Wednesday, December 23, 2009

(No.70) To Europe a different way

What is the 'best' way ( the easiest/cheapest/most pleasant) to fly to Europe from Canada, specifically from Toronto? Many travellers have a favourite airline and route to Europe based on one or more factors, often including how much they shudder at the prospect of landing at Heathrow or Charles DeGaulle.

Pat and I had done trans-Atlantic flights more than a dozen times with various airlines, landing in London (Heathrow), Edinburgh, Paris (DeGaulle), Amsterdam and Vienna. We recently used an airline new to us: Jet Airways, a large Indian airline that flies from Toronto to Brussels Belgium on its way to Mumbai and Delhi in India.

Jet Airways has done little or no advertising in Toronto's newspaper travel sections and has a low profile. We found its prices to be very competitive. From Brussels one can get a direct flight to almost any significant European destination using Brussels Airlines with which Jet Airways has a relationship which (while not a code share) permits the checking of luggage through from Toronto to a final European destination via a Brussels Airlines flight (in our case it was to Malaga Spain).

Jet does not issue boarding passes at its Toronto check -in for use in Brussels on a connecting flight with Brussels Airlines but one can go online with Brussels to pick a seat and print a boarding pass within 24 hours of the connecting flight out of Brussels airport.

Jet Airways was using an Airbus 330-220 on our flight from Toronto with 2 seat configurations on each side of the 4 seat middle row. We were favourably impressed with this airline, specifically the seat and leg space for economy passengers, the promptness and quality of the cabin staff, passenger service and food. Even the passenger noise in the cabin (which of course the airline can't calibrate) seemed noticeably quieter than what one has come to expect on such fully booked flights. Jet Airways was markedly superior to Air Canada measured by all our indices although other longtime AC passengers may regard our compliment as damning with faint praise given the point of comparison.

Brussels airport is large and its Concourse A is new, pleasant, spacious and, for passengers waiting for a flight, a very pleasant contrast with Heathrow and DeGaulle. Brussels Airlines flies mainly to European and African destinations and seems well organized and efficient. However be warned: this airline gives away nothing to passengers, not even a glass of water. For example: a cup of instant coffee costs 2 Euros on the plane.

Overall we thought that Jet Airways and Brussels Airlines are both a pleasant contrast with current North American flights and service by many if not most North American-based airlines. Moreover our flights actually left on time and arrived early.

On our flights from Toronto to Malaga Spain via Brussels we experienced only two negatives worth mentioning:

1. In Brussels airport, in order to get from Concourse B where we disembarked to Concourse A where we boarded our connecting flight, we had to clear EU Passport Control. This took over an hour (fortunately we had left lots of connection time for our flight out of Brussels). This delay was caused by a mob of several hundred people, well-behaved but a mob nonetheless, which backed up at Passport Control waiting for processing and trying to figure out where specific lines might be forming (there were none indicated beyond a few feet back from the EU booths). A herd of cats would have been better organized than this aspect of the Brussels airport. Advice: to be on the safe side leave a minimum of 2 hours for any flight connection in Brussels.

2. Jet Airways had overbooked its flight out of Toronto and when we attempted to check in for our flight (and we did so quite early) we were redirected without explanation to a Jet agent whose assignment apparently was to try to persuade passengers like us with confirmed and reserved seats to fly to their destinations with a different airline(s) and/or even a different route and/or flight time(s). We declined although by the time the agent conceded defeat in persuading us to give up our seats the incentive offered to us to do so had gradually increased from meal vouchers to $250 each.

But these are minor points on a trip involving 10 hours flying time with an airline change at a second airport. Bottom line: the flights and the travel experience were better than average, the flights were on time and no luggage was lost. In these days of commercial flying as an endurance test one cannot really ask for much more than that.

Henceforth we will consider Jet Airways (with a Brussels Airlines connection if needed) for any flight to Europe as well as Brussels airport as a more appealing European entry point than Heathrow or DeGaulle.

Alastair Rickard


Thursday, December 17, 2009

(No.69) Banks & insurance: shooting off another toe?

As I have written previously in this column I argued for many years in articles, editorials and speeches that if the insurance jurisdiction of the provinces over agency matters was challenged by the feds or the federally regulated Canadian banks as it related to their insurance activity as banks the Supreme Court of Canada would side with the provinces as had been the case with the House of Lords decision which had forced Ottawa to come up with the federal insurance legislation of 1932. This was the core of a modus vivendi at the time between Ottawa and the provinces to address the federal government having over-reached itself constitutionally involving the regulation of insurance.

