know from first-hand experience that it’s not that easy for employers to implement this kind of program,” Kerba adds. “So, when we developed our service offer, we decided to make it easy for them by taking care of the heavy logistical part of the process.” To find out more, contact your Desjardins Insurance group insurance representative or visit desjardinslifeinsurance.com/telemedicine-service

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Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company.

SPECIAL REPORT MENTAL HEALTH

Accomplishment: The key to preserving mental health during changes According to Rose-Marie Charest, everyone needs to feel useful. When a person’s contributions are recognized, they are happier and less likely to become sick. BY: ALAIN CASTONGUAY | PHOTO BY RÉJEAN MELOCHE

enowned psychologist Rose-Marie Charest delivered the opening remarks at the Life Insurance Convention held in Montreal in late 2019. She explained how to deal with technological changes in the workplace – while finding happiness! Her key message? Happiness in the workplace comes from a feeling of accomplishment while working on a collaborative project. Charest draws a parallel with her beginnings as a psychologist forty years ago. In those days, the concept of burnout wasn’t even mentioned in classrooms. “When you begin working, you have a certain amount of knowledge and motivation, and what you learn as you go along. It’s the same thing for you and what you’re going to do with technology.” Psychologists believe that, generally speaking, change incites two reactions in human beings: fear and excitement. Resistance to change is natural, resulting from “the fear of not being good enough,” she adds. Companies wishing to make changes will have an easier time if they begin by

Rose-Marie Charest

INSURANCE JOURNAL APRIL 2020

educating and training their employees, so they will understand how the changes will benefit them and feel that their contributions will be recognized. Charest’s advice to insurance professionals is to play to their strengths – in other words, to maintain the human relationship they have with their clients. “You have the power to interact with people. Even a simple phone call can be meaningful. When you hear a person’s voice, you feel their emotions – much more than when you simply read a text message. When adapting to change, you can’t be passive. You must be active!” Adapting to change Being able to adapt is a sign of intelligence, according to Charest. It’s a two-step process: assimilation and accommodation. You can’t just resist and refuse to get on board. You can disembark from a plane, but you can’t disembark from the world, from the universe in which you live,” she says, adding that everyone must find their own way to embrace change. Desire and fear are people’s biggest motivations. “If you want something, you move forward. If you’re afraid, you stop or move backward. It’s so simple that we should all take the time to figure out our desires and our fears. And one thing is sure: our fears influence us more than our desires. Never forget that.” Charest explains that everyone needs to feel fulfilled and that they’re working efficiently. Employees don’t take sick leave because they’ve been working too hard, she says, but because they’ve been unable to accomplish something in the workplace. “We need that – to feel that

“IN FORTY YEARS OF CLINICAL PRACTICE, I’VE SEEN LOTS OF PEOPLE. NO TWO LIFE STORIES ARE THE SAME.” For Charest, happy people are the ones who are able to set priorities. Since we can’t always succeed at everything we do, if we place everything at the same level, the sense of failure can be overwhelming. For this reason, priorities shouldn’t be written in stone – they should be changeable. With group insurance, we know it’s not always easy to convince young people – who think they’re invincible – to share risks with their colleagues. But when you agree to be part of a group, such risk sharing is necessary. “If I do everything by myself, if I control all my risks by being alone, at some point, my anxiety will be high because I won’t feel like I’m part of a chain. As long as the insurance world is linked to society, linked to the people you serve – in a personalized way – as long as that’s true, you won’t really be threatened by technology.”

we’re making a difference to others. We need to be part of something bigger than ourselves. Our work makes that possible. Having power without abusing it Having power does not automatically mean abusing it, according to Charest. “If I gain more power, it’s always up to me to decide how to use it. And I have far more opportunities to help others when I have power than when I don’t.” Real power allows you to build something long term. In fact, she notes, we teach children to use their power within a certain framework. “At school, if you don’t follow the rules, you could find yourself kicked out of the classroom, standing in the hallway, where you’re powerless. We mustn’t be afraid of power but decide how we want to use it.” Human beings are born with a conscience that allows them to live together, to have real relationships, to feel they belong to a society, a community. When you take the feelings of other people into account, you feel happier, and this desire to be happy is part of life. So when you’re seeking your own happiness, that helps others, too, adds Charest. Our fundamental needs include having our own identity, knowing we are unique, she says. “In forty years of clinical practice, I’ve seen lots of people. No two life stories are the same. Personal contact, like that between counsellors and their clients, highlights this unique relationship.” The impact of technology Technology inspires its own share of fears, including the loss of identity resulting from a data breach or the theft of personal information, so ways must be found to protect employees’ confidentiality. “We need to feel there’s a barrier between our private and public lives. Even those who say, ‘I’ve got nothing to hide!’ That may be true, but we still need a place where we can feel there’s a part of us that’s not accessible to others,” explains Charest.

Any breach of confidentiality threatens the psychological equilibrium of its victims, she says. “My professional life has been packed with secrets and confidences. There are some professions where you can’t reveal what a person has said to you, but you can disclose that you have met with them. “A psychologist can’t even reveal the names of their clients. It gives you an enormous sense of satisfaction to know you have a strong container where you can keep the contents safe and secure. In your relationships with clients, you know they can trust that whatever they tell you will be held securely in that safe space […]. That helps you build strong relationships.” The importance of the value placed on the project Implementing a new technology is a project. “In psychology, we know that projects are a source of happiness. That’s even truer when they’re group projects. Working together to do something can make you happy,” she says. Charest believes you can find happiness at work. “Work means doing something together. That makes you happy. So implementing a technology project can also be that, doing something together. But, for that to happen, everyone who participates in the project must be able to assert themselves. Asserting yourself doesn’t just mean being able to say “no,” she continues. “I’ve never seen anyone find happiness just by saying ‘no.” That doesn’t mean you don’t have to learn to say ‘no.’ What I’ve seen are people who are happy because they’ve learned when to say ‘yes.” Asserting yourself means first saying ‘yes’ to something, knowing when to say ‘yes.’ Then you can build on that by saying ‘no’ to something else. This relationship with technology must also be based on the same need to accept change at your own pace. “Our values change with experience, at different stages of our life. That’s nothing to be ashamed of.

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COVID-19

Advisors and clients adapt to “new normal” Welcome to the “new normal.” More Skype, more Zoom, more people asking their employers to include iCBT in their benefits programs...All of this because of COVID-19. BY SUSAN YELLIN | PHOTOS BY FREEPIK

INSURANCE JOURNAL APRIL 2020

or financial advisors “the future is now,” says Wendy Brookhouse, CEO of Blackstar Wealth in Halifax. Advisors whose main connection with clients was face-to-face or over the phone for years, will now have to learn to be comfortable using any number of virtual meeting software plans, she says. Advisors’ main goal during any uncertain time is to be supportive and wrap their thoughts around how they are going to help clients, says Brookhouse, even if – in this case – there’s no reliable prediction as to when the issue will bottom out. With online meetings, this may be the first time that clients will be able to see their advisor’s face and how the advisor is reacting to their questions.

Brookhouse says she wishes there was more that she could do for her clients. But she notes that all advisors can do is to stay on top of what’s going on and then give clients the proper resources. She has had a number of calls with business entrepreneur clients strategizing over what can be done in the short term, like pausing RRSP contributions until issues clear up. But she says there is no financial plan that would have envisioned both a market downturn and a health emergency the likes of COVID-19. Still, most clients have been positioned so that if they need long-term money they will have it, she says. Naturally, there are questions from clients, with the predominant one being whether now is a good time to invest. Mitchell says those most concerned about the markets in particular are clients with young children and who are earning enough to start saving and Interact with clients in investing – the emerging affluent. a meaningful manner But, says Mitchell, high net worth and pre-retirees How advisors act now is the way clients will rememdon’t seem to be as worried. ber them for the future, so they Basis Wealth has put together need to determine how they a reserve plan for pre-retirees will interact with clients in a “Once the world that outlines four years of a meaningful manner to mainreturns to normal, client’s future. In it is a very tain a strong connection. conservative basket of money But COVID-19 isn’t just I think we’ll see in case of major market another market correction. So people react fluctuations. much news has gone out and differently to the Because COVID-19 is not keeps coming out that investonly a market situation but a ors really need to know how concept of savings major health issue, some of to interpret it all, says Dana and building buffers Mitchell’s clients who were in Mitchell, a certified financial and those types of the midst of being evaluated planner with Basis Wealth in for life insurance were stuck Toronto. things. I think there in the underwriting pipeline. When there’s a major event, will be a different Blood testing was halted and the firm sends out a “Basis mindset.” doctors’ reports were held up. Wealth Important Update” to At that time, Mitchell said subscribers and all clients will — Wendy Brookhouse she was doing whatever she be called. The goal is to reach could to move things along, but out to clients in a timely fashadded that the most important ion and explain in a neutral issue advisors had at the beginfashion what has happened. ning of the outbreak was to take time to reach out to “It’s not buy-now, buy-later, the world is ending,” clients. “This is why they have advisors.” says Mitchell. “We tell clients to stick to their plan, this is not the first time the markets have come down. We’ve taken all these issues into account when we put The estate planning conversation the plan together.” While not everyone may want to hear it, now may While some advisors may prefer to call their best also be an opportunity to talk to clients about estate clients first, Brookhouse believes all her clients need planning, says Karen Henderson, a Toronto-based to hear from her. Every client receives the informaindependent planning advisor specializing in ageing tion and has the necessary technology so they can and long-term care. call Blackstar Wealth immediately and book a phone More than 40% of Canadians don’t have a will, call for a meeting. The company then works its way but at dire times like the current pandemic, advisors through its book, putting in calls to nervous investors should be telling clients they need to have one to enfirst. sure a legal document exists outlining their wishes, says “This way they will be in a better mental state and Henderson. more knowledgeable about what they’re doing,” she This is not just for older clients “because as we have says. seen COVID-19 is hitting and killing every age

