Canada Life announced on July 13 that it will acquire third-party payor and group insurance claims administrator ClaimSecure. The transaction is expected to close in the third quarter of 2021. 

This acquisition will enable Canada Life to reach 1.25 million new customers, mostly plan members and their dependents. ClaimSecure disburses more than $1.2 billion in claims payments annually.

Based in Ontario, ClaimSecure has over 300 employees. It is a technology platform that administers and pays medical and dental claims for public and private companies across Canada. The company’s head office is located in Mississauga and its main operations centre is in Sudbury. 

Expanding its presence 

Canada Life says the transaction will considerably expand its presence in the third-party administrator (TPA) and third-party payor (TPP) sector of group insurance claims.

“This transaction is a great strategic fit and aligns two like-minded companies with complementary areas of expertise,” said Brad Fedorchuk, Executive Vice-President, Group Customer, Canada Life. Technological advances are another advantage the insurer is gaining from this transaction. “ClaimSecure offers advanced technology, plan designs and approaches not previously employed by Canada Life,” the EVP adds.

Fedorchuk explained to the Insurance Portal how the insurer will benefit from this deal. “Our footprint in TPA/TPP was below that of our general market share in group insurance, which is about 22 per cent. In the TPA/TPP, we’re probably closer to 8 to 10 per cent.”

“This gives us an opportunity to accelerate growth in the TPA/TPP market in the short term. In the longer term, we can grow the business together with ClaimSecure, even faster than previously,” he continues. Fedorchuk predicts that Canada Life's market share in the TPA and TPP segment will be around 25 per cent immediately after the transaction closes.

“We believe that we can continue to grow that business at about 10 per cent a year. By combining Canada Life and ClaimSecure value propositions, we can grow faster than the market,” Fedorchuk adds. He estimates that the TPA and TPP market will grow between 6 and 8 per cent annually.

Maintaining independence 

Fedorchuk also emphasized that ClaimSecure is a TPA/TPP, but not a distributor. In fact, some third-party administrators and payors also act as distributors. AGA Group Insurance is one example.

ClaimSecure thus offers its services directly to group insurance brokerages and insurers. Fedorchuk told Insurance Portal that Canada Life will maintain ClaimSecure's independence and the independent channel it serves. “We remain heavily involved in independent distribution,” he says. 

The EVP is pleased that Paul Hardwick and Peter Craig, respectively President and CEO ofClaimSecure, willremain on the management team.

Following the announcement of the transaction, another insurer commented on the news. In a note to independent advisors published in the July 22, 2021 edition of MGA Groupe AFL’s newsletter, Assumption Life confirmedthat the acquisition does not change its service offering. 

“ClaimSecure remains a separate entity from Canada Life and a partner of Assumption Life," the Moncton, New Brunswick-based mutual insurance company says. Assumption Life adds that Canada Life's investments will allow ClaimSecure to further develop its technology platform, “which will serve all of its partners, including Assumption Life and its clients.”