In more recent years it must be admitted that the provinces were hesitant to assert their right to regulate bank insurance activity within their area of competence. I longed for the big banks to exercise their happy combination of arrogance and ignorance and challenge provincial insurance jurisdiction vis-a-vis bank insurance activity. They did so in BC but in a case which did not really focus on the core jurisdictional/regulatory issue -- and won. Then, bless their high-priced legal advice, the big banks made the fundamental error (in Alberta) I had long waited for involving the clear cut issue of provincial insurance jurisdiction. The Western Bank v. Alberta case went all the way to the Supreme Court which, in a May 2007 decision, favoured the provinces.

[ For some of my previous comments on banks and insurance see column Nos. 33,34,47 & 48 on]

Now in what one must regard as an unintended consequence the Royal Bank has, by initiating a piddling civil suit in the Ontario Superior Court, caused to be generated a judgment (dated Nov 18,2009) which not only cites the Alberta bank case precedent but confronts the province of Ontario (as well as by implication the other common law provinces except Alberta and BC) with the need to take action themselves in terms of bank insurance activity.

Why? Because the nub of the matter in the case of Royal Bank v. Mujagic is this:
the bank was held to be taking and transmitting insurance applications and receiving benefits in return, i.e., acts like those of an insurance agent and therefore requiring an insurance license in Ontario -- which the bank does not have.

Several points that need to be noted about this significant case and judgment by Justice D.S. Crane:
  • This may well be the first time since the the unanimous decision of the Supreme Court of Canada in the Western Bank case that the decision has been cited with authority regarding banks' authorized types of insurance. Well done Royal Bank for causing this citation of a key precedent; another toe on the banks' legal foot is shot off since the banks' longtime core belief (almost religious in its intensity) is that they -- the almighty, deity- sanctified, federally incorporated and regulated big banks of Canada -- should not have to lower themselves to a point at which they need to pay attention to lowly provincial insurance regulators.
  • An Ontario judgment involving a regulatory framework for banks and insurance is significant not only for Ontario but other provinces. Since the definition of "insurance agent" is the same in all of the common law provinces the implications of the Royal Bank case judgment extend beyond Ontario. The other common law provinces (except for BC and Alberta which have already legislated on the matter of banks and licensing) cannot stand idly by and do nothing.
  • Given this decision by an Ontario court it seems clear that the status quo is no longer an option for Ontario. Therefore the Financial Services Commission of Ontario (FSCO), the insurance regulator, needs to: (1) apply the law, i.e., the existing insurance licensing requirement, OR (2) ask the legislature to pass amendments to specifically exempt banks from licensing (as in BC), OR (3) implement a restrictive licensing regime applicable to banks (as in Alberta). The insurance industry trade associations like CLHIA, CAILBA, Advocis and IFBC should work to ensure that FSCO does not try to successfully pretend that nothing has happened and that it does not need to take effective regulatory action.
  • The judgment in the Nov. 18 Royal Bank case clearly shows on the basis of evidence what has certainly been no secret: banks do more vis-a-vis insurance than simply enrolling consumers. They take and transmit insurance applications and receive something of value in return. These are core functions that define an insurance agent for regulatory purposes in Ontario. Hence this case reinforces, for those who may have preferred to turn a blind eye, that banks are functioning as insurance agents and need to be licensed accordingly.
  • Leaving banks unlicensed when they are acting as insurance agents creates an unlevel playing field, one that gives the banks a competitive advantage since they have a lesser regulatory burden. It also leaves insurance consumers at risk with no proper and appropriate regulator with whom to lodge insurance-related complaints and from whom to seek redress.
  • The Supreme Court decided in the Western Bank case that the distribution of insurance and its regulatory framework are NOT of federal competency. Only the provinces can regulate those acting as insurance agents. It is clear that if FSCO were to fail to enforce Ontario's insurance regulation on the banks then it would demonstrate, in light of the Royal bank decision, a lack of due diligence in protecting the insurance buying public.
  • Clearly the status quo in Ontario is not an option. There is nothing in the Ontario Insurance Act that empowers FSCO to replace the existing licensing regime with some sort of self-regulatory regime applicable to banks acting as insurance agents. The Ontario judgment in the Royal Bank case makes clear: a license is required in Ontario to do what the Royal Bank was found on the evidence to be doing. Therefore this now requires action by FSCO.
  • What ought to be done by Ontario is what agents and others (including me) have favoured for a long time concerning banks and insurance: apply a full insurance licensing regime at the provincial level to bankers rather than to banks per se vis-a-vis the banks' current authorized types of insurance. Certainly such compulsory individual licensing (and its associated preparation and knowledge) would at least begin to address the problem posed for consumers by the gross inadequacies arising from the so-called incidental sale of insurance (ISI), the biggest share of this ISI product category being the highly profitable creditors' group insurance coverage peddled by unlicensed bank staff in connection with the lives of those seeking the banks' mortgages and loans.
  • Finally, if FSCO (or any other provincial insurance regulator) decides that a possible bank court challenge in response is a deterrent to their taking real action involving bank licensing and levelling the regulatory playing field in terms of who is and is not required to be examined and licensed, they need to remember -- even if the banks and the same legal advisors who took them to the Supreme Court have retiform memories -- that provincial jurisdiction in this matter has already been decided by Canada's highest court.
Meanwhile, as the banks limp from legal defeat to legal setback, it is becoming ever more difficult for them to pretend that the provinces are unable to call the agency tune to which they must dance -- with implications that extend beyond bank branch staff licensing to the consequential issue of the potential provincial role and influence in their attempting to bring off any future expansion of bank branch retailing of insurance.

