Manulife and RBC strike travel insurance business deal
RBC insurance has sold its travel insurance activities distributed through travel agencies to Manulife Financial, which becomes the reinsurer of this block of business. The transaction amount was not disclosed.
Under an agreement that took effect on September 9, travel agencies can renew their distribution contracts with Manulife when their contracts with RBC expire. During this transition, RBC will continue to supply its product to travel agencies. Manulife will provide sales support and distribution of RBC insurance products through travel agencies. Manulife Financial added that it will offer jobs to most RBC Insurance employees affected.
Manulife says this transaction will reinforce its presence in the insurance market sold through travel agencies. “The travel agency channel is an important part of our strategic growth plan as it is the leading source of distribution for travel insurance. This enables us to serve more Canadians and meet their travel insurance needs,” Rob Iafrate, AVP, Travel Insurance, Affinity Markets at Manulife Financial told the Insurance and Investment Journal. Manulife Financial acquired travel insurance broker Pottruff & Smith in 2009.
Manulife plans to offer white-label products and products customized for their clients needs, Mr. Iafrate says. He expects most travel agencies under contract with RBC to renew with them.
Mr. Iafrate mentions that the agency network also includes agencies present online. On top of that, Mr. Iafrate has diversified networks to distribute travel insurance “as well as associations, brokers, advisors, and financial institutions, to name a few,” he says.
RBC Insurance confirms that it is still in the game. “RBC Insurance remains committed to the travel insurance business,” spokesperson Kiara Famularo told The Insurance and Investment Journal. “This transaction allows us to focus on areas that we believe represent the greatest growth opportunities and are aligned with our strategy.” Ms. Famularo explains that RBC will remain present in travel insurance in its branch insurance network and contact centres, and through the external network, which includes credit card companies, airlines and the general agent network.
Existing contracts between RBC and travel agencies will not change when the transaction with Manulife closes, Ms. Famularo adds. “RBC Insurance will maintain its business relationship with the travel agencies until the expiration of the contracts,” she says, adding that some of these contracts had four-year terms.
After the agreement takes effect, Manulife will take on most sales-related support. RBC insurance will continue to handle risk underwriting, claims and assistance, and business compliance, Ms. Famularo explains. “When the contract expires, the travel agency will have the opportunity to sign a contract with Manulife Financial. Manulife will then issue the insurance policies sold by the travel agency and RBCI will only provide claims and assistance services for those policies,” she says.
Travel insurance expert and president of Saddik International Consulting, Pierre Saddik thinks that RBC has succumbed to battle fatigue. “It's expensive to be in all networks and RBC seems to have decided to refocus,” he says.
The Canadian travel insurance market offered by travel agencies is shrinking, Mr. Saddik says. “Aside from Manulife, to my knowledge there is TIC, Reliable and Blue Cross. Rather than vying for market share, Manulife and RBC seem to have realized that it is more profitable to form a strategic partnership,” he believes.