Desjardins Financial Security aims to grow Individual insurance and investment sales outside Quebec

By Alain Thériault | October 27 2007 02:13PM

Desjardins Financial Security (DFS) wants to double its individual insurance sales outside Quebec, and boost sales growth of individual investment products throughout Canada.

The problem is, DFS’ Canadian market share is treading water. According to data from MSA Research, sales plateaued at 6.77% at the end of 2007, equal to -0.01% growth compared with 2006.

"I think I can add to our share in Quebec. The LFS network is growing, and other contributions are having an effect, like Caissassurance (sales through Desjardins’ branches), whose in-force premiums have swelled from zero at its inception seven years ago to $70 million in 2008. But in English Canada, our market share is shrinking. I want to turn this around," Alain Bédard senior vice-president individual insurance, told The Insurance Journal in an exclusive interview.

His goal, he said, is to double sales on the individual insurance side outside of Quebec and to keep growing DFS’s investment products business in Quebec and throughout the country. The company has already made significant progress in group insurance outside of the Quebec market.

As part of the three-year plan that runs until 2011, DFS has restructured its operations to underline the importance of the individual products sector. After having separated insurance and investments in 2003, in August DFS decided to regroup the two activities.

"It’s logical," Mr. Bédard explains. "When advisors offer their clients integrated financial planning, they offer funds and insurance at the same time." He points out that over 90% of his advisors in the Desjardins Financial Security Independent Network (DFSIN) – formerly known as LFS Laurentian Financial Services – hold both permits.

Having ventured outside Quebec some time ago, DFS now wants to make its investment products better known Canada-wide.

"Our planning exercise confirmed that we were profitable and able to invest in organic growth," he continues. "To reach this goal, it is important to allocate our risks across different regions and business segments." 

As of January 2009, the insurer will offer a new selection of products in the Helios line, its guaranteed minimum withdrawal benefit offering. At the same time, the insurer will launch a product line eligible for tax free savings accounts (TSFA), a new federal government tax shelter that will take effect on Jan. 1, 2009.

He also mentions a return to previously dropped market sectors. The insurer will revive SOLO, its disability and health insurance product aimed at self-employed workers, in January 2009. "We are upgrading disability coverage, among other things."

Also in 2009, DFS plans to update some products in its target markets, especially its high end Executive Health Savings Plan, owned jointly with the client’s company and launched almost five years ago.

Western MGAs

For DFS, the challenge outside Quebec is distribution, he explains. Several products are being revamped to appeal to the networks, which are more diversified outside Quebec.

The managing general agency (MGA) network had been a low priority until recently. No longer. DFS signed distribution contracts with 11 new general agents in the first six months of the year, and has no plans to stop there.

All the same, Mr. Bédard is not leaving the door wide open. He prefers firms close to their market rather than those that have a superficial presence across Canada.

"We have production criteria but we’re not necessarily seeking large MGAs. What we’re looking at is their growth potential. We also want managing general agents that have a solid foothold in their region and that want to deal with a limited number of suppliers. I don’t want to become the 11th supplier of the firm that I just signed with," he explains.

The Desjardins Financial Security Independent Network is also growing vigorously. DFSIN has grown from five centres in 2001 to 24 centres today. "We’re growing on average by four new centres per year. This network is very strong in both savings and life insurance." He plans to intensively recruit new advisors within the network in 2008, he added.

The company also has another distribution channel Desjardins Financial Security Investments (DFSI) – the former Performa network acquired from Standard Life by OptiFonds in 2006. DFS is encouraging this channel to diversify its product line. Mr. Bédard recently welcomed 90 representatives associated with DSFI to its Montreal head office. Many were from Ontario and points west. "Up until now, they were mainly mutual fund vendors, but we informed them of our other products they could offer. They were very receptive."

To fuel DFS’s growth, Mr. Bédard is actively recruiting in Toronto. In May, for example, Brigitte Mallozzi was appointed director of medical underwriting for Ontario, the Atlantic provinces and the west.

"We want to put together a savings and life team of about a dozen people, in addition to 15 people with new business in one year," Mr. Bédard says. In particular, DFS is seeking account managers.

Mr. Bédard is also differentiating specific niches to whom MGAs and DFSIN advisors can offer customized products.

"Cultural communities have differing needs. We have seen that the ethnic market has a need for guaranteed products with a very early paid up premiums. This lets them build redemption value and accumulate guaranteed savings at retirement," Mr. Bédard explains.

DSF is also carefully cultivating this market in Quebec. "The SFL network (Quebec advisor network) is usually associated with a French-speaking market, and cultural communities are pretty much overlooked. We want this to change," he adds.

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