For the time being at least the federal Tory govt. has kept that door firmly closed. But stay tuned. Although the door is likely to remain closed for some time there are still likely to be further interesting developments in the area of banks and insurance in Canada. And there are bank toes yet to be severed.

Alastair Rickard


Sunday, December 13, 2009

(No.68) Feeling melancholy in Madeira & Malaga

Over generations the Spanish in the city of Malaga on the Costa del Sol and in the Canary Islands as well as the Portuguese on the island of Madeira have done a poor job of preserving the physical evidence of centuries of activity. Today the appearance is too often akin to a North Las Vegas suburb (where a structure built in 1950 -- if it still stood -- would be like somethng from the Middle Ages) than to cities whose origins are hundreds of years ago.

Having recently visited Malaga on the Spanish mainland, Funchal on Madeira and Santa Cruz on Tenerife, each being port cities backing against mountains, it strikes one like a swat across the face that -- driven by mindless commercialism -- high rise apartments and condos aimed at foreign tourists (especially punters from the United Kingdom) have spoiled not only the look but the scale of these cities. It has happened as surely as Hermann Goering's Luftwaffe bombers set the stage (by devastating much of London) for the post-war construction of more ugly modern buildings than can be found even in the Greater Toronto Area.

In Malaga the magnificent cathedral built in two phases in the 16th and 17th centuries is hemmed in on all sides by high rise residential buildings of uncommon ugliness, structures that even the most ardent opponents of Prince Charles' traditional architectural preferences would be hard pressed to describe as anything more than pedestrian.

Any reference to Malaga and the Costa del Sol reminds me of the 1930s American "public enemy"gangster Alvin Karpis (actually a Canadian born in Montreal) who ended up settling in Malaga in 1973. He lived modestly there on the money he made from his autobiography Public Enemy Number One (1971) written following his deportation to Canada in 1969. Karpis had been refused parole from his U.S. imprisonment so long as FBI boss J. Edgar Hoover reigned supreme. Hoover, who cemented his public reputation as a crime buster by saying he had personally captured Karpis (he didn't), steadfastly opposed Karpis' release from prison. Karpis remained incarcerated for 33 years (1936-1969) until three years before the cross-dressing Hoover died, having donned his pink chiffon dress for the last time. Karpis was finally able to get parole.

Unfortunately for the preservation of historic Malaga, Alvin Karpis' preference for the Costa del Sol (he died there in 1979 under suspicious circumstances) came to be shared by thousands of Europeans whose desire to visit or dwell on this part of Spain's Mediterranean coast have made Malaga into a cheek by jowl sort of place.

The Portuguese settled the Atlantic island of Madeira in the 15th century. In Funchal, Madeira's main city, the houses and commercial buildings are scattered higglety pigglety, many with sideyards of dwarf banana plants. Of Madeira's history and heritage too little remains as modern hotels are jammed along Funchal's seafront like hockey players elbowing each other in the corners. Indeed not that long ago the historic building where Hapsburg Empress 'SiSi' of Austria stayed regularly was pulled down to make way for a singularly unimpressive hotel. Indeed in the travels Pat and I have undertaken over the years I cannot recall seeing a less appealing stretch of jammed together hotels this side of a U.S interstate highway interchange.

The fact that Reid's Palace Hotel (opened in 1891) has managed to survive is the exception which proves the rule. Like 'arme blanche' horsed cavalry in late 19th century European armies, it holds out the lingering possibility of class in what would otherwise be an unseemly brawl. But the survival of Reid's Palace is too little to redeem the whole any more than Madeiran references today to Winston Churchill's occasional visits to paint a fishing village can endow the island with cultural awareness.

The British connection to this Portuguese island, beginning with the 17th century wine trade, is a long one but when post-WWII tourism on the island was started by the British in 1949 it began an era that has transformed Madeira. These days the seasons can be marked by when the French come to the island, when the Germans and then Scandinavians visit; the British apparently don't comparmentalize -- they come to Madeira year round.