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COVID-19

group. So every adult Canadian needs to have a will, a power of attorney, an advanced directive telling those around them what they would want, if for example, they became stricken with COVID-19.” Henderson says families should at least start talking now about what they want so when the pandemic is over they can sit down with their financial, legal and insurance advisors and be able to articulate what they want to do if something like this happens again. But each client is different and advisors have to be aware of where their clients are in their financial journey. Connecting with SMEs While there are many people who do not have financial advisors, Advocis recently announced it was launching a free national, online service to match Canadian small businesses with financial advisors. Called Advocis Connect, advisors will provide advice to small businesses on the state of their companies and answer questions about how to navigate government relief programs that could be available to them. Advocis says it should take only one-to-two business days for a small business to be paired with a volunteer financial advisor in their area. “The motto of Advocis is non solis nobis – which translates to ‘not for ourselves alone’,” said Greg

Pollock, president and CEO of Advocis. “Through Advocis Connect, we are working with our 13,000+ members across Canada to live up to those words, and dedicating resources within our association to coordinate them effectively so that small business owners across the country can weather this unprecedented storm.” Brookhouse says those who don’t have money set aside for events like a major correction or a COVID19 will probably have other opinions when it’s all over. “Once the world returns to normal, I think we’ll see people react differently to the concept of savings and building buffers and those types of things. I think there will be a different mindset.”

To learn more about the pandemic and its impact on the life insurance industry, consult these articles on the Insurance Portal: • Life insurance industry responds to COVID-19 • COVID-19: Nature of life insurance business muting impact of the crisis, iA CEO says

“COVID-19 is hitting and killing every age group. So every adult Canadian needs to have a will, a power of attorney, an advanced directive telling those around them what they would want, if for example, they became stricken…” — Karen Henderson

INSURANCE JOURNAL APRIL 2020

5 CE credits awaiting approval

PROSPECTING

POWER!

Tuesday, September 15, 2020 — Beanfield Centre, Toronto

The 2020 Canada Sales Congress Rescheduled to Tuesday, September 15, 2020 Given the ongoing developments surrounding the global spread of the COVID-19 virus, the Insurance Journal Press Group has rescheduled the 2020 Canada Sales Congress originally planned for Wednesday May 20, 2020. Some 1200 attendees were expected. The 2020 Canada Sales Congress will now be held Tuesday, September 15, 2020 at our usual venue, the Beanfield Centre in Toronto. Organizers Serge Therrien, President and Publisher of Insurance Journal, and Jim Ruta, President of Advisorcraft, sincerely appreciate the support of our corporate sponsors, speakers and exhibitors for their continued support in these difficult circumstances. The rescheduled Canada Sales Congress will again be live streamed giving insurance and financial advisors across North America access to our amazing line up of speakers. Watch for more details coming soon. Tickets already sold for the 2020 Canada Sales Congress will be honoured for the September event. We thank our regular attendees for their continued support and hope that you and your families stay healthy. See you on September 15!

Serge Therrien President and Publisher Insurance Journal Publishing Group

Jim Ruta Industry Thought Leader, Coach, Keynote speaker

canadasalescongress.ca AN EVENT BY

MAIN SPONSORS

ASSOCIATION PARTNER

Prospecting is an art that must be mastered to thrive in this business

Join us at the Canada Sales Congress to fire up your Prospecting Power! DISCOVER OUR NEWLY CONFIRMED SPEAKERS

Brian Ashe

Danielle Genier

CLU, President Brian Ashe and Associates, Ltd.

CLU, CFP President Genier Financial Services Inc.

MDRT level success in traditional prospecting is the result of the right “activity” and changing what we say to prospects about probabilities and risk.

Small town, huge potential! How to qualify for Top of the Table in a town of 50,000 by creating a brand and a team that prospects for you.

Michael Silver

Jason Bonneteau

CFP, CHS, Managing Partner W.P.G. The Wealth Planning Group IPC Investment Corporation

You can buy a book of business, but can you make it pay? Here’s how to prospect in your book and build a multi-million-dollar business.

PREVIOUSLY ANNOUNCED SPEAKERS

Gail Goodman

Eszylfie Taylor

Fred Cacciotti

Founder and president Taylor Insurance and Financial Services

CLU - Financial Advisor Worldsource Financial Management Inc.

The PhoneTeacher

Adrian George

David Appel Managing Partner Appel Insurance Advisors

Libby Wildman

Sim Gakhar

Senior Partner Davis Rea Investment Counsel

LLQP, CHS, B.Sc, B.Ed, M.A Life Insurance Agent & Investments Advisor

CFP CLU TEP Member MDRT Top of the Table

Van Mueller Life Underwriter Training Council Fellow (LUTCF)

Cristine Pawid Insurance & Financial Advisor AT Financial Group Inc.

Daniel Kachani CHS - Advisor WEALTHinsurance.com

Jim Ruta: Speaker and Master of Ceremonies! Renowned industry consultant, speaker, author and CSC Co-Founder, Jim Ruta always brings tremendous energy to the event!

SPECIAL REPORT MANAGING GENERAL AGENTS

Managing general agents navigate multiple challenges Consolidation. Thinner margins. The technology lag. Lack of recruitment. The challenges are many for managing general agents. They are, however, finding solutions to overcome these obstacles. A SPECIAL REPORT BY ALAIN THÉRIAULT

INSURANCE JOURNAL APRIL 2020

Consolidation intensifies for smaller firms With the recent acquisition of Aurrea Signature, the cohort of large and medium-sized players in life and health insurance distribution continues to shrink. However, consolidation will continue, say MGAs who are betting on the acquisition of smaller firms to grow and bring in new blood. BY ALAIN THÉRIAULT

ith transactions large and small, MGAs are consolidating rapidly. In March 2020, HUB Financial acquired LSM Insurance, an online distributor of life and health insurance products for people who are hard to insure, based in Markham, Ontario. And, in recent months, consolidators such as property and casualty insurance giant HUB International, have been acquiring group benefits firms at a dizzying pace. Between January and early March 2020, HUB had already bought the group benefits consulting practice of Morneau Shepell for $70 million, the group benefits firm Azur, Benefex Consulting of Alberta and RHC Insurance Brokers of British Columbia. With its acquisition of Aurrea Signature, IDC Worldsource Insurance Network (IDC WIN) equipped itself with a real distribution structure in the Quebec market, rather than opening a simple satellite office. The acquisition raised the concerns of some advisors in the province who feared that their support in the French language would weaken under the new ownership. In an interview with Journal de l’assurance, IDC WIN president Phil Marsillo, sought to alleviate these concerns. His message: the MGA, supported by its parent company Guardian Capital, aims to integrate more fully into the culture of the Quebec market. “Since I am from Quebec, I am very aware of the Quebec market and the need to have all the information in French, and not only by translating the documents. We have to think in French too, because there are expressions that do not translate. It was our intention in acquiring Aurrea, to have French-language management in place throughout Quebec, not just in Montreal,” said Marsillo who is also Director of Public Relations/Media Relations for MGA association CAILBA. Another reason to acquire Aurrea was for the generation of leads for advisors through Pro Spect Insurance. “The leads generation is important to us,” said Marsillo. “We want to see what we can take from Aurrea and develop across Canada, and what Aurrea can take from IDC to adapt to the Quebec market.” Lorne Marr, who owned LSM, joined Hub Financial Inc., a subsidiary of Hub International stated when the transaction was announced that he looks forward “to helping Hub Financial build the most robust lead generation program in the industry.”

Yan Charbonneau, CEO of Lévis, Quebec-based MGA, AFL Groupe Financier called the acquisition of Aurrea a game-changer in the Quebec market. Charbonneau is also currently a Vice President and Treasurer of CAILBA. “As IDC WIN’s activities have been very limited in Quebec to date, it is as if we are witnessing the arrival of a new major player,” said Charbonneau. Far from worrying about this, he said he believes this transaction is part of the natural development of the industry. “As in recent years, consolidation will be the most important development axis for MGAs,” said Charbonneau. AFL has embarked on a strategy to acquire group benefits firms. The first step was the acquisition of the group benefits division of Patry, Poulin, Trahan & Associés in 2019, which brought AFL $20 million in group premiums. AFL says it is in the process of closing a few other transactions this year, and Charbonneau said he is targeting a short-term volume objective of $100 million in group insurance, not only by acquiring blocks of business and brokers, but also via cross-selling personal insurance via its property and casualty insurance activities. Organic growth still has its place Michel Kirouac, vice-president and executive officer of Groupe Cloutier, said the firm has made very few acquisitions so far. Kirouac is also Quebec Director of CAILBA “Among other things, we are developing by analyzing how we could do more business in each of our divisions, or how to increase the number of products per representative.” Groupe Cloutier is also looking for more ways to recruit. “We recruit around 70 to 90 advisors a year. We rely heavily on this activity for our growth,” said Kirouac. Consolidators also benefit from organic growth. Acquired in 2017 by Canada Life (then Great-West Life), Financial Horizons Group ended fiscal 2019 with strong results, marked by “organic growth beyond the growth derived from our acquisitions,” said Nick Pszeniczny and David Stewart, respectively CEO and COO of the MGA, in an interview with Insurance Journal.

