Industry continues to move away from travel incentives

By Susan Yellin | September 22 2017 07:00AM


The “perception of a conflict of interest” has been enough for the bulk of Canadian life insurance companies to do away with sales-based travel incentive conferences or follow the suggestions made by the industry’s association.

Since the Canadian Life and Health Insurance Association (CLHIA) came up with suggestions last year on how to handle these conferences to avoid public misperceptions and fall in line with the mutual fund industry, the majority of insurers have decided to do away with these conferences for independent advisors.

Companies like Great-West Life and Canada Life, Manulife and Desjardins were among the first out of the gate to announce they would end their sales-based incentive conferences, at the latest by 2018.

Other firms have followed suit.

Foresters Financial announced the end of its sales-based travel incentive conferences for its independent insurance advisors in Canada, with its Elite Producers’ Conference and its 2017 Whistler conference with managing general agency (MGA) BridgeForce Financial being the last.

“Foresters works hard to ensure our sales practices align with industry guidelines and are in the best interests of our distributors and their clients,” Sheridan Antoniuk, vice president, corporate marketing and shared services with Foresters Financial, said in an email.

Phasing out

Sun Life Financial is currently in the process of phasing out travel incentives for its wholesale channel advisors. “We have updated our policy and expect to be fully aligned with the CLHIA guidelines in 2018,” said company spokesman Gannon Loftus.

Last year, the CLHIA recommended that regulators look at different “parameters” on new incentive travel programs. While it said it had no evidence of travel incentives causing a conflict of interest in advisor recommendations, the CLHIA said it recognized that “in those situations where an advisor has a choice between various insurers, conference incentives could contribute to a perception of a conflict of interest.”

The CLHIA also made some suggestions to insurers, including that:

  • Insurance manufacturers with independent channels offer trips with reasonable professional content, but advisors must pay their own travel and hotel costs;
  • Insurance manufacturers that still have an exclusive sales force offer trips with reasonable professional content and still have the option to pay advisors’ expenses;
  • Insurance distributors with independent channels offer trips with reasonable professional content, with the option to pay advisors’ expenses, with the proviso that the trips aren’t tied to placing business with one particular insurer and there are no other incentives to recommend one company’s product over another.

Another of the large insurance companies, Industrial Alliance Insurance and Financial Services (iA Financial Group), has stopped offering travel incentives for its independent distribution network across Canada.

However, Pierre Vincent, senior vice president, individual insurance and sales for the insurer, said it will continue to offer travel incentives to its exclusive distribution in Quebec, in line with the CLHIA recommendations.

While there have been times when insurers have balked at recommendations made by the CLHIA, this is not one of them.

“The CLHIA's member companies support the initiatives set out in our 2016 distribution policy paper and the move away from travel incentives is continuing,” said Wendy Hope, CLHIA vice president, external affairs. “We have not heard any complaints from any companies and we are not aware of any from the advisor community.”

Jim Virtue, president and CEO of managing general agency PPI Solutions, agrees that there could be negative public perception with sales-based travel incentives and the steps taken by the CLHIA are correct.

Educational programs

In place of some of the sales-based travel incentives, Virtue said MGAs offer a number of different kinds of educational programs. PPI, for example, offers two types.

In conjunction with the insurance companies, PPI offers training related to specific products, said Virtue. “We see our role as more of helping an advisor run a good quality, profitable practice, helping them grow their business, giving them the tools and education to make sure they can run their business well.”

The MGA also has a series of sessions called the Knowledge Program, which are full-day seminars, including one on understanding the business market, another aimed at the family market, one seminar on how to run a compliant practice and another on buying and selling a practice.

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