In Santa Cruz on Tenerife, the major island of the Canary Islands, the millions of annual visitors can look (up) to the national park, to Mount Teide with its height of 12,000 feet and volcanic crater and terrain surrounding its base -- truly breath-taking views.

But look down and around and see what? An imitation of the Sydney Opera House or Santa Cruz's 'twin towers' that, according to one local, nobody since 9/11 wants to live in. But it would be unfair to ignore the preservation of the small El Tigre fortification: it houses the cannon that supposedly separated Horatio Nelson from his arm in 1797 as he led an attack on it eight years before his death at Trafalgar. I suppose one must give it some credit for representing what little remains of the city which fell to the Spanish hundreds of years ago.

I am prepared to be regarded as churlish for offering my conclusion that the city's lap dancers, spit-and-sawdust bars and discos are not, strange as it may seem, sufficient to offset what has been lost from this historic place.

And yet, so impressive is the vista from the top of another mountainous national park in another of the Canary Islands, La Palma, it is almost enough by itself to make up in a traveller's experience of the Canaries for what has been depreciated elsewhere.

Alastair Rickard


Monday, December 7, 2009

(No.67) Freud, Buddy Holly & 1897 Vienna

Selden Edwards, after graduating from Princeton University, was studying at Stanford in California in the early 1970s when he read Wittgenstein's Vienna by Allan Janik and Stephen Toulmin. As a result he gradually became fascinated by the Austrian city of Vienna as it was during the late 19th and early 20th centuries. He arbitrarily chose 1897 as a year on which to focus. He then wrote ca 1974 the first rough version of what became his novel The Little Book (although it is not a 'little' novel).

Edwards became a teacher but continued to work on his novel off and on until it was published more than 30 years later in 2007. It is his first novel and not only did it surmount the usual obstacles in the way of publication of first novels it made the New York Times fiction list of bestsellers and is now out in trade paperback format (Plume, 2009).

One of my interests is turn-of-the century Vienna, the cultural and political centre of the Hapsburg Monarchy's Austro-Hungarian Empire, the disappearance of which was one of the outcomes of World War I and the agreements made at Versailles.

My interest in the Austro-Hungarian Empire was piqued years ago when I researched a curious but little known episode involving an heir to the Hapsburg throne, Archduke Maximilian, who was sponsored by French Emperor Napoleon III and Mexican monarchists to become an emperor. He sat on the Mexican throne briefly as it turned out (1864-67) during what is called the Second Mexican Empire. This European involvement in Mexico was attempted while the U.S. govt was absorbed by its own civil war in the 1860s and unable to to take effective action to prevent it at the time.

As a footnote -- one of the great engagements in the history of the French Foreign Legion and celebrated by Legionnaires to this day ( the Legion was the backbone of the military force supporting this European intervention) was fought in Mexico. But that is another story.

It is difficult to exaggerate the cultural vitality of Vienna during the period ca 1897, even as most of those involved remained largely immune to feelings of pending doom. In Vienna at this time one might encounter, among many luminaries: Sigmund Freud, the father of modern psychoanalysis; Ludwig Wittgenstein, perhaps the 20th centruy's greatest philosopher; the composer/conductor Gustav Mahler; the artists Gustav Klimt and Egon Schiele and other painters belonging to the Vienna 'secessionist' school; the Empress Elizabeth (known as SiSi); and even -- living not far from Vienna -- Adolph Hitler age 10.

It is this milieu which is at the heart of The Little Book, a novel which involves time travel by three generations of a Boston family back to 1897 Vienna.

The plot is multi-layered. Key plot points and reader enjoyment of this novel will be easily spoiled by any reviewer who is uncaring. It is sufficient to say here that members of the three generations of the Boston family, the Burdens, range beyond Vienna and encounter the likes of Mark Twain, Winston Churchill and Buddy Holly.

The plot of The Little Book involves war, mystery, romance and the murder of both fictional and historical characters. Several of the novel's reviewers have predicted that The Little Book will become a classic. While Selden Edwards seems to me unlikely to wander the foothills of immortality in the company of, say, Charles Dickens or Marcel Proust, his first belated novel may indeed stand the test of time by attracting future generations of readers.

There is more than enough remaining today of fin-de-siecle Vienna to make the city, and what has been inherited from the Hapsburgs and preserved, a wonderful place to visit. Selden Edwards' The Little Book evokes, in an absorbing novel combining adventure with ideas, why Vienna was and still is a fascinating place.


A footnote: several very enjoyable mystery novels by the English psychologist Frank Tallis are also set in Vienna during this pre-W.W.I era [see my review in column No. 54 at].