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Stewart added that Financial Horizons experienced substantial growth in both its life insurance business and living benefits, in premiums and number of policies. The MGA also saw an increase in its segregated fund deposits. PPI CEO Jim Virtue also reported significant organic growth since iA Financial Group acquired the MGA in February 2018. “The acquisition was two years ago and we have seen excellent growth in new advisors and in premium,” he said. Pszeniczny said if Financial Horizons were a regular MGA he would be concerned about the future, but this is not the case. “We’re beyond an MGA. We are not just an aggregator. Our job is to bring value to our advisors,” he said. “Our value proposition is technological support, education and training, a succession opportunity for advisors, compliance and maybe litigation support, marketing concepts.” According to him, these kinds of services enable the MGA to continue “to be a very significant organization of choice for independent advisors as profit margins

We have not seen any changes in the way that we operate as a result of the iA acquisition. We still operate independently, and our advisors have not seen any changes in the way we deal with them or how they deal with us. We treat iA like our other carriers and they treat us like their other MGAs. — Jim Virtue

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get thinner in the channel. “If you are simply an aggregator or you are simply an MGA, you run the risk of reaching your expiration date, because you do not have critical mass to support the necessary investment to create value for your advisors.” He added that he wants to invest more in his most productive advisors, as business costs rise in traditional distribution. “We have to teach advisors to move up market and elevate the profile of their clients” and focus on advice. “If you sell a commodity product, you’ll go extinct because you are facing digital distribution.” David Stewart revealed that in 2019, the organization went from 2,000 unproductive relationships with advisors with little commitment to the organization, to 400 advisors. “We focused on supporting those we see as the advisors of the future,” he said. As for PPI, Jim Virtue said he is very confident about its strategy and future. “We clearly have the scale and financial support to succeed. We continue to enhance our advisor value proposition and grow our business. The last two years have been successful for us,” he said. He added, however, that it is important for MGAs and their providers to push for more technological 30

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innovation. “There is an important issue related to the future of our industry that I feel deserves attention. Although we have seen progress relating to the better use of technology by both insurance carriers and MGAs, we still have a long way to go to compete with most other industries. We need to see the industry develop solutions for the transfer of data, etc., as opposed to each company coming up with their unique solution. APEXA is a good example of an industry solution, but we need to see more of these types of cooperative industry-wide projects,” he said. Many advisors have said they remain skeptical about the true independence of MGAs acquired by and integrated into insurance companies. At Financial Horizons, Nick Pszeniczny said that having the support to grow intelligently shouldn’t be controversial. He pointed to the acquisitions of the financial groups TORCE and VANCE in the Greater Toronto Area in August 2019, which brought on board 1,200 in advisors. “Bigger is better than controversies. In 2019, we had unprecedented organic growth and unprecedented growth from our acquisition. We are not buying just for the sake of buying. Acquiring a firm is acquiring more opportunities for organic growth, it’s acquiring significant talent, market intelligence and strategic resources,” he said. Jim Virtue said he feels just as independent as he did before PPI was acquired by iA Financial Group in 2018. “We have not seen any changes in the way that we operate as a result of the iA acquisition. We still operate independently, and our advisors have not seen any changes in the way we deal with them or how they deal with us. We treat iA like our other carriers and they treat us like their other MGAs. Having the size and strength of a solid parent company behind us, is always an advantage in today’s marketplace,” he said. He added that iA was already a major PPI supplier before the acquisition and continues to be so. “However, for 2019, iA was not our number one company in either life or funds sales,” he noted. Building the next generation For Kevin Cott, CEO of Qualified Financial Services (QFS), the survival of an independent MGA will depend on a good succession plan and an unwavering belief in total independence. He proudly displays this on the first page of the firm’s website: “Independent and family owned since 1997.” Three of his children work with him. With first-year commissions up 15 per cent in 2019 compared to 2018, and increasing sales in both life and health insurance and investment funds, Cott said he is very positive and bullish. He said that he will retire from the presidency at the end of 2020, but will remain active in the industry as chairman of the board of QFS. In September 2019, Fiona Cuddy, formerly of Canada Life, joined QFS as president as part of the MGA’s succession plan. QFS hired Scott Morrow, formerly of-Sun Life, to lead sales, as vice-president of business development. “The advisors are very well aligned with Fiona and Scott. The transition went very well,” said Cott.

“The only real challenge for MGAs is the same as it is in all the financial services industry, for the carriers, the banks…It’s the average age of the advisors. It’s not an average from which you can go on another 30 years. We have to focus on building the next generation,” he said. In 2019, the Ontario MGA launched two such programs: the Ignite Program and the QFS Advantage Program. The second program is a recruitment incentive. Participants take a 90-day training program. The first, Ignite, follows Cott’s experience, who successfully recruited three of his four children into his business. “The Ignite Program is dealing with the sons and daughters of our advisors and aims at bringing them to the business, training them, offering them a social media platform. The idea is to allow parents to bring their children in a comfortable environment, so they can see what their parents are doing. We have quite a large group of young people, around 15 people in the program.” Recruitment challenges Phil Marsillo said he wonders where the next advisors will come from, when insurance companies no longer train them. “We will see them coming from other professions, lawyers, accountants, in a context where financial and estate planning gains value.” The days of hiring from all walks of life are over, said Marsillo. “In their recruitment, companies aim for a higher retention rate, and are more selective than before. A manager can no longer afford to hire 10 people at a time. He will not have time to train them and bring them under contract.” After operating the same way for 30 years, the MGA network will have to change to help the young to survive and the old pass on the torch, said Yan Charbonneau. “Successful advisors under the age of 30 can be counted on the fingers of one hand,” he said. “The older ones are clinging to their volume and their renewal commissions because the majority have not created a business. They have created a job, said Charbonneau. These advisors believe they will be able to secure their retirement. But selling a clientele 4 times the renewal commissions means for 4 years of income.” He said these two groups have a networking opportunity. “This is one of the areas of consolidation that grabs our attention the most: acquiring the volumes of advisors who will continue their activities on a parttime basis and hiring new advisors to produce new sales from this volume,” he said.

is not of the quality we are looking for, we refuse the contract. This year, we’ll even make it tighter.” Once recruited, other challenges follow. “Getting an independent advisor to think like a business person. Advisors that are successful have learned to treat their business…as a business. Advisors that aren’t successful are sales people that simply move from one sale to the next.” Developing a new mindset Cott said he converts them to a business person mindset through the tools and recognition he gives his advisors. QFS’ President’s Club, which recognizes success, has 25 per cent more members than last year. He said that this has been possible thanks to tight recruitment standards and a constantly evolving range of services, especially in regards to technology. He added that QFS loses few advisors. “Half a dozen advisors among the top ones who left last year came back to us in January. They left because they were promised something better elsewhere, compensation, resources. Five left us at the beginning of the year for an MGA acquired by an insurer. They already are all back to us. They said that it wasn’t what they expected. They said: ‘I want to come back home; I missed you.’ I think it’s a real testimony to our organization,” he said. Among the differences that these advisors may have noticed between QFS and insurer-owned MGAs, Cott said he believes is the network’s commitment to advisor independence and its recognition efforts. “I recently heard from somebody in an insurer-owned MGA say that they no longer call it an MGA, they call it a distribution line.”

MAGAZINE SUPPLEMENTS • Insurers remain buyers...to varying degrees • Tax authorities hardening their stance These magazine supplements are available online for PRO subscribers! Read them on insurance-portal.ca

Think like a business person Kevin Cott said he has no concerns about the sustainability and future growth of QFS, precisely thanks to tight recruitment. The MGA’s organic growth continues. He said he has more than 2,000 advisors. He also said he focuses on the most active producers. In 2018, he recruited 80 advisors and in 2019 another 106. Cott said he is very selective. “We want to recruit the right people and offer them tools to grow their business. We profile them, put them through a selection process. We do not hire all advisors that come to us. If the profile APRIL 2020

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Financial Horizons Group is committed to independent advisors and their communities.

Community Champion | Saskatoon, SK

Janea Dieno Brightrock Financial More than a business, a family

s a young girl, Janea Dieno often listened to her father and uncle ‘talk stocks’ over wine at the kitchen table and she hung onto every word. At the time, she had no idea that exciting world would become such a prominent part of her future. Janea went on to a successful career in sales and marketing, but eventually was ready for change. When her uncle suggested she give the financial industry a try, she took the leap.

