Foresters’ new president targets uninsured market

By Alain Thériault | August 17 2012 07:55PM

Foresters is hoping to harness the potential of uninsured Canadians to stoke long-term product sales despite pressure from low interest rates.In May, Sharon Giffen became president of Foresters Canada and president and CEO of Foresters Life.
Prior to this appointment, Ms. Giffen carried out the duties of chief financial officer for the fraternal benefit society’s companies. She advised Foresters’ various departments and held them to account.
Now the shoe is on the other foot. At a time when low long-term interest rates are on everyone’s mind, she has to make choices from an entirely new perspective.

“As a CFO, I’d have probably been more insistent that things happen sooner. Now I’m in the place where I have to make decisions, but as [Canadian] president, there are other things to balance, such as product development and ensuring we’re positioned well from a sales and marketing perspective to continue to grow in the Canadian market. That is, after all, our underlying goal,” she told The Insurance and investment Journal in an exclusive interview.

Ms. Giffen is presently weighing her options, but knows she will have to make a choice. “We’ve seen our competitors take significant actions: withdrawing products and increasing prices more than once. We’re not immune.” But, thanks to its solid capital position, Foresters can afford to take its time.
“It’s comforting not to be the first, but we don’t want to be the last either. We’re looking at the underlying design and pricing of all our product lines. Maybe there will be some changes,” she says.

Creating markets

Despite interest rate uncertainty, Foresters is applying a business plan designed to create markets through innovation. With its newly hatched simplified whole life insurance product Easylife, the insurer aims to carve out a specific niche: the market of uninsured or underinsured Canadians.

“That’s the place we believe, by being innovative around processes, we can in fact continue to take additional shares of the market without stealing those shares from another carrier,” Ms. Giffen explains.

With many Canadians underinsured, the growth potential is enormous, Ms. Giffen points out. “We’re selling insurance to people that don’t currently own insurance. Easylife is exactly the intent. It’s the first new product we have launched in that space. I’m very hopeful it won’t be the last,” she continues.

Easylife offers affordable permanent insurance at a uniform price by limiting coverage to $100,000, for clients ages 20 to 60. The lowest annual premium is $300, or $25 per month. Applications can be submitted by mobile application (Skylite), and Foresters does not require any medical exam or questionnaires to fill out. Insured are fully covered as of the first day, for both accidental and natural death.

Efficiency is the key. “We’re not going into the full long underwriting process that can take weeks and sometimes even months. Issuance is very rapid as the contract has already been left to the member because it’s part of the brochure. As soon as we receive the information at head-office and we can validate it, the contract is in effect,” Ms. Giffen explains. This simplification also lightens advisors’ administrative workload.

Balanced growth

Ms. Giffen believes in balanced growth: she describes her management as the midpoint between an aggressive and conservative style. “I have no intention of being a price leader or a compensation leader. I want to be on the market for those two items, but not aggressively,” she says.

She hopes to fuel growth through acquisitions and organic development, which includes breaking into new markets.

Foresters will continue to target appropriate acquisitions as they come available. This is a major growth avenue through which it has achieved its present size, she adds.

The company is profitable and its sales are rising. Foresters’ net earnings advanced to $32 million in 2011 from $29 million in 2010, for growth of 10%. The fraternal benefit society held total assets of $8.6 billion at Dec. 31, and a surplus of $1.4 billion. Its Minimum Continuing Capital and Surplus Requirements (MCCSR) stood at 336%.