Alastair Rickard


Wednesday, December 2, 2009

(No.66) Wankers, wingnuts & Fox News


The 5-part series "Sun Life: Comments on its performance" appeared in in column numbers 50, 52, 60, 61 & 62.

The 2 part series "Insurance people email" appeared in column numbers 63 & 64.

The column "Some email responses to my U.S. health care comments" appeared as No. 65.

These columns as well as all my other columns posted this year can be read by going to the links in the left hand margin of any column.


Canadians generally do not have the same access to U.S. cable news broadcaster Fox News as they do to CBC Newsworld (recently renamed News Network) or to Fox's American cable news rival CNN. I was familiar with the particular right wing prism through which Fox broadcasts must pass before reaching American viewers but my familiarity recently became an overdose. This happened in the mid-Atlantic when reception of television channels by the ship on which Pat and I were passengers was lost, channels including the BBC, Euronews and CNN. The Fox News signal was substituted.

Dissatisfaction is a word that does not adequately describe my feelings when I found myself with Fox as my ONLY source of news (print or broadcast). But it did provide me with the opportunity to focus as never before on its bias and inadequacies.

Some Canadians will know that Fox News (owned by media baron Rupert Murdoch) was the leading media voice and defender of the Bush administration and is now the self-appointed 'leader of the opposition' to the Obama administration. Listen to Fox News and you will hear, for example, that the Obama administration is "socialist", that President Obama is a "racist" and you will learn about the American citizen "tea party" protests (Fox has promoted, supported and lavished coverage upon them) against all manner of federal government spending to deal with recession, unemployment and health care problems.

The clear message that the viewer gets from watching Fox News is that President Obama and the Democratic Party's majorities in both houses of Congress are actually a threat to American freedoms. Imagine such 'threats' in a country in which after 8 years led by Fox's favourite, President George Bush, 45 million people have no health insurance (but Fox talking heads routinely attack proposals for health insurance reform); the U.S. Dept. of Agriculture reports that in 2008 there were 49 million Americans living in households that lacked consistent access to food; and well before the latest recession and financial crisis began a U.S. Census Bureau survey reported that more than 1 in 5 Americans needed help from family, friends or outsiders to pay for basic needs.

After 8 years under a Republican administration (as well as years of Republican congressional majorities) such facts fail to connect in any realistic way with the core values that Fox embraces and trumpets today: less govt. spending, still lower taxes (on the wealthy) and even less government regulation. Indeed, listening recently to a Fox program 'host' construct a verbal plinth on which former Republican vice-presidential nominee Sarah Palin could pose as a superior political being is almost enough to convince me of the existence of a parallel universe.

It was of course no accident that when the former Alaska governor hit the road recently to promote her bestselling book Going Rogue the focus of her national television promotion (other than Oprah) was Fox News where she has been an object of near religious adoration since John McCain chose her as his 2008 running mate. Palin's Fox interviews could not really be called interviews in any journalistic sense since they were puffball affairs more closely resembling 'infomercials' not just for her book but for her as a political celebrity and (Fox people apparently hope) the 2012 Republican presidential nominee.

The Fox News slogan of " fair and balanced" may be one of the most inappropriate invoked since British Prime Minister Neville Chamberlain's declaration on his return from Munich of "peace in our time". Fox's defence for their pronounced right-of-centre slant on most political issues of substance on which they report and comment is that Fox commentators offer their own conservative views but Fox news broadcasts per se are fair and balanced. This is codswallop.

Just one recent example: a mid-Nov. recommendation of a change in American guidelines for mammography testing from an independent govt.-appointed panel of medical specialists is spun by Fox News into being a precursor of health care "rationing" under President Obama's "public option" health care reform -- if, God forbid in Fox's view, it were to be implemented.

But Canadians should not for a second underestimate the malign influence exerted by Fox on a segment of the American electorate and on much of the Republican Party, especially by the ranting of right wing wankers and wingnuts who regularly appear on its news programs.

Why does Fox News matter much to the U.S. body politic? Because the Fox influence in the U.S. is real indeed. 71% of Americans say (July 2009) that their "main source" for national and international news is television and specifically 40% cite cable news channels (of which Fox News is one of the two leaders along with CNN) as their main source.

The negative Fox influence on public affairs extends beyond encouraging the holding of puerile political views by voters many of whom, if they rely on Fox news to provide their information, are ill-equipped to separate wheat from chaff. It also instills in too many Americans the belief that Fox news is their best resource in understanding public issues and what is happening around them. Among the implications of this: among all national sources of news a study (2007) of American knowledge by news source conducted by Pew Research found that the the viewers with the lowest level of knowledge of national and international affairs were those who relied on Fox news as their "main source".