Financial horizon group

Janea started out at her uncle’s Managing General Agency (MGA) where she made cold calls to sell insurance and quickly knew she had found her calling. She grew a book of business and eventually became a Certified Financial Planner. In 2015, Financial Horizons Group acquired her uncle’s MGA and turned her small family business into a bigger ‘family’ business. “Financial Horizons Group has been great,” Janea says, “they help smaller businesses evolve into being more corporate minded. They’re established, credible, and backed by fantastic experience.” Janea believes one of her greatest assets is helping clients develop a good relationship with cash flow. She starts every plan by educating her clients about spending so they can understand their current situation and set goals for the future. Janea’s home community of Saskatoon is rich in natural resources and many of her clients are affected by being

I develop trust by being genuine, authentic and relatable

dependent on pipelines and railway systems. She makes a point of always coming to the table educated and with a genuine interest in the challenges her clients are facing. “I develop trust by being genuine, authentic and relatable. Anything I recommend to my clients I have considered for my own portfolio—I believe in what I’m doing and make sure I communicate that.” When she isn’t relating to clients through business, Janea is often connecting with them in the community. She’s been involved with READ Saskatoon for 15 years and is passionate about supporting adult literacy. “It is hard to believe that one in three adults struggle with literacy on a daily basis. Imagine the barriers it places in front of employment, managing their finances, and helping their children with schoolwork. I am proud to be a part of the change READ Saskatoon provides to our province and city.” Community Champion | Winchester, ON

Trevor Watters Watters Financial Building connections through deep community roots

C 32

There’s a flavour of life here that I really INSURANCE JOURNAL APRIL 2020 as much as I can relish, I try to give back

onnecting with clients at a community level has been a key driver in the success of Watters Financial. In his small farming township of Winchester, Ontario, Trevor Watters takes every opportunity to get involved. “There’s a flavour of life here that I really relish, I try to give back as much as I can,” he says. Watters participates in annual community events like Rib Fest and Bike Night, and even teamed up with his staff to bake and hand-out 300 cupcakes on Cupcake Day. He is an avid supporter

of the Ottawa Valley Aid for Chernobyl Children (OVACC) and hosts a child from Belarus in his home each summer.

products, and tax and legal experts, which is all a huge benefit to my clients,” he says.

Trevor prides himself on having regular face-to-face contact with each of his clients in order to get to know them on a personal level and build trust. He’s seen technology bring incredible changes in terms of clients accessing financial information online and continues to take an education-first approach. When it comes to helping clients understand what’s reliable and reasonable, Watters says, “education is key.” Recognizing that many people get nervous when it comes to finances, he focuses on clients’ goals, what’s worked in the past, and where they want to be in the future.

He believes that at some point in life, everyone needs someone like him—a voice of experience with a holistic understanding of the financial landscape—and that investing in ongoing training and always making time for a client’s call, yields the greatest return.

Trevor appreciates that Financial Horizons Group keeps a pulse on the industry and offers regular training to support current trends. “Working with Financial Horizons Group, I get access to a larger range of wholesalers, companies, specialized

What’s next for Watters? He recently announced that his son Lucas has joined the business to focus on insurance. “Financial Horizons Group has been providing Lucas with excellent training and I’m so proud to be sharing this with him.” The community has already come to know and love Trevor’s French Bulldog, Wolfgang—whose presence in the office quickly earned him the role of company mascot—and now with Lucas joining the team, they’ll have another great reason to drop in and say hello.

Community Champion | Ottawa, ON / Gatineau, QC

Financial horizon group Natasha Brazeau

Coughlin & Associates Ltd.

Success through the value of convenience

entors can have a great impact on your career path and your life, and that’s just what happened with Natasha Brazeau. A dear friend once gave her this empowering advice, “Surround yourself with successful people so you can continuously learn from others and improve in every aspect of your life, both professionally and personally.” These words have stayed with her through the years. Today she lives that advice by seeking out professional development opportunities and is always on the lookout for the opportunity to learn from her peers. Natasha’s passion towards mentorship extends to her local community. She stays active in women’s business groups and takes opportunities to mentor women whenever possible. It’s often those who have been positively impacted by others who are able and willing to give back. In her business, Natasha’s focus is to truly understand the financial needs of her clients. “I take pride in being able to offer the best solution to address my clients’ needs – helping them achieve their financial goals for themselves, their families,” she says. Every client is different. Different goals, different willingness to take risks in the marketplace. As such, a one-size-fits-all approach simply doesn’t work. Natasha’s commitment to knowing her clients helps to tailor a customized approach for each of them, at each stage in their life. She remarks, “the most important skill for any financial advisor—whether they specialize

The most important skill – is to listen to your clients in wealth management, insurance or are holistic planners—is to listen to your clients. Ask them questions. Get to know them. Truly hear what they are saying.” “Since, working with Coughlin & Associates, People Corporation and Financial Horizons Group, I have found partners that allow me to offer the best options to my clients, access to tools and expertise. They help me to support the unique needs of my clients. There’s nothing more important.” As Natasha looks to the future, she sees an ever changing landscape. Years ago, Natasha had adapted and optimized the use of technology and alternative solutions. Now, clients realize the value of convenience and look to purchase in a similar fashion to Amazon or eBay. Speed and convenience are essential – the use of technology and alternative solutions, both open more doors and create additional business opportunities. One thing will always be paramount, one thing will never change: advisors need to listen to their clients. ■

To recognize the commitment of these financial advisors to their communities, Financial Horizons Group is proud to make a charitable donation in their name. We live where you live.

For more, or to start a conversation, visit RecognizingExcellence.ca Profiled individuals are independent advisors and have a broker relationship with Financial HorizonsAPRIL Group2020

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SPECIAL REPORT MANAGING GENERAL AGENTS

Insurers may not accept non-APEXA members after certain date It began in 2014 as the Group of Nine – five insurance carriers and four managing general agencies (MGAs) that wanted a less cumbersome, more efficient web-based answer to standardize advisor contracts and compliance. BY SUSAN YELLIN

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ow six years later the solution known as APEXA will be coming to all carriers and MGAs, as insurers insist that APEXA be the one and only solution for the entire industry. “The position the carriers have taken from all the discussions I’ve been at is that they will only contract if somebody is on APEXA,” says Phil Marsillo, president of IDC Worldsource and director of public relations for the Canadian Association of Independent Life Brokerage Agencies (CAILBA).” I’ve got letters from some of the carriers saying they are no longer contracting any advisor unless they are on APEXA.” Marsillo concedes that at one time some MGAs thought of APEXA as a passing “industry thing” and that they had no need to be on it. But the letters from the insurance carriers led many MGAs to readjust their

From the numbers I’ve seen there are about 300-400 advisors being added each week. It’s gaining traction and has been accepted by the industry. It’s happening. — Jim Virtue

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priorities and many have either got on board or are in the process of onboarding APEXA. The first companies behind APEXA — insurers Canada Life, Empire Life, Industrial Alliance, Manulife and Sun Life, as well as MGAs HUB Financial, Financial Horizons, IDC Worldsource and PPI Solutions – have added dozens of other companies since APEXA went live in August 2017. Many of those not currently on the list are set to be on in the next three to six months, adds Jim Virtue, president and COO of PPI. Last year, the Group of Nine decided that if APEXA was to be successful, the only way to allow contracts was to put a final date of Jan. 1, 2020 out to fellow MGAs, carriers and advisors. “It works best when everybody participates,” says Virtue. “From the numbers I’ve seen there are about

INSURANCE JOURNAL APRIL 2020

300-400 advisors being added each week. It’s gaining traction and has been accepted by the industry. It’s happening.” While not everyone is on APEXA yet, some companies are starting to move. “We are very interested in APEXA and have been talking…about next steps and timeline,” said Suzzette Chapman, senior vice president of communications and human resources at ivari. Carole Taniguchi, vice president of operations at Creative Planning Financial Group, says her firm is also not yet on APEXA but “the industry has been in dire need of this for decades. I’m a huge supporter of APEXA.” APEXA was meant to bring on board some 85,000 life and health insurance advisors and corporations. It was first slated to begin in early 2016 but stakeholders said they wanted to make the project more appealing to advisors. The next launch data had been scheduled for mid-2016, but then APEXA announced it required more time to fix issues stemming from internal systems of the large insurers. While it officially began flight in 2017, there are some companies still not on the program. “It took a long time, but in fairness it’s a very big undertaking,” says Virtue. “We’ve now made substantial headway and I am convinced this is the right thing for the industry, as it will save the industry time and money. It’s going to make what was a very cumbersome, paper-based process more efficient and bring the industry into the 21st century. Once everybody is on the system it’s just going to make everyone’s life easier.” Those who don’t onboard by themselves may not be able to carry out business. “If a carrier has requested that their MGA submit new advisor contracts through APEXA by a specified date and the MGA does not want to go through APEXA, the carrier may not accept paper-submitted contracts from the MGA after a certain point,” Tonya Blackmore, CEO of APEXA said in an email. “APEXA was developed to create a standardized process for contracting and screening new advisors to uphold a high standard in providing advice to clients. As an industry solution, APEXA is the vehicle for organizations to collaborate to ensure these standards are being met.”

Pre-APEXA, advisors had to send their contracting information to any number of insurers via their MGA. Once the MGA received the data, it was sent to the insurers. Advisors' E&O information, disclosure form and licence then had to be sent to each insurer. Now the technology-based system is much quicker and downloaded only once with the result that both insurance carriers and MGAs have access to the information. Once a year, advisors go back into the system to confirm they’ve completed their CE credits and affirmed their licence. “The process is rather simple, but it’s new, it’s a change and depends on how comfortable you are with technology,” says Marsillo. Not only will APEXA make the advisor screening, contracting and compliance processes much simpler,

it’s going to cut costs, says Virtue. He says he’s hoping it cuts PPI’s costs by 20% or 30% a year on a running basis. But until everyone is on, Marsillo believes there will be a cost for APEXA on an annual basis. APEXA will simplify the process, leading many to anticipate the manual transactions that now occur from a contracting perspective will be reduced. But what the final result will be is a number Marsillo said he can’t quantify right now. Still he said the system is good for the industry. “It’s a painful process to start. We’ve been on APEXA for a number of years, but when it’s fully functional – and everybody is on APEXA – I think it will be good for the industry.”

