APEXA: Membership growing despite hurdles

After years of development, the APEXA digital platform went live in August 2017, with the goal of becoming the standard in life and health insurance for advisor registration in Canada. As of mid-April 2021, APEXA had approximately 22,000 members.

A similar platform, the National Registration Database (NRD) is mandatory for advisors who practise in the securities industry. By comparison, only new advisors who contract with an MGA are required to join APEXA by the insurance companies that deal with that MGA. Insurers do not oblige advisors with whom the MGA already has a contract to be on APEXA.

Owned by privately held Toronto-based LOGiQ3 Group, the APEXA platform was developed by Bluesun, which has since been acquired by iPipeline, a back-office system provider for general agents (Wealthserv Insurance) and mutual fund dealers (Wealthserv Investments). APEXA is supported by a governance board comprised of four MGAs (HUB Financial, Financial Horizons Group, IDC Worldsource Insurance Network and PPI Solutions) and five insurers (Canada Life, Empire Life, iA Financial Group, Manulife and Sun Life).

The four MGA partners are well advanced in their efforts to onboard advisors. They say enrollment has picked up in recent months. IDC Worldsource Insurance Network (IDC WIN) was one of the first MGAs to adopt the APEXA compliance system, says president Phil Marsillo.

Marsillo told Insurance Journal in March that his firm has over 2,000 advisors registered with APEXA. A month later, the number had exceeded 2,200. In addition to being president of IDC WIN, Marsillo also serves as director of public relations for the Canadian Association of Independent Life Brokerage Agencies (CAILBA). In total, there are more than 22,000 registered advisors on APEXA in April, he points out, up from 20,000 a month earlier.

Jim Virtue, President and COO of PPI, describes APEXA's onboarding results as excellent. In March, he noted that about 200 advisors were being added to the APEXA platform each week. Almost all insurers and MGAs have signed up for APEXA. Currently, PPI has over 4,500 of its affiliated advisors on APEXA, he continues. In its 2020 MD&A, iA Financial Group says its PPI Management subsidiary is 5,000 advisors strong.

Picking up the pace 

President and CEO of HUB Financial Terri Botosan says she currently has 3,500 advisors on the APEXA system, out of a total of 5,000 active advisors. As do most MGAs, she defines an active advisor as one to whom she has paid first-year commissions in the past 12 months. Registration in APEXA is not increasing as fast as she would have hoped, but HUB is picking up the pace, she says.

Financial Horizons Group (FHG) President and CEO Nick Pszenicznyhas nearly 4,500 active advisors enrolled in APEXA. Over 65 per cent of his advisors are on APEXA, he says, out of 6,500 advisor relationships. FHG accounts for 22 per cent of the advisors on APEXA, which he finds very encouraging. The CEO of the Canada Life-owned MGA aims to onboard the rest of his sales force by the end of 2021.

On its website, APEXA says insurers and managing general agents pay an annual fee based on the number of advisors enrolled in the platform. The fee “reduces as the volume of advisors increases up to a maximum annual CAP on fees.”  
The maximum is not specified. APEXA did not respond to Insurance Portal’s requests for an interview.

Significant cost 

The four founding MGAs lauded the benefits of joining the system, while admitting that the cost of entry is significant. For now, seeing the costs. I think the benefits will come eventually. The more advisors we have on APEXA, the more our employees who process contracts with advisors will be able to do other things, Phil Marsillo explains.

Despite the financial costs and learning curve in the first year, the advantage of joining APEXA becomes clear during annual license renewal time, says Marsillo. Advisors dealing with seven different insurers used to have to submit their license number and proof of liability insurance to seven different places. With APEXA, it's all done at once and it's taken care of for the following years, he explains.

To register advisors, the MGA sends them an email from APEXA that prompts them to create an account with password and complete their profile. Advisors do not need to repeat this process for their contracts with other MGAs. If they update their profile, the changes are automatically transmitted by the platform to the MGAs and insurers concerned. In addition to personal information, APEXA requests a digital copy of the advisor's license and E&O policy, as well as information on the insurers with whom the advisor has done business.

APEXA also has an agreement with Equifax for credit checks. Before joining the platform, advisors receive an email inviting them to log on to the Backcheck site to confirm whether they have a criminal record. Advisors representing a company must provide the date of incorporation of the company, a list of shareholders and a digital copy of the articles of incorporation.

Terri Botosan mentions that APEXA is integrated with regulators in provinces such as British Columbia. The system receives a confirmation when a licence is renewed, and updates the database automatically. She points out that it takes 30 to 60 minutes for advisors to create a profile. Advisors who have been on APEXA for some time say that creating a profile took a while, but it got so much easier after that, she explains.

The cost-benefit ratio of APEXA is another uncertainty. Fiona Cuddy, President of Qualified Financial Services (QFS), says she is half-way through implementing APEXA. Following the implementation she will know first-hand the potential for an improved advisor onboarding experience and contracting and compliance efficiencies.