What is perhaps most striking to me about Fox's slanted broadcasts is that so much of the opinion expressed is manifestly false, even silly and yet Fox News is today close to being the leading American cable news network. It already has an unhealthy influence in particular over the Republican Party and many of its core voters: 63% of Americans surveyed (July 2009) who said Fox was their "main source" of news were Republicans and Republican-leaning independents.

Finally, an insurance industry footnote to my mid-Atlantic exposure to Fox:

as a former Sun Life executive I wonder, in passing, why Sun Life Financial in the US -- particularly at a time when it is a financial drain on the overall operations of the company -- is paying Fox News to broadcast pathetically unfunny television commercials featuring KC and the Sunshine Band.

Based on my understanding of the company line I had thought Sun-branded individual insurance sales activity in the U.S. (after it had dumped its own career agency system in that country) was supposed to target a PPGA-accessed upscale market. Is that what those who direct Sun Life's U.S. operation think Fox News delivers?

Oh dear.

Alastair Rickard


Wednesday, November 25, 2009

(No.65) Some email responses to my US health care comments

In columns on (see Nos. 51 & 55) I offered views from a Canadian's perspective on the US health care reform debate. My perspective on this subject was also published as an op-ed article in the Toronto Star (Sept. 9, 2009 ).

I have selected and presented below (with writers' names omitted) a few comments pro and con from several of the emails I received from both Americans and Canadians.

1. You promote a false agenda

from an American in California:

I have many Canadian friends, traveled Canada for many years.

SO: Why are so many Canadians coming to the USA for health care they cannot get in Canada? They pay out of their own pockets for health care?

Canada has very long waiting lists. Why would you distort the facts other than to promote a false agenda for what purpose?????

2. An accurate and pertinent piece

from an American in Florida:

This group insurance professional thanks you for an accurate and pertinent piece on both our system and the Canadian system of health care.

Now I know why I spent my honeymoon touring your great nation and a few more trips over the years.

"It is a tragic mix-up when the United States spends $500,000 for every enemy soldier killed and only $53 annually on the victims of poverty." Martin Luther King, Jr.

3. You're confused

from an American (state not specified):

hi .. nice piece in the Star. So you're an insurance guy, leaves the industry and finds religion? Awesome.

You're confused on why Americans don't want change but on Canadians' resistance to change [of their single payer system] you think it's just about right..... Which is it Al, change or status quo?

You dredge out the "47 million" uninsured quote .. unchecked or scrutinized.

FACT CHECK: uninsured who are not U.S. citizens -- 45% of the 47 million. With reasonable adjustments there are in fact less than 10 million individuals who are so-called "chronically uninsured" ....

So let's grant that there are between 8 to 10 million Americans (total population 307 million) .... 97% who want insurance have it and are happy. Sounds like Canada.

4. America is a Me country

from an American (state unspecified):

I am an American who fully applauds your commentaries concerning the health care system in the United States. I also understand your amazement at the apparent inability of many Americans to digest facts! So allow me to offer you a tip ... America is a "ME" country.

It is all about "ME". Therefore everything that does not coincide with a "ME" attitude is met with the most vituperative vitriolic consternation. All ideas must be sold and postured in the context of why it is good for "ME". Concepts such as "for the good of humanity", "for the good of society" cannot be grasped because the impacted group extends beyond "ME". ....

So, anyone who supports it [health care reform] is NOT a patriot, a good American or a good Christian because, of course, "ME" is a patriotic American Christian. ....

Please keep up the good work ... for some of us it is not all about "ME".

5. Critically Ill Canadians

from an American emailing from an address in Canada:

I read your excellent article in the Toronto Star on how much better Canadian health care is than the American health care system. But I had to write to you because an American friend living in northern New York state tells me that "tons of critically ill Canadian pateints come to New York state and America to get urgently needed medical tratment that they cannot get in Canada."

Can you tell me what you make of that statement? Is this true?

6. Well done

from a Canadian:

This is excellent information, extremely well written and for the first time that I have seen provides some balance in explaining the various reasons so many Americans oppose the health insurance reform proposals.

Well done!!

7. To be Canadian

from a Canadian:

I read your op-ed in the Toronto Star.

I often work in the U.S. and for the first time someone summed up what I felt like to be Canadian.


Alastair Rickard


Thursday, November 19, 2009

(No.64) MORE insurance people email

This is a continuation of the most recent column (No.63) .

Since the inception of at the end of 2008 a number of the columns have involved my comments on aspects of the insurance business, Sun Life in particular -- the company with which I was associated until this year. It should come as no surprise that I have received emails in response from people in or associated with the business. Some are known to me, some are not.