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SPECIAL REPORT CHRONIC PAIN

CHRONIC PAIN

An invisible condition that exacts an enormous toll It is estimated that one in five Canadians are living with chronic pain. For those suffering from this condition, there are flickers of hope on the horizon as governments begin to recognize the impact of pain on the population and new treatment approaches emerge. A SPECIAL REPORT BY SUSAN YELLIN

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In search of relief from pain that never ends The car accident took place in April 2014. But despite emergency surgery a year later, neuropathic pain medication and a narcotic pain-relieving patch, there are many times when Rafi Remez is still in such prolonged agony that he can neither lie flat nor get out of bed without difficulty. BY SUSAN YELLIN

“I

was used to getting up at 7 in the morning, go to work, come home and do my stuff around the house,” says Remez, 62. “The situation now is that I just cannot get out of bed. It takes about a half hour to just get started before even taking a shower and making breakfast.” Like some others with chronic pain, Remez has had to quit a job he loved (in his case as a culinary arts instructor) and go through a relentless battery of tests only for doctors to tell him that they cannot – at the present time anyway – do anything more to determine the exact location of his pain centre and potentially help him. “I’m bushed,” he says. “It takes a lot out of you because you get to the point when you’re asking: Why me? I’m typically a happy go-lucky man with a sense of humour that is sometimes just masking the inevitable depression, which then means another line of medication, which causes side effects and then you have to take another medication for that – it’s a huge chain of events.” Rather than wait in Toronto for new technology that might lead to reduced pain, Remez is planning on going to Israel where he says they have more up-todate medicines and technology. It will cost an initial $1,100 for a consultation with a surgeon who will tell him whether there is any way he can be helped. If surgery is required, it will cost about $30,000. Remez is already steeling himself for the surgeon’s decision – either way. “I’ll beg, borrow or steal to get that money, but I also have to be prepared for them to say: Sorry, you’re beyond hope.” Remez is just one example of the 20 per cent of people around the world who suffer from chronic pain, a malady described by the International Association for the Study of Pain as pain that lasts or recurs for more than three months. Others define it as pain that persists after a reasonable period of healing. Some studies indicate that two-thirds of Canadians living with chronic pain report moderate pain (52%) to severe (14%) pain and 50% have lived with chronic pain for more than 10 years. But basically, says James Henry, PhD, professor emeritus at the McMaster Faculty of Health Sciences, chronic pain lasts a long time and it’s painful because the patient says so.

Despite all the ramifications of chronic pain and all the aspects of a person’s life that are affected, he says chronic pain has not been given the legitimacy it’s due. “If one in five people had some other disorder it would be a national calamity.” The Canadian Pain Task Force says chronic pain is more common among older adults, women, veterans, Indigenous People as well as those facing social inequities and discrimination.

An estimated one in five Canadians lives with chronic pain Source: Canadian Pain Task Force Report 2019

Henry says some causes of chronic pain are unknown as is the case with fibromyalgia, which causes widespread musculoskeletal pain accompanied by overwhelming fatigue; rheumatoid arthritis which has pain that is also difficult to treat and inflammatory pain which can be treated with anti-inflammatories. There is also neuropathic pain which is damage to the nerves, stemming from different sources, such as a tumour and some drugs have proven successful in helping patients with this, says Henry. No magic bullet But while some pains can be helped, “there is no magic bullet,” he says. More frequently, more than one kind of treatment needs to be followed to reduce pain. Henry and his wife started up a local pain support group in Hamilton 16 years ago which meets monthly and is still going strong. Through the group, he has discovered that people who live with one type of chronic pain often develop a second form of chronic pain, known as comorbidity. Many tend to stay at home because of their disabilities, simply compounding the problem. Understandably, there is a high incidence of anxiety and depression that arise because the hope of getting better is non-existent for many, while

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SPECIAL REPORT CHRONIC PAIN

“

the prospect of getting worse is uppermost in their minds. Many in the Hamilton support group have had suicidal thoughts and one member did commit suicide, says Henry. Henry, who does not suffer from chronic pain, says those in the support group have basically fallen off the end of the health-care system and have exhausted all available help. Some have turned to complementary or alternative medicines, like homeopathy, acupuncture, massage, tai chi, dietary supplements and probiotics. Newer techniques also on the helpful list are psychotherapy and compounding.

We really have a significant problem in Canada with untreated pain and the federal government has now woken up to that fact and really recognized that.

”

— Maria Hudspith

While there are the newer and more expensive biologic drugs available for illnesses like osteoarthritis, Henry says they don’t aim at the pain. “They aim at the underlying cause, but even with biologics that doesn’t mean that the pain is gone.” Benefits of cannabinoids Cannabis has a long history, including decades of denial about the benefits of cannabinoids, but some cannabis oils, like CBD, have had excellent medical benefits for pain sufferers, says Henry. “We’ve been surprised at the number of people in the support group who have benefited from cannabinoids and some of them have found that they take CBD during the day for their pain and then a different cannabinoid for the evening so they can sleep well.”

Henry says the insurance industry should take notice of the benefits of cannabinoids. “I think the insurance industry will probably benefit from the uses of cannabinoids and covering more and more of their uses because this is going to get people off the more expensive compounds like gabapentin and often the more dangerous drugs such as opioids. It’s an opportunity for the insurance industry to in fact be leaders in selecting or identifying cost savings for specific disorders and diseases where cannabinoids can replace more expensive compounds.” While opioids have been a hot topic because of the potential for overdoses, many knowledgeable about pain say there are a good number of people who have taken opioids – even in higher doses – to allow themselves to work productively and have good social and family lives. This has forced some people to turn to street drugs to keep themselves pain-free and go to work. “The guidelines for opioid use have been misunderstood by the government and by a lot of physicians,” he says. “It still remains the physician’s discretion whether to prescribe a higher dose to one of their patients. But they may also be called before the College [of Physicians and Surgeons] for overprescribing.” The opioid crisis It was exactly this issue with opioids that spurred the creation of the Canadian Pain Task Force in March 2019. But Maria Hudspith, executive director of Pain BC and co-chair of the task force, said while the opioid crisis was the impetus for the task force, medical, legal and political authorities had already agreed that something needed to be done to help those with chronic pain. “We really have a significant problem in Canada with untreated pain and the federal government has now woken up to that fact and really recognized that,” says Hudspith.

THREE MAIN BIOLOGICAL MECHANISMS UNDERPIN PAIN: •

Nociceptive pain arises from damage to body tissue, and is the typical pain one experiences as a result of injury, disease, or inflammation. It is usually described as a sharp, aching, or throbbing pain.

•

Neuropathic pain arises from direct damage to the nervous system itself. It is typically described as burning or shooting pain, and the skin can be numb, tingling, or extremely sensitive to even light touch.

•

Nociplastic pain arises from a change in the way sensory neurons function, rather than from direct damage to the nervous system. The sensory neurons become more responsive (sensitization). It is similar in nature to neuropathic pain. Source: The Canadian Pain Task Force report 2019

INSURANCE JOURNAL APRIL 2020

One of the core issues is that chronic pain has not been recognized as being “legitimate” pain. Instead, Hudspith characterizes it as a condition that’s been invisible and stigmatized despite almost 30 years of scientific consensus on its validity. A major step to its acceptability has been taken by the World Health Organization which is listing chronic pain in its latest established classifications of diseases definitions set to come out in 2022. Part of the task force’s role has been to listen to those in the community who have chronic pain and how it has affected them personally. Hudspith puts them into three categories: Firstly, those who have found ways to cope with their pain and are living well. Secondly, there are those whose lives have been diminished over time by pain. They have used up all their sick time, gone on long-term disability, their marriages have broken down and some have even lost their homes. “This can be really devastating for many people,” says Hudspith. But in the middle are those who are “coping,” those who know there are only a few chronic care services with many provinces having a two-to-three year wait list. Those who have been in touch with the task force say there’s a lack of knowledge and understanding among health-care providers and employers. Many want a menu of options since there is no one-size-fitsall resolution and requires a team approach. Hudspith says the federal government has many tools at its disposal, including helping provinces structure their health services in a way that makes more sense for those with chronic pain, such as introducing low-cost or free recreational therapists. She says Pain BC is one of the few pain organizations of its kind in Canada, adding that Ottawa can create some granting funds if it chooses. The task force brought out is first report in June 2019. It is currently gathering data from interested parties and is expected to present its second report to the federal government at the end of June. The final phase will look at how to implement the ideas of the second report and that should take place in the first half of this year and into 2021. The Task Force’s first report indicates there is a range of successful approaches that can serve as for the foundation for change. “A tremendous opportunity exists to leverage and improve existing national data and surveillance in Canada, including deeper explorations of the social context related to chronic pain. Multidisciplinary and interprofessional clinical models and proven education approaches across the health sciences offer promising practices that could be more widely supported.”

