Outlook 2018

By The IJ Staff | January 03 2018 09:45AM

The Insurance & Investment Journal’s journalists hare their insight and observations on the challenges facing the industry this next year.​

It’s time to wake up to the dangers of climate change!


Serge TherrienBy Serge Therrien
President and publisher
The Insurance and Investment Journal

We can’t just all hop on a spaceship and relocate to another planet, no matter what Elon Musk’s aspirations may be. Plans to colonize other planets are entertaining enough, but universes away from being realistic.

We all know that there is only one planet Earth. Sadly, it is in critical condition.  Over 15,000 scientists from 184 countries have—yet again—sounded the alarm  that our planet is in trouble. 

Around the world, reinsurers are renowned for being highly prudent financial institutions. Yet they have no doubt that climate change is for real! Their annual reports are brimming with an unusual blend of finance and the environment. The figures are peppered with words like hurricane, flood, storm, tornado, earthquake, forest fire, hail, volcano, cyclone and drought. These finance experts have become specialists in climatology!

The human footprint

What is causing these changes? The human footprint, through the combined effect of demographic changes and socioeconomic development.

Swiss Re clearly states: the world needs to understand that global warming is a fact. The institution has witnessed the effects firsthand: it recently reported a loss of US$468 million for the first nine months of 2017. The culprit: natural catastrophes.

Munich Re is also suffering: in its third quarter, the institution sustained a loss of US $1.65 billion.  Hurricanes Harvey, Irma and Maria alone wrought US $3.1 billion in damage.

The reinsurer’s climate experts say that 2017 will prove to be one of the hottest years on record.

The reinsurer stresses that climate issues are everyone’s business. Easy to forget amidst the barrage of messages transmitted to us daily.

And most reinsurers are affected, as The Insurance and Investment Journal confirms. In fact, insurers like Great-West incurred losses in reinsurance in the past year. 

Where can we find solutions?

The political leaders can set the solution in motion: they must use their authority to bring together scientists, insurers and consumers. No one can solve this problem on their own, but if we work together, solutions can emerge. However, time is of the essence.  

More regulatory change ahead


Donna GlasgowBy Donna Glasgow
The Insurance and Investment Journal

Times are changing, stated the Canadian Council of Insurance Regulators as it released a position paper in mid-December that outlines regulators’ new expectations for segregated fund disclosure.

The insurance industry will now be looking a disclosure model for seg funds similar to that of the mutual fund industry.

Segregated fund disclosure is just one of a number of areas where regulation is poised for change. In fact, Stephen Frank, president of the Canadian Life and Health Insurance Association (CLHIA), told The Insurance and Investment Journal that the current pace of regulatory change is almost without precedent.  

How life insurance is distributed is at the heart of much ongoing industry discussion, such as the CLHIA’s proposal to create a licensing regime for managing general agencies, under which an advisor would have a primary MGA, but would still be able to do business with multiple MGAs.

Financial planners in Ontario can also expect to see change ahead. The Ontario government has committed to regulating the profession by restricting the use of titles and imposing proficiency rules.

Meanwhile, in a world of fee disclosure and a potential commissions ban on the horizon, many independent mutual fund advisors are shifting their businesses to a fee-based management model as we reported in our year-end edition.

Expect 2018 to be a pivotal year


Alain ThériaultBy Alain Thériault
Director, life insurance, taxation and investment
The Insurance and Investment Journal

In Quebec, bills 141 and 150 will amend many existing sections of existing legislation.

While these changes could be negativily perceived by financial advisors, the changes could solve some of their problems. For example, Bill 141 would authorize a group savings advisor to share commission with a mutual fund advisor’s firm. This is currently prohibited, but the Quebec financial services industry has been asking for this change for a long time.

If Bill 141 is passed as is, the guidelines for online distribution will become clearer. Bill 150 will also set out the process of transferring a policy to a third party without interest.

In 2018, we should also expect Quebec regulator, the Autorité des marchés financiers (AMF) to present guidelines for assessing insurers’ risk mitigation mechanisms with respect to sales incentives.

New tax rules brought in by Canada's finance minister Bill Morneau will also be under continued scrutiny. These measures will come into effect  in January 2018.

Developments are also expected regarding the taxation of MGA servicesRevenu Québec’s and the Canada Revenue Agency’s interpretation may cost some MGAs hundreds of thousands of dollars.

No matter how it all plays out, 2018 is set to be a pivotal year for the life insurance industry.

Related to the same topic …