QFS founder and chairman Kevin Cott adds that “for an MGA of our size, it's quite expensive. I don't know what the value is really going to be at that point.” QFS has 2,000 consultants under contract, 1,000 of whom deal with him regularly.

No obligation, no registration  

Michel Kirouac, Vice-President Executive Officer of Groupe Cloutier, has seen some MGAs sign up with APEXA, but they have not onboarded the advisors who already deal with them because they are not required to do so. This is because insurers continue to accept paper-based or in-house contracting, he says.

"All MGAs are aiming to transfer advisors' contracts to APEXA, but as long as insurers do not make the platform mandatory, many MGAs will react as we did," says Kirouac, who also serves as the Québec director of CAILBA.

Kerouac compares APEXA to the NRD, where membership is mandatory for all mutual fund representatives. "If the industry decides to adopt APEXA, insurance companies should make membership in this platform mandatory. The insurers' legal departments say that would not be possible. I disagree. It could be done if they allow a transition and adaptation period," Kirouac explains.

Gino-Sébastian Savard, president of MICA Firms in Brokerage of Financial Services, says his MGA has signed up for the platform, but has not yet registered any advisors. Savard thinks it would be difficult for insurers to force the MGA network to join APEXA. “Some insurers have already threatened to do so," he says. “They're taking a hard line.” Imposing a way of doing business could hurt insurers’ sales development, he adds.

Reduce MGAs’costs 

Gino-Sébastian Savard says that costs are a major deterrent for many MGAs. His brother Martin sits on the APEXA pricing committee, and is executive vice president of MICA. “Discussions are progressing, but there is no solution yet," he adds. “At MICA, we don't see the benefit of APEXA other than to satisfy our suppliers. Insurers have made major investments in APEXA; I understand their dismay, but we don't want to invest money in the hopes of getting it back later.”

MGAs want APEXA's fees to be reviewed, says Michel Kirouac, who also sits on APEXA's pricing committee. “This committee is looking at the best way to collect fees,” he adds. At $75 per advisor member, the fee the MGA is paying may seem prohibitive, he says. “Paying $75 for 2,000 advisors costs me $150,000 for a system that is not mandatory. To date, no one has shown me that I would save a lot of money and time with APEXA. But everyone believes that it can help us eventually.”

Kirouac points out that it costs even more to register a mutual fund representative. In 2021, the Autorité des marchés financiers has set the annual fee it collects from the dealer for each registered mutual fund representative at $383. As administrator of the NRD, the IT company CGI charges $75 for initial registration in the database. 

Make the advisors pay?  

Groupe Cloutier's vice-president and general manager thinks the obligation to join APEXA must go hand in hand with a cost-sharing arrangement for the financing of APEXA. "This reasonable cost formula must involve a contribution from insurers, MGAs, and representatives. There are scenarios on the table, but nothing has been decided yet,” Kirouac says. The costs may seem significant, but they would be spread over 60,000 advisors in Canada, he adds.

MGAs have expressed other concerns, Kirouac adds. If one advisor is dealing with five different MGAs, we're paying five times. We need to avoid duplication and find the right solution for cost structures, he explains. He points out that the MGA contribution limit is $150,000. This maximum cost formula creates a funding problem for APEXA, he says. When IDC WIN bought Aurrea and Copoloff Agencies, APEXA lost two customers. He finds this business model debatable.

Forging ahead

There are pricing issues, admits Yan Charbonneau, CEO of MGA AFL Groupand its parent company Synex Business Performance. “APEXA is a train that can only move forward,” he says. “We're embracing it, and we're in the process of getting advisors on board. Doing it now or in one or two months won't change anything...It has to be done. It's been debated and the whole industry is moving in that direction,” says Charbonneau, who also serves as vice president and treasurer of CAILBA.

For now, an MGA can join APEXA without any registered advisors, as no new advisors are recruited. “All advisors with a contract already in place will come on board, it's just a matter of time,” Charbonneau explains.

Jim Virtue is convinced that everyone who joins APEXA will benefit from the platform. PPI's President and COO expects registration to become mandatory. “The insurance companies are working to ensure that everyone gets on the system and eventually the only way you’ll be able to deal with them for contracting and licences will be through APEXA," he says, pointing out that most MGAs have signed on to the system and are working to onboard all their representatives.

Consumer protection  

APEXA benefits the whole industry, says Nick Pszeniczny. “APEXA is a win for all, especially consumers. The transparency of Apexa will allow advisors to contract and re-contract as necessary in an efficient and compliant way,” he says.

MGAs on the platform will be able to provide more effective oversight of advisors from a regulatory standpoint, Pszeniczny adds. He acknowledges that the implementation of APEXA has been a long journey, but believes the digital platform can now provide the value that MGAs expect.