50% of Canadians with chronic pain have lived with it for more than 10 years Source: Canadian Pain Task Force Report 2019

APRIL 2020

INSURANCE JOURNAL 39

SPECIAL REPORT CHRONIC PAIN

Insurers offer programs to provide customized pain relief Pain, disability, more pain, anxiety and even more pain: that about sums up the lives of many Canadians who suffer from enduring, chronic discomfort. BY SUSAN YELLIN

B $56 to $60 Billion Annual cost of chronic pain, including direct health care costs and lost productivity

ut some insurers have designed programs to provide customized relief for their employeesponsored plan members with the goal of helping them remain at work or get off disability and head back to their jobs. The recent report by the Canadian Pain Task Force indicates that the total annual cost of chronic pain including both direct health care costs and costs related to lost productivity amount to about $56 billion-$60 billion per year. Chronic pain is one of the most common reasons Canadians seek health care. Add to that the inability of a person to participate fully at school, work, community and relationships and the toll – both financially and emotionally – adds up. “Chronic pain is a very complex condition,” says Youlanda Hart, director, Organizational Consulting for Sun Life in Toronto. “Chronic pain is related to a prolonged presence of pain in a plan member that can be varying levels of pain related to some other underlying illness. What makes it complex is that sometimes those levels of pain can be subjective.” What also makes it complicated are the plan member’s requirements for treating that pain, says Hart. Sometimes a medication that can slow the pain makes it difficult for a person to function at work or home. Sometimes people manage to work through their pain but that could have an effect on their productivity. Flexibility required Those with chronic pain can sometimes require short-term disability, while others may require longer time at home, adds Hart. What’s critical, says Hart, is that employers be flexible, open-minded and try to accommodate those who have any condition. “For instance, if you need to be off because you are having a flare-up of pain and really all you need is to be at home – then are they flexible in doing that? Certainly we want to see plan sponsors recognizing the impact that has on productivity in the workplace and supporting their plan members when they need it. Staying at work is ideal, but not everybody with chronic pain has the ability to stay at work.” Going on disability is a challenging time for many, so getting them back to work helps them find a better

INSURANCE JOURNAL APRIL 2020

work as well as home life, says Irene Keller, product director, Disability and Integrated Health Solutions at Sun Life in Waterloo, ON. Treating the whole person Sun Life doesn’t have special programs for those with chronic pain mainly because each person is different, says Keller. “It’s a multi-pronged approach. You need to treat the whole person.” For example, depending on the level of severity, Sun Life might use its health management consultants to aid in providing employees with physical-related programs like exercise. Other times it may be more focused on programs such as virtual cognitive behavioural therapy (CBT) which gives an employee online time with a psychologist or psychotherapist over an 8-12 week period. “Part of our mission is to serve our clients and get them to live healthier lives so [our goal is] early intervention and helping them get access to treatment they need. That’s why Sun Life started working on innovative new therapies like pharmacogenomics and virtual cognitive behaviour therapy.” A personalized health plan might also use techniques like mindful meditation combined with any number of other aids such as exercise, physical therapy, massage, acupuncture or a specific individualized medication determined through pharmacogenomics. Keller says these members usually work with a number of practitioners who must talk to each other and know each other’s roles so they can figure out a plan that works for an employee. An individualized plan is also the goal of Medavie Blue Cross’s rehabilitation team which uses a stepby-step customized plan focusing on patient education that teaches coping behaviour and managing pain, says Rebecca Smith, director, Group Life and Disability Services. The program, called “activation,” is aimed at getting people moving again. Smith says quite often automatic body responses are slow with people who have to deal with chronic pain. The recommendation for many people is to “work through the pain” and when they do their tolerances improve and their function improves. A number of specialists are involved in getting those

with chronic pain back in the mainstream, including an occupational therapist, exercise and a physiotherapist, all who help treat the whole person, she says. In the past, there were plans that focused on one specialty, but over time the insurer learned that there are so many different aspects to chronic pain that a holistic approach provides a much better outcome. This way, says Smith, the chances of getting a positive result are higher. She says Medavie Blue Cross looks at every option for those with chronic pain. Some work from home as an option, especially if they are working to increase their tolerances. But she cautions that some people

then limit themselves, making it more difficult to go back to the office environment. “So you want to make sure they have the healthiest option for that individual and that it’s not placing more barriers around the attempt to return to normal functioning.” Medavie Blue Cross has started two pilot programs, one on pharmacogenetics and the other is virtual cognitive behaviour therapy. “People are looking for options and we’re seeing a really good uptick on these programs,” says Smith. “We typically see people who want to get better. It’s the rare ones that aren’t willing to try anything.”

APRIL 2020

INSURANCE JOURNAL 41

SPECIAL REPORT CHRONIC PAIN

Pain management requires multi-pronged approach Chronic pain affects all aspects of a person’s life from work and play to family. Failure to manage the pain can lead to sleeplessness, depression, anxiety and isolation. BY SUSAN YELLIN

hronic pain affects all aspects of a person’s life from work and play to family. Failure to manage the pain can lead to sleeplessness, depression, anxiety and isolation. A host of remedies are now available, although more than one kind of treatment is generally required. “With chronic pain it’s never ever as simple as just feeling the pain in your physical body,” says Ann Marie Gaudon, a Waterloo, ON psychotherapist specializing in chronic pain management. “There’s a huge emotional fallout and many, many consequences that can come along with chronic pain that can upend your life. So this is what I help people with.” Gaudon, who once was completely disabled by chronic pain when she was only 19, knows that chronic pain can affect jobs, friendships and education. “There’s a tremendous amount of loss. It may begin with: ‘I can’t work anymore. Maybe things are getting really bad and I can’t be the same kind of parent I was before.’ There may be a loss of friends.” Most of her clients with chronic pain are working, but even then all of them have issues – whether it’s the stress of trying to keep up with people who are ablebodied or the anxiety of trying to hide searing pain for fear they will lose their jobs, she says. “My part is to help them try to understand the difference between clean pain and dirty pain. Clean pain is the pain we feel in our body … but the dirty pain is all the repercussions that come as a result of our reacting to the clean pain. I help people recognize all the dirty pain in their lives that is causing them to suffer more and we work towards behavioural change trying to get some focus, some function back into their lives.” Acceptance and Commitment Therapy Gaudon is a big proponent of a psychotherapy technique known as Acceptance and Commitment Therapy (ACT), a tool considered to be useful for a wide range of individuals struggling with mood, thought or anxiety issues. It encompasses pieces from both cognitive behavioural therapy and dialectical behaviour therapy, challenging distorted thoughts and practising mindfulness and distress tolerance. Gaudon says she helps the client create a more purposeful life by helping them clarify their own values. For example: she asks them how they want to treat themselves and how they want to treat the world around them, using personal values as a guide. She also teaches them some mindfulness skills, which allow people to be aware of where they are right now and what they’re doing without being overly reactive or overwhelmed by what’s going on around them.

INSURANCE JOURNAL APRIL 2020

Typically, Gaudon says she provides clients with a new tool or strategy to work on for a couple of weeks and then return with how they feel. “If you truly want to give this behavioural change a solid try in your life, you are going to keep it up.” She acknowledges she can’t help everyone. “But the tools I give them, once they practice them, they’re theirs for life.” Customized medication With chronic pain differing from one person to another, compounding has become the customized option for pain medication. Unlike a set dose pill manufactured by a pharmaceutical company, compounding involves mixing any number of medications and fashioning it into a cream to be used topically, often to be as needed and with fewer side effects, says Lina Youssef, a pharmacist at Pharmasave Swan Lake Pharmacy in Markham, ON. “We get a powder for a nerve-pain killer, for example, a muscle relaxant and an anti-inflammatory. That’s high risk to take as a pill because it has side effects. The medication enters all the organs if you take it orally,” says Youssef. “We tend to do it as a cream because then we can treat it locally.” When mixed together and used as a powder they have the same outcomes as pills but without the side effect of spreading throughout a person’s system, she adds. Compounding has been around for some time, but it really wasn’t until the “Opioid Crisis” in the 1990s when over-prescription of opioids took place, that people started to take a longer look at compounding. Which powdered medication to take depends on where the pain is coming from and what continues to cause it. “With compounding, it’s not a pre-set medication. It’s case by case. We customize the cream according to the patient’s needs,” says Youssef. “Very rarely do you see two patients taking the exact same cream.” Doctors must prescribe a medication, but compounding the anti-pain cream exactly takes the knowledge of both the pharmacist and the doctor. Once the pharmacist receives the doctor’s prescription, she can recommend a cream to the physician according to the patient’s situation. “That makes it easier for the doctor to look at. He can plus or minus any ingredient he wants or doesn’t want.”

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LIFE INSURANCE SALES

Whole life powered premium growth in 2019 Vigorous whole life sales fuelled premium growth in the Canadian life insurance sector, the 2019 LIMRA report shows. BY ALAIN THÉRIAULT

ew premiums spurred insurance sales by 8 per cent in 2019, versus 2018, to reach $1.5 billion. For the fourth quarter of 2019, premium sales climbed 7 per cent in Q4 2019, compared with the same quarter in 2018, for a total of $432 million. In fact, sales advanced in each quarter of 2019 compared with the corresponding periods of 2018. “Carriers enjoyed moderate premium growth throughout 2019, driven largely by increases in whole life sales,” LIMRA research analyst Matthew Rubino says. The impact of the tax changes affecting permanent life insurance products that rocked the industry from late 2016 to early 2017 is fading, he adds. “Some of the effects of the tax changes in 2017 are giving way to more ‘typical’ market conditions, and new Par WL products have boosted the market as well,” he explains. Again in terms of premiums, whole life insurance sales rose by 16 per cent in 2019, to reach $899 million. They represented 61 per cent of all life insurance premiums sold in Canada in 2019. They were up 11 per cent between Q4 2018 and 2019, for a total of $277 million. Once the star product, universal life has lagged behind whole life in the permanent product niche in recent years. At $223 million, its 2019 premium sales dropped 8% compared with 2018. UL premiums made up 15% of total life insurance sales in 2019, at $224 million in new premiums Sales stabilized in Q4 2019 for universal life, as

premiums edged a mere 1% downward compared with Q4 2018, at $62 million. Term insurance, considered a commodity product, is holding steady. Premium sales increased by 3 per cent in 2019 versus 2018. Term insurance generated 24 per cent of total life insurance sales in 2019, with new premiums of $363 million. Premiums fell slightly by 1 per cent in Q4 2019 versus the same quarter of 2018, to $93 million. National accounts in the lead The positive turnaround was particularly visible among insurance distributors operating in the full service securities brokerage sector. Premium sales for national accounts were up 21 per cent in 2019 versus 2018. They advanced 16 per cent in Q4 2019 compared with the same quarter of 2018. MGAs were also boosted by strong year-end results. Premium sales in this network rose by 9 per cent in 2019 versus 2018. They surged by 13 per cent in Q4 2019 compared with the same quarter of 2018. Affiliated and direct sales networks were less successful. Premium sales for captive agents (affiliated exclusively with one insurer) slipped 2 per cent in 2019 versus 2018. They declined 10 per cent in Q4 2019 compared with the same quarter in 2018. The direct sales network, a category that LIMRA recently integrated in its results, shed 7 per cent in 2019 versus 2018. It slumped by 12 per cent in Q4 2019 versus the same quarter of 2018.