I have reproduced in this column (below) excerpts from selected emails. I have withheld the identity of those whose views I have presented but I have preceded each with a brief reference to their role or industry connection.


[ continued from No. 63 ]

13. Crapspeak

from a former member of the Sun Life distribution system:

Your 'crapspeak' article [No.10 -- "Crapspeak in business"] was great and it really got me thinking and angry. I think the problem is much more than merely dreaming up euphemisms. It's that it's a veiled attempt to embed one's own values in another's world view, to moralize and to proselytize, and that's what offends me most.

"Legacy planning" indeed. ... And while I think that "holistic planning" is vitally important, mere cross-selling is not holistic -- the essence of the holistic approach is to weave together for the individual's benefit, based on the individual's needs, a comprehensive and workable plan. Calling cross-selling "holistic" is fraudulent unless it also looks at an individual's life needs in a holistic fashion. ...

Long may you blog!

14. Reactive Sun Life

from a Sun Life agent:

I agree with your comments, especially on staff reduction [in Sun Life's Canadian operation ]. I thought we acted 'reactive' instead of 'proactive'. However not my call.

We focus on so many products to bring in income [to Sun], like a cash register.

Are we selling for need is my concern.

15. Sad commentary

from a former insurance executive:

[Ref. "Part 3 - Sun Life: Comments on its performance"]

This is a very sad commentary on Sun Life's continuing strategy in the Canadian market place ... continue to reduce the investment (in relative terms) in the career system in favor of direct sales and inflating the actual results of the direct sales area.

16. New agents

from an MGA:

[Ref. No. 60 - "Pt 3 - Sun Life: Comments on its performance"]

On the new advisor front I agree it's a sticky mess. It's messy because it's too expensive to train and subsidize and it's messy because the compensation is built upside down with not enough trailers left to make it attractive to service.

But it is solvable if older advisors become more involved in selling their whole practice or at least pieces of the practice. I'd hate to be a client today where the advisor doesn't care to service and the insurance carrier only sends out bills and stuffers. To this end I'm exploring a new business idea. ...

It's sort of like capitalism: it's not very good but it's better than the alternatives.

17. The betrayal of mutuals

from an American of long experience with the life insurance business:

[Ref. No. 57 - " Me and mutuality: for whom the bell tolled"]

Well said, Al. As always!!!

When I think of the betrayal by executives and managers of so many fine mutuals, I'm reminded of the scene in "A Man For All Seasons" when Sir Thomas More is convicted on perjured testimony by Richard Rich, a man who formerly had sought More's support and had risen to high rank through treachery. Before leaving the courtroom More lifts up a new chain of office (Attorney General for Wales) dangling from around his betrayer's neck and says "Why Richard, it profits a man nothing to give up his soul for the whole world .. Ahh, but for Wales."

Perhaps there were some justified demutualizations but most were driven by sheer greed.

18. A pang of sadness

from a Sun Life agent:

[Ref. No.57 - "Me & mutuality: For whom the bell tolled"]

I read this last week. Felt a pang of sadness promoted by the last few paragraphs. I realize that the 'milk has been spilt'. Still, as you say, there is more than financial results. I suspect this is what drives us old "Mutualists" crazy.

The pride I feel today is reflected in what happens to my client. I like taking care of them. ...

I enjoy your ramblings. Keep them up as I like it when you force me to think something other than the corporate line.

19. Never dared voice

from an industry executive:

Great article [ref No.29 - "Lottery tickets from life insurance companies"].

These reflect my sentiments which I never dared to voice as I thought I might be missing something .... I am thoroughly enjoying your articles.

20. Mismanagement to the brink of failure

from a former member of the Clarica/Sun career agency system:

Just wanted to comment on how much I have enjoyed reading this series [ "Sun Life: comments on its performance"].

Having been part of the [Mutual/Clarica] organization when the field force was a valued asset and actually had investments made into its success and sustainability, it is sad to see it being mismanaged to the brink of failure.

I applaud you for your frank analysis and my hope is that it has an impact on the outcome.

21. Sun recognizing mistakes?

from an American involved with the insurance business in the U.S.:

[Ref. No. 62 -- "Sun Life: a few conclusions about its performance"]

The chances of [Sun Life ] management recognizing their mistake and doing something is somewhere between 0 and 0.


Alastair Rickard


Thursday, November 12, 2009

(No.63) Insurance people email

Since the inception of at the end of 2008 a number of the columns have involved my comments on aspects of the insurance business, Sun Life in particular -- the company with which I was associated until this year. It should come as no surprise that I have received emails in response from people in or associated with the business. Some are known to me, some are not.

