Securities brokers outdo MGAs at Manulife

par Alain Thériault | January 20 2001 08:46PM

The success of Manulife's national accounts has exceeded the company's expectations to the extent that the insurer claims that sales in this network will soon dwarf those of its general agents.

In the wake of this success, Manulife Financial has doubled the number of its national accounts in two years, revealed Clyde Grout, Vice-President, National Account Distribution.

The "national accounts network" is the distribution network formed of securities brokers such as RBC Dominion Securities, National Bank Financial and BMO Nesbitt Burns. Manulife deals also with Merrill Lynch, CIBC Wood Gundy, Assante, Dundee and Peak Financial Services among others.

"We're actually ahead of what we set at the beginning," said Clyde Grout. Manulife began to distribute its products through a national account network two years ago, "with eight or nine securities organizations. Now we have 16."

This robust roster currently accounts for 20% of Manulife's new premiums in life insurance and 35% to 40% of its segregated funds, Mr. Grout said. He is confident that he will reach the objective set two years ago, namely to generate 50% of total sales through the national account network by 2003 (see The Insurance Journal, August 1998).

The Manulife national accounts team is co-ordinated by 12 regional vice-presidents, including Louis-Pierre Brosseau, Regional Manager, Investment, Distribution, National Accounts. Mr. Brosseau sees securities brokers as nothing less than a goldmine for insurers. "Life insurance is often a pressing need for rich people. In this sense, several clients of securities brokers have an urgent need for insurance," said Mr. Brosseau. And to top it off, the securities brokers do not want any other company to serve its clients in its place.

"The annuities that we sell through national accounts often generate gigantic sales. For example, a client from one securities firm bought an $8-million annuity along with life insurance," Mr. Brosseau revealed.

To ensure service quality, Manulife is adding technical teams to its regional vice-presidents. "One underwriting team has been fully transferred to our national accounts at the Waterloo head office. Quebec is served separately by its own team," explained Mr. Grout. Estate planning specialists, teams of tax specialists, actuaries and law specialists are also called on to assist the regional vice-presidents.

MGAs outflanked

Securities brokers are determined to increase the depth of their activities, Mr. Grout said. "They feel threatened by discount brokers who now have a large market share. To make up for this, full service brokers want to add other services such as insurance."

Their desire to grow in this direction may well spur them to outperform general agents, Mr. Grout believes. "I believe that the national account and general agent networks will coexist, but you'll se the growth of national accounts far outpace that of the traditional network," he predicted. Business originating from the Manulife national account network may soon exceed that of general agents by 10% per year, "and I'm talking conservatively."

It's to be expected, because the money is there, Mr. Grout noted. This network can manage financial planning and investment files that are on average larger than those of traditional networks. For his part, Mr. Brosseau pointed out that insurance products that thrive on national account networks ­ universal life and seg funds ­ are also the most popular in the industry.