2019 SALES OUTPACED THOSE OF 2018 ANNUALIZED PREMIUM TRENDS

Universal life

Whole life

Term life

$405M $334M

$348M

$283M $180M

$198M

$80M

$92M

$87M

$94M

$56M

$61M

$63M

1Q 2018

2Q 2018

3Q 2018

4Q 2018

$147M

Source: LIMRA 2019 4Q, Canadian Individual Life Insurance Sales.

INSURANCE JOURNAL APRIL 2020

$432M

$357M

$361M

$206M

$214M

$84M

$96M

$90M

$93M

$49M 1Q 2019

$55M

$57M

$62M

2Q 2019

3Q 2019

4Q 2019

$335M $249M

Total

$202M

$277M

Modest sales growth for critical illness insurance in 2019 Critical illness insurance sales stagnated in Q4 but rose for 2019 overall, the LIMRA report on CI insurance in Canada confirms. BY ALAIN THÉRIAULT

remium sales of CI insurance climbed 2 per cent in 2019 versus 2018, to reach $138.7 million. Sales were flat in Q4 2019 versus the same quarter of 2018, at $38.8 million. “Despite flat premium growth for the fourth quarter, new critical illness premiums ended 2019 higher than 2018,” LIMRA research coordinator Matthew Rubino explains. He adds that 10 of the 17 insurers participating in the LIMRA report saw growth in CI insurance premium sales. Although modest, this growth was good news for the industry. In 2018, new CI premium sales declined 6 per cent compared to 2017. After several consecutive quarters of declines between year-end 2018 and early 2019, sales finally staged a comeback in Q2 2019. In 2019, sales in terms of new CI insurance policies were down 1 per cent versus 2018, at 123,410 policies. This marks an improvement from the 7 per cent decline in CI policies sold between 2017 and 2018. Term products dynamic Term CI insurance was the growth leader in 2019. “Renewable products had the highest percentage growth of premium, growing 4 percent over last year, but flattened at year-end,” Rubino said. Permanent products faced more of an uphill battle, he added. “Permanent products grew in quarters two through four, but not enough to overcome a steep 18

per cent decline in the first quarter,” he explains. Sales of this product dipped by 2 per cent in 2019 versus 2018. They increased by 4 per cent in Q4 2019 versus the same quarter of 2018. MGAs to the rescue Premium sales by career agents (affiliated exclusively with one insurer) declined by 2 per cent in 2019 versus 2018. They declined 1 per cent in Q4 2019, compared with the same quarter of 2018. MGAs drove the results of the independent network, achieving the only sales growth in this group. Premium sales rose 9 per cent in 2019 compared with 2018, and 15 per cent in Q4 2019 compared with the same quarter of 2018. In contrast, CI insurance sales by national accounts (securities channel) dropped by 6 per cent in 2019 versus 2018 and by 22 per cent in Q4 2019 compared with the same quarter of 2018. Independent advisors also saw a downturn, with a 1 per cent drop in sales in 2019 versus 2018, and a 15 per cent plunge in Q4 2019 compared with the same quarter of 2018.

CRITICAL ILLNESS INSURANCE BY THE NUMBERS

$1.1 billion

CI insurance premiums in force in Canada

1 million

CI insurance policies in force in Canada

9 per cent

MGAs’ CI sales growth in 2019

15 per cent

CI sales growth in Q4 2019

5 per cent

Independent advisors’ CI sales growth in 2019

4 per cent

Career agents’ CI sales decline in 2019

THE LAST QUARTER OF 2019 SAW SALES PICK UP CRITICAL ILLNESS INSURANCE SALES IN CANADA

Renewable

LPL $38.8M

$31.3M

$33.6M

$32.9M

$11.0

Total

Permanent

$38.8M

$35.1M

$33.6M

$10.0M

$9.8M

$15.7M

$17.5M

$16.7M

$31.0M

$11.5M

$9.7M

$9.5M

$16.5M

$16.3M

$6.2M

$7.4M

$7.1

$7.7M

$6.9M

$7.6M

$7.2M

$7.8M

1Q 2018

2Q 2018

3Q 2018

4Q 2018

1Q 2019

2Q 2019

3Q 2019

4Q 2019

$10.4M

$14.6M

$8.5M $20.1

$19.6M

Source: LIMRA 4Q 2019 Canadian Critical Illness Sales and In Force.

APRIL 2020

INSURANCE JOURNAL 45

LIFE INSURANCE SALES

Seg funds rebound in Q4 2019 Segregated fund premium sales fell 2 per cent in 2019 versus 2018, to reach $9.6 billion, the LIMRA 2019 report on individual annuity sales in Canada reveals.

BY ALAIN THĂ&#x2030;RIAULT

billion in 2018, equal to a 1 per cent increase. They totalled $4.6 billion in Q4 2019 versus $4.2 billion in 2018, equal to 10 per cent growth. Total annuity assets rose to $140.3 billion at December 31, 2019, a gain of 1 per cent compared with the third quarter of 2019.

he downturn would have been much steeper if not for the strong year-end performance: seg fund sales soared by 14 per cent in Q4 2019 compared with the same quarter of 2018, to reach $2.9 billion. The year had looked dismal for seg funds. Sales were down 3 per cent in Q3 2019 and 8 per cent at the end of the first three quarters of 2019 compared with the same periods in 2018. Annuities (term deposits and payout annuities) sank by 7 per cent in 2019 versus 2018, at $2.2 billion. The year did not end well for those products, with sales plummeting 24 per cent in Q4 2019 versus the same quarter of 2018. Fixed annuity sales were $559 million in Q4 2019. Combination products upheld solid growth. These products, which combine fixed annuities and seg funds, saw their sales climb 15 per cent from 2018 to 2019. Sales rose by 27 per cent in Q4 2019 compared with the same quarter of 2018. Combination annuity sales totalled $4.0 billion in 2019 and $1.1 billion in Q4 2019. In 2019, 82 per cent of combination premiums flowed into seg funds, and 18 per cent into fixed annuities. For all categories taken together, total annuity sales reached $15.8 billion by the end of 2019 versus $15.6

Accumulate or withdraw? Fixed annuities are mainly a product category for investors in the withdrawal phase. In 2019, 64 per cent of sales in this category were generated by payout annuities (58 per cent), along with RRIFs and life income funds (6 per cent for the two vehicles combined). The remaining 36 per cent went into accumulation products, namely term deposits in the form of RRSPs, nonregistered deposits or tax-free savings accounts (TSFA). In contrast, segregated funds are still viewed as accumulation products. In 2019, 79 per cent of seg fund sales were channeled into accumulation vehicles, broken down into 39 per cent for RRSPs, 31 per cent for nonregistered vehicles, and 10 per cent for TSFAs. Also in 2019, 82 per cent of combination annuities sales were captured by seg funds, and the remaining 18 per cent by fixed annuities.Â

TRENDS IN NEW ANNUITY PREMIUM SALES, BY QUARTER $ Million

Combination

Fixed

Segregated

$5,000 771

861

2,849

2,878

694

592

686

1,139

897

$4,000 $3,000 2,954

2,538

2,888

$2,000

Source: LIMRA Canadian Individual Annuity Sales, Fourth Quarter 2019.

INSURANCE JOURNAL APRIL 2020

19 20

19 Q

20 Q 2

559

18 1

2 Q

731

17 Q 1

17 Q

20 Q

16 20

Q 1

16 Q 3

2 Q

1 Q

20 16

564

$1,000

Annuity and seg fund sales in the individual market by the numbers In Q4 2019

Total for 2019

$351 million

$1.3 billion

• Life income annuity (payable for life)

$244 million

$961 million

• Certain annuity (limited duration)

$107 million

$308 million

$1.8 billion

$6.5 billion

• RRSPs

$960 million

$3.651 billion

• Nonregistered

$855 million

$2.859 billion

$138 million

$701 million

• RRSPs

$56 million

$294 million

• Nonregistered

$82 million

$407 million

$719 million

$2.6 billion

• RRSPs

$442 million

$1.625 billion

• Nonregistered

$277 million

$944 million

Premiums into TSFAs

$380 million

$1.5 billion

$12 million

$68 million

• Seg funds

$224 million

$870 million

• Combination annuities

$144 million

$552 million

Premiums into immediate annuities (for payout)

Premiums into segregated funds (accumulation phase)

Premiums into fixed annuities in accumulation phase (term deposits)

Premiums into combination annuities in accumulation phase*

• Fixed annuities

Source: LIMRA Canadian Individual Annuity Sales, Fourth Quarter 2019.

