The Co-operators exits Quebec individual life insurance market

By La rédaction | June 27 2007 08:54PM

After entering the market just over a year ago, The Co-operators has announced it will stop distributing individual life insurance in Quebec. The move stunned the three managing general agencies with which it had distribution agreements in Quebec – Groupe CMA, Force Financière Excel and Groupe Cloutier – when it announced its immediate withdrawal in late May.

To bolster its campaign in the province, the company had hired eleven people, including Denis Tremblay, marketing director, life insurance. Mr. Tremblay told The Insurance Journal that he would be leaving the company. Some employees will be laid off, while others remain on staff.

“Co-operators will continue to serve its Quebec clients as long as they stay on the books.” Mr. Tremblay added, without commenting on the company’s decision to get out of the market.

“We have shut down our Quebec operations. Our decision is immediate. We will honour proposals submitted until the end of the month, but we have stopped accepting individual life insurance proposals,” Garry Herback, vice-president, Co-operators individual insurance, told The Insurance Journal.

This move affects the individual life insurance segment exclusively, Mr. Herback explains. He points out that Co-operators invested amply in financial resources, human resources and product pricing during its incursion into Quebec. He stopped short of disclosing amounts, but admitted that Co-operators did not achieve the results it hoped for in the Quebec market.

Asked about the premiums generated in Quebec and the objectives Co-operators set, Mr. Herback simply repeated that the insurer was considerably off target. “We attained barely 10% of our objectives.”

The insurer claims it took a step back to better assess the situation and find a way to make its Quebec operations viable. “We concluded that for now, the effort required is too large for the return it could generate,” Mr. Herback adds.

He doesn't necessarily see the move as permanent. Instead, he described it as a strategic withdrawal until conditions become more favorable.

The lack of leverage by agents in the Quebec distribution network reinforced Co-operators’ decision. “The market here is very competitive. It is difficult to get a solid foothold in a new market,” Mr. Harbeck continues.

Groupe CMA and Force Financière Excel said they were surprised by Co-operators’ seemingly overnight decision. The Groupe Cloutier could not be reached before press time. “We thought we had found an insurer with a serious approach toward Quebec. Co-operators was well prepared for its implementation. I’m still waiting to find out what motivated this decision,” Normand Caty, president of Groupe CMA, said.

Force Financière Excel president James McMahon is disappointed by the decision. “I think Co-operators could have been more patient in Quebec and could have continued improving their products and client services.”

Did Quebec advisors giving Co-operators the cold shoulder? “No I don’t think so,” Mr. McMahon says. “It was mainly a question of products and pricing. The Quebec market is on the vanguard when it comes to products: if you are more expensive than the market overall, penetration will be more difficult.”