RBC Insurance looks to provide clarity around recent changes

In the wake of major changes to RBC Insurance’s product line and MGA distribution strategy made last summer – as well as the rapid pace of change in the industry in general – John McMeans, vice president, Brokerage Sales, with RBC Insurance told The Insurance and Investment Journal that there is uncertainty among advisors and that he would like to provide some clarity.

“It’s a complex time for an advisor to keep up with the changes in the industry…There is an awful lot of uncertainty at the advisor level and some confusion.”

The main changes made by RBC Insurance during the summer were the cutting back of its MGA relationships from 83 to 14, as well as a number of suspensions in its permanent product line.

Mr. McMeans says the pressures facing the industry such as low interest rates, increased regulatory capital requirements and the new IFRS accounting standards are affecting all insurers and causing them “to react and assess their resources and re-look at their model, all with a view of getting stronger and we did the same thing.”

Product shelf now stable

The product changes, he explains, were made to focus on RBC Insurance’s key markets.
Now that these changes are in place, advisors can expect stability from RBC Insurance’s portfolio, he underlines. “The product shelf they’re working with is a reliable one and stable and one that they can count on.”

A critical point to clarify, he says, is that RBC Insurance still offers permanent insurance. “We know Canadians are looking for affordable coverage and we continue to be a significant player in that marketplace by providing a highly competitive renewable and convertible term product that converts to universal life as well as T100 and that continues to be the case for both in force and new term policies sold.” He also adds that the insurer still offers critical illness, disability and segregated funds.

As well, he adds that the company is planning to expand its offering in the group market. “We’re making significant expansions over the course of 2013 to include a full suite of group product lines for the brokerage community.” This includes adding group health and dental products.

Traditionally, RBC Insurance has been a long-term disability carrier. Adding health and dental coverage to its lineup will enable it to offer a full suite of group benefits solutions to employers in Canada. Small and medium sized businesses are its target market. “We know there are a tremendous amount of small business employers in this country and they all need a benefits package for their employees and it’s a strong market today…We feel we can participate in that and open up opportunities to not only work with them on a group insurance basis, but also work with those employers on an individual basis through their advisors.”

Meanwhile, the changes in the MGA channel are aimed at focusing on its “most important distributing customers,” he explains. “Those are the MGAs that we feel like we have the most opportunity to grow with and who are working in the target markets for RBC Insurance.”

Mr. McMeans says a desire to improve service was one factor driving its decision to reduce the number of MGAs. The insurer has experienced a high level of sales, which led to some service issues around turnaround times, for example.
“We were gaining quite significant volumes of business. What we were being told by our advisor community was that we needed to improve in our service delivery, improve in things like the amount of time it takes to get policies in and out of the door, the type of communication we’re offering…”

By focusing on its key MGAs, he says that RBC Insurance will be able to develop “a deeper relationship with them. We can then create an environment where we’re able to better service them…”

During the fall, the company was planning to introduce a differentiated service model to its MGAs, which would give them better access to the underwriting department, quicker communication and better cycle times, Mr. McMeans said.