February 20, 2018 07:00
Michel Kirouac, James McMahon, Peter Vincent, and Stéphane Rochon | Photo : Réjean Meloche
Insurers have recently acquired general agents. What will be the impact on the financial advisors ? They will be able to remain independent, say of the general agents and insurers. Their presence will continue to be a need, they said.
A panel of the Congress of the insurance and investment focused on this question in his edition of 2017, was held in November. iA financial Group has been one of the first insurers to purchase of general agents, including the acquisition ofHollisWealth in 2016.
Pierre Vincent, executive vice-president, individual insurance in iA financial Group, has pointed out that the insurer was important to have access to advisors and to strengthen its distribution network. In making these acquisitions, the insurer can implement the best technology solutions to serve the customers more effectively in wealth management, » he said.
«We have always believed and we still believe in the independent brokerage «, says Stéphane Rochon, president and ceo ofHumania Assurance. The costs of distribution are higher and higher, he notes. The general agents are no longer used only as a «back-office» for the insurers. They also want to use them for the marketing of the products. Humania wants to make them true partners while leaving them their independence.
«For us, if we continue to invest, it is also to help new start ups, such as Management FTM or Karma Insurance. It assures us of a falls on the side of the brokers. This is the best approach if we aim at the independent council, » noted Mr. Rochon.
Horizons : 52 purchasers have expressed their interest
The Group financial Horizons has been purchased by the insurer Great-West Lifeco in may 2017. James McMahon, president, region of Québec, in Horizons, is income on the process of merging the group’s Horizons with Excel in 2012, with the support of the fund Genstar Capital. This investor wished to withdraw his marbles. «We knew that they were there for seven years,» he says.
It is in this context that the general agent has been placed on the market in 2016. «We had negotiations for a year with potential buyers. There were 52 who came to see us. The group has been reduced to seven potential buyers, and then three. The best offer came from Great-West «, he says.
The interest of the insurer to invest in the distribution network is simple : the insurer wants to offer its products to consumers, regardless of where they are. «It is the customer who decides where he buys his products. The insurer wants to be present in each of the networks, whether it is captive, semi-captive or through the general agent. He wants to have the nose everywhere to serve all types of consumers, » added Mr. McMahon.
Michel Kirouac, vice-president and general manager of the Group-Cloutier, sharing the words of Mr. McMahon. «Insurers have their own network of career and their network of dealers. The direct network, sometimes this will be through the Internet. So, why not put the nose in the general agents, as they do at the present time ? They need to diversify their distribution channels. General agents represent at least 50 % of the distribution in Canada, » he says.
He sees another reason for more «defensive» explaining the trend, which traces itself back to almost 15 years, according to him. The big insurers don’t want to be the only ones to distribute their products outside the network of general agents, because the latter holds a large share of the market.
Develop new bébelles
Despite its status as a shareholder, Humania does not require general agents of their reserve a minimum proportion of their business volume. «The largest market shares of the agents-general, this was the case in the past and it still is, were not in Humania «, says Stéphane Rochon.
However, when it comes time to offer training to advisors, the proximity of the distribution network with the insurer to makes things easier, » he said. It is hard to see the interest of the insurer to make the leadership by imposing rules on distributors.
«It is up to us, as manufacturer, to find innovative solutions. It is the mandate of the insurer to get out of new bébelles, like HuGO , «he says, referring to the platform developed by Humania.
Since the transaction with Great-West, James McMahon went three times in Kitchener, at the headquarters of the group Horizons. «We don’t even have a contract with Great-West. It has an agreement with Canada Life. It is the same as that of the Group-Cloutier. «The board of directors, John Hamilton is still president, and James McMahon is one of four regional presidents. These are the ones who run the company completely independent. The insurer does not sit on the board. However, it approves budgets and monitors the financial results, » said Mr. McMahon.
Home iA financial Group, the independent advisor can provide all the products accessible in the market. «If it happens, it is even more difficult for him to sell our products, because of its independent status means something,» says Peter Vincent.
Products equal, the insurer, the investor may express its preference to the agent-general. However, there’s nothing he can impose. The insurer wants to certainly obtain a profit as a manufacturer of products. He also wants to get a return on its investment in the distribution network, » adds Pierre Vincent. If the general agent makes a profit by selling the products of other insurers, the shareholder benefits from it anyway. «It complements our service offering,» he says.
A little discomfort
Michel Kirouac noted that » until now, insurers have kept a little discomfort «. Independent advisors want to keep their status. The press to focus their offering to a single insurer would not be constructive. If the insurer offers special conditions for independent advisors to increase its sales, it can even become unfair to other advisors with whom it has business relations.
The management of heritage is also an important part of the offer of advisers, » says Mr. Kirouac, giving the example of ai, owner of iA Clarington Investments. «This is one of the providers with which Clarington account the less active,» he said.
The insurer does not yet see the value of offering particular products or to offer incentives to sell. Mr. Kirouac hoped that this attitude persists. If a company starts to promote its own distribution network, it is likely that other insurers will eventually do the same. This fear prevents them from running into the problems, he adds.
«The objective is to provide good tools and distribution network to strengthen it,» insists Peter Vincent. The growth of the independent network of consultants is a necessity in Canada because many consumers still do not have access to the board, » he said.