APRIL 2020

INSURANCE JOURNAL 47

ADVISOR COACH

The blue collar market is a promising niche for financial advisors While many financial advisors seek a target market made up of professionals like doctors, lawyers or accountants, they miss out on a large blue collar population, many who need thoughtful advice and many who earn in the six-figure bracket. BY SUSAN YELLIN | ILLUSTRATION BY PCH.VECTOR

s a kid, Daryl Smith grew up in Barrie, Ontario, spending summers on his aunt and uncle’s farm driving tractors, milking cows and soaking up the reality that farming is a tough job where counting on things like nature just isn’t possible. “What I got from that was that there is so much that is out of your control that they need to do what they can to plan for unexpected things. The blue collar market seemed like it needed to be served.” Now with Synergy Life Financial, Smith has a large client base of blue collar workers, many of whom work for themselves in areas such as manufacturing and the trades. “A guy with a truck and some tools is a blue-collar worker,” he says. Like many who work for themselves, Smith recognizes that baby boomers in the blue collar market don’t have either pensions or health benefit plans and can’t rely on an employer to help them through difficult times. Oddly enough, they may have an accountant and a lawyer, but no one to look after macro financial planning. That’s where Smith comes in. An underserved market “There is a huge opportunity because this market is underserved,” he says. Smith suggests that blue collar workers who are sole proprietors may not have those health care benefits, but can set up a health spending account. This way they don’t have to worry about any pre-existing conditions and they pay for the benefit with pre-tax corporate dollars. One of the biggest issues retiring blue collar workers face is that about three-quarters of them have their money tied up in fixed assets, like a farm. So he’s put together a “blue wealth program” to help

INSURANCE JOURNAL APRIL 2020

owners convert their business assets to personal assets and then to retirement income. Take selling the family farm, for example. Farmers may have land, crops and equipment, but they’re tying up millions of dollars in assets and are essentially cash strapped. “The idea is to help them look at the big picture and decide what they want to do and where they want to be when they retire.” But there also may be succession planning issues with regard to a working farm that the owner needs to discuss with adult children, especially if not all of them want to stay on the farm. “You have to have a plan in place if you want to keep the farm as a viable business,” he says. “The blue wealth program takes people through the conversation of where they are now and where they want to go for retirement, looking at potential risks. I want to ask them basically where they want to be in their 70s and 80s. A lot of people don’t want to go cold turkey into retirement. It’s about emotions and being fair to everybody.” Six figure incomes Michael Morrow’s blue collar clientele have many of the same issues as Smith’s. But while they also need thoughtful advice, a good chunk of them have annual gross income in the six figures. Morrow lives in Thunder Bay, Ontario, where there is a cross-section of people, including plumbers, electricians and highly skilled workers. But a three-hour drive away is Marathon, Ontario, which has struck it rich as a gold mining hub in Northern Ontario. Miners, mechanics, electricians, fork lift operators and security guards are all required, many of whom have jobs paying in the neighbourhood of $120,000-$130,000 and some even as high as $180,000 a year. One of the largest roles Morrow has is to encourage this group of blue collar workers to deal with the high cost of retirement. While younger people may be more inclined to spend rather than save, the big job for Morrow, a 15-year-member of the Million Dollar Round Table, is to get them focused on saving for the future. “Once they start to save they see the benefits and are more willing to save even more for the future,” he says. “I tell them the same as I tell everybody: put in as much as you can [into RRSPs and TFSAs] as early as you can.” Morrow says he has better prospects in places like Marathon, where a house is about $150,000 compared to someone living in a big city like Toronto, where a similar home could cost $1 million or more.

“If you focus on a blue collar worker, specifically in a small town they’ll have a really large disposable income and you have a very high need for savings at retirement time. If I took someone who worked at hydro or a teacher or municipal employee [in a big city] they might have a high disposable income but they have all their money going into pension plans already so they don’t see the strong need for savings.”

WHO IS A BLUE-COLLAR WORKER? In 2018, Express Employment Professionals commissioned a study of Canada’s blue-collar workers and included adults aged 18 or older who are full-time employed, part-time employed or self-employed in a job that requires manual labour in one of the following industries: construction, manufacturing, transportation and warehousing, automotive services, maintenance, agriculture, forestry, fishing, hunting or utilities. While some blue collar workers make income into the six-figures, that’s not true of everyone. According to the survey: While 77% of blue collar workers said they can make ends meet,

more than half (56%) say it is difficult to do so.

When the survey was taken, 17% said they did not have any money saved in case of an emergency

46% said they had $1-$4,999 saved 19% said they had $5,000-$24,999 saved 12% said they had $25,000 or more saved RETIREMENT CONCERNS The study suggests that if retirement ages rise, blue-collar workers could feel harsher consequences than white collar workers. Because blue collar jobs require more physical labour, blue collar workers may not be able to delay retirement and have a difficult time switching to retirement. More than two-thirds of blue collar workers (68%) say they are worried about saving enough for their retirement. About 44% agree that it’s “more likely that Martians will land on Earth than I’ll collect a public pension.”

APRIL 2020

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CORNER OFFICE ADVICE

guaranteed cash for opportunities, retirement income and inflation protection. And, it stays simple regardless of the complexity of the client situation. Take the opportunity presented by these unique circumstances to help people protect themselves in both ways for both reasons. Offer them the option to make sure they improve their peace of mind today and especially in the future when the next crisis happens… and it will happen.

Is it time to be a Tele-Advisor and practice distance selling?

JIM

RUTA

Pandemic Pandemonium? Prospect Panic? What to do now

Question: How do I keep selling life insurance in the face of the COVID-19 pandemic and the market meltdown? The unprecedented disruption to life and the markets brought on by COVID-19 is a gamechanger for financial advisors. Business will never be the same. But here are two reasons you need to keep selling life insurance and the one way you are going to have to learn how do it. This is absolutely the best time to promote and sell life insurance products. The COVID–19 situation reminds everyone of the fragility and unpredictability of life like we haven’t seen since before the discovery of penicillin. Prospecting for new business is, more obviously than ever, just offering to help in difficult times. The historic market volatility reminds us that a solid financial foundation is critical to long term financial security. Today, everyone has a better appreciation for the value of preparing for the unexpected and having segregated resources. Can you still sell insurance despite the virus and the market crash? Yes, you can. Prospects and clients have never needed your financial leadership more than today, Lead them to financial security and safety with life insurance products. Lead by promoting insurance for two reasons: 1.

Insurance ON the person, to protect for the unexpected loss of income from sickness or death, to cover needs like paying off debts, providing survivors income, paying final expenses and paying taxes payable on death to protect a legacy. Insurance FOR the person, to protect against loss of capital due to market volatility and build a non-correlated asset for retirement. This uses the privileged nature of whole life insurance as a financial foundation to financial security and peace of mind.

Insurance ON the person is the often-complicated tax and needs based approach that gets more complicated as personal situations get more complex. But whole life insurance can also be sold FOR the person, as a foundational asset. Use it in any situation to create an asset that provides

INSURANCE JOURNAL APRIL 2020

The option to visit clients or have them visit you is no longer quite as obvious as it was only a short time ago. Tele-advising, working with your clients at a distance using telephone and video conferencing, will become part of a new normal starting now. This will not be as a total replacement for face-to-face meetings, but as a routine meeting option so that we can be ready as the need arises in the future. And it will. Count on it.

7 Steps to be a Tele-advisor: 1. Build a digital prospect list from LinkedIn, Facebook and personal contacts. 2. Create a 90 second – 200 word, “Prospecting Video” as a sociallydistanced personal introduction to you and your business. Simply: Ask two compelling questions. Introduce yourself briefly. Answer the questions briefly. Invite people for a video appointment. 3. Script a text or telephone approach to get a 15-minute video appointment via Zoom.us. Make the approaches. 4. Develop a brief 15-minute PowerPoint presentation to share on Zoom to your case. For instance: • “Mr. Prospect, in just 15 minutes you can decide for yourself if you want me to help you. And, in that same 15 minutes, I can decide if I can help you. With that in mind, may I get your opinion on a few questions? • Was it your intention to make the Canada Revenue Agency the primary beneficiary of your RRSP/RRIF rather than your kids? • If you were to become seriously sick or disabled would you rather lose your house or your mortgage? • If you or your spouse were to die unexpectedly, would you rather your kids grieve with the remaining parent, or a babysitter? • If there were a way that you could be the beneficiary of your own life insurance policy while you were still alive, would you be interested?” 5. Gets the facts you need to make the presentation to meet the needs they expressed. 6. Then be ready with brief closing strategy including electronic application completion. 7. Prepare a compliant delivery protocol including a questionnaire to ensure that insurance policies are legally in effect and not just nominally in force. Good tele-advisors are more concise, more prepared, more effective and more productive. These are the skills that make you a much better in person advisor. Take on the challenge of leading your clients in these unprecedented times with life insurance products using virtual meetings. Handling this extraordinary situation well today can set you up for your best business ever, tomorrow. Jim Ruta’s mission is simple – to preserve, promote and propel the financial advisor business. A former insurance advisor and executive manager of a 250-advisor agency, Jim is a highly regarded coach, author, podcaster and keynote speaker. He has spoken 4 times at the MDRT Annual Meeting including the Main Platform. Jim Ruta is an Executive Coach and Keynote speaker specializing in life insurance advisors and leaders. He works with top advisors around the world and re-energizes audiences with his deep insight and passion. Discover more at www.jimruta.com. If you have a question for Jim, you may send an email to jim@jimruta.com

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