We asked The Insurance & Investment Journal’s journalists to share their insight and observations on the challenges facing the industry in the coming months.
Talk to your clients
By Serge Therrien
President and publisher
The Insurance and Investment Journal
Recent social and political events have shaken up priorities for many insurance industry stakeholders.
These events will oblige brokers, advisors, agents and insurers to talk to their clients – in addition to writing to them – to explain, advise and guide them in their choice of coverage to protect against climate change, and with respect to buying insurance policies via the Internet.
Why?
1. The U.S. election has put someone at the head of the world’s largest economy who is skeptical about humanity’s impact on climate change. President-elect Donald Trump has promised to undo laws and regulations that are aimed at protecting the environment and fighting global warming. Trump has surely not read the well-documented reports by institutions such as reinsurers Munich Re and Swiss Re, which have recognized this impact for several years now.
From words to action; Trump has just appointed Scott Pruitt as head of the Environmental Protection Agency. Pruitt, attorney general of Oklahoma, has fought to prevent the closing of coal-fired power plants and to soften, if not eliminate, environmental protection laws.
2. Internet trends and social networks...
Two trends are exploding: false news is proliferating and social media communities are being created under the age-old principle: birds of a feather flock together. In tight-knit groups, divergent ideas are not often tolerated. In addition, if false news is promoted through one of these communities, it will spread easily and exponentially.
In view of these new realities, it has never been as important for our societies to invest in education. The need is great for every individual to develop a critical sense. This isn’t just the job of governments, but also of the industry now.
The insurance industry has made significant strides to improve financial literacy, but it’s high time to get rid of this expression and enhance the industry’s efforts to make life insurance and property and casualty insurance contracts easier to understand and even enjoyable to read!
Talk with, explain and advise clients – this is a new path for the future, yet also one that is tried and true.
Change on all fronts
By Donna Glasgow
Editor-in-chief
The Insurance and Investment Journal
Change came on all fronts in 2016 and the New Year looks sure to bring much more. In the November/December edition of The Insurance and Investment Journal we underlined our 20th anniversary milestone with interviews with 20 industry leaders who discussed the challenges presented by the changes they are facing in their companies, as well as the opportunities.
First, technological change is transforming the way that the industry connects with consumers. On the insurance side, companies are struggling to establish this contact, explained Mark Sylvia, president and CEO of Empire Life, in his interview: “Companies are doing more direct advertising on TV, they’re trying all sorts of different ways. But this is a fundamental change in the industry – an industry that has relied on people to contact people to create sales is now having to look at different methodologies for getting in front of customers.”
Neil Skelding, president and CEO of RBC Insurance, said the Millennial generation is driving a great deal of change as they seek a more direct relationship with their insurance companies. To meet this expectation, RBC Insurance is digitizing its business.
Marianne Harrison, president and CEO of Manulife Canada said that a great deal of innovation will come into play on the service front. “We see it with the Internet, mobile devices – people want easier access, when and where they want it.”
So what does this mean for advisors? Veteran financial advisor, Gilles Chevalier, says the ability to adapt is the key to prospering in today’s changing business environment. “You can always react to change by turning it to your advantage.”
Meanwhile, columnist Jim Ruta writes that despite the changes brought by technology, the need for good advice has not diminished. “What hasn’t changed is the heart of the business. Personal relationships are still vital to helping people. And when you help more you sell more. Prospecting and connecting with people is still critical because people don’t line up for a product that reminds them they can get sick and die. They need help.”
Game-changing new realities for life insurance and investment funds industries
By Alain Thériault
Director, life insurance, taxation and investment
The Insurance and Investment Journal
The end of commissions?
May 2017 will bring the end of the consultation by the Canadian Securities Administrators (CSA) on embedded commissions. Mutual fund companies and dealers have little hope that the CSA will rule out banning these commissions. With this in view, lower cost products are multiplying and more and more dealers are introducing new fee-based methods of compensating their advisors.
Quebec’s distribution legislation
In the new year, Quebec’s Minister of Finance Carlos Leitao will put an end to the suspense about Quebec’s Act respecting the distribution of financial products and services (ARDFPS) with the tabling of an omnibus financial services bill. Firms and advisors will finally learn if they will keep their self regulatory organization, the Chambre de la sécurité financière, and whether they will be sharing the privilege of distributing insurance with the Internet.
What ARDFPS cannot prevent: the tsunami of InsurTechs and other disruptors, who will be further challenging traditional carriers and distributors in the year to come.
Policy taxation
Advisors will be adjusting to new exempt test rules impacting life insurance policies, which will become effective January 1. These new rules will limit the tax advantages that clients can benefit from within their permanent life insurance policies. In a rarely seen year-end rush, dozens of insurance products have disappeared or been changed as a result of these new rules.