I have reproduced in this column (below) excerpts from selected emails. I have withheld the identity of those whose views I have presented but for the purpose of context I have preceded each with a brief reference to his or her role or industry connection.


1. Right on the money with Sun Life

from a Sun Life agent:

First of all I'd like to say "I miss you" .....

[name deleted] has passed on your [recent] columns [on Sun Life] to me. I found them (like always) right on the money and enlightening that someone really knows what is happening in the Sun Life career sales force world.

It seems as soon as we have a 'pro-advisor' head office staff person they disappear quicker than you can imagine....

2. The industry keeps limping along

from an MGA:

Great piece [No. 49 "Executive ignorance, arrogance & self-interest"] but somehow this industry keeps limping along.

My feeling is that an MGA will figure it out and find a way to commoditize the insurance companies and spin business to the highest bidder. The MGA issue will be to recruit, train and retain agents.

3. Humour in insurance

from a member of the media:

Thanks for another great edition Alastair.

If anyone can bring humour to insurance, you certainly can.

4. Informative screeds

from a former industry executive:

Your screeds are informative but I read them partly as entertainment. You write as you talk and I hear your voice as I read.

I did have to look up the word 'screed' to remind me of the meaning.

I have often pointed out to my technical associates that the big difference between shopping for life insurance and a commodity is: people intend to buy the commodity; they hope to find an advisor to tell them they need no more life insurance.

5. Your biggest fans

from a member of Sun Life's career agency field management:

Here I sit having just read your No.29 ["Lottery tickets from life insurance companies] aloud to [name withheld] who is one of your biggest fans. This is becoming a tradition .... Keep writing.

Of course I agree totally with your comments ......

6. Fighting the good fight

from an industry executive:

Great overview and history lesson [ref. No.59, "Banks & insurance: like Wellington's horse"]. I only hope that this one gets forwarded wide and far in the network of senior life company executives.

Thanks for fighting the good fight on this one.

7. Disturbing reading

from a Sun Life career agent:

Just a note to say your No.29 "Lottery tickets from life insurance companies" and especially your No. 26 "Sun Life Downplaying Canadian operations" were well worth reading; disturbing to say the least.

Thanks for taking the time to blog.

8. A poignant message

from a member of Sun Life's field management:

... I took the time to read your column No. 25 [and] reminisced about the good old Al Rickard days ....

By the way No. 25 was another beautifully crafted message, particularly poignant to those of us who toil away in the CSF [i.e., the Sun Life career sales force].

9. Banks & insurance

from a securities analyst:

I agree completely with you about banks' potential in insurance [ref. No. 47 - "Sun Life & banks selling insurance"].

10. Manulife & irony

from another securities analyst:

[ref. No. 46 -- Manulife, Sun Life & shop-worn insights"] You realize of course that you just spent an entire email discussing Manulife -- ironic isn't it?

11. Witty & correct commentaries

from a member of Sun Life's career agency field management:

[Ref. column No. 56 - " In order to stab someone in the back ..."]

Love it!! Too true!! Many believe if you had not been so frank and truth spoken you would have been the CEO ... but alas you couldn't have slept at night or written such witty and correct non-partisan commentaries.

We actually prefer you the way you are!!!

12. Sun vs Manulife

from an MGA:

[ref. No. 60 - " Pt 3 - Sun Life: comments on its performance"]

Can't disagree with anything you said.

I had a meeting with [name withheld] a reasonable MGA owned and operated by old system managers. ... they said something very interesting and that is that Sun Life is taking over number 2 spot [among MGAs] from Manulife because the advisors would rather not deal with Manulife.

Maybe Sun Life's success has nothing to do with them and more to do with the competition.

[ to be continued in No.64 ]


Alastair Rickard


Friday, November 6, 2009

(No.62) Pt.5 - Sun Life: A few conclusions about its performance

This is the fifth in a series of columns commenting on the current performance of Sun Life's operation, particularly in Canada. Parts 1 & 2 appeared in column Nos. 50 & 52.

The third and fourth parts of the series (which is continued in No.62 below) appeared in Nos. 60 & 61.

Other columns about Sun Life and the life insurance business (as well as various non-business subjects) can be located by checking the monthly listing of columns going back to January of this year. This listing and access to each column appears beside each column.


Continued from No.61

The several factors involving problems in Sun Life's Canadian operation about which I have commented in the first 4 parts of this series are indicative; they are by no means intended to be seen as a comprehensive treatment of the subject.

I may well return to aspects of Sun's operation which work against the company achieving the level of insurance premium increase annually that it desires in profitable individual product sales in its Canadian operation. That operation has in turn been a key element contributing to the company's total profits world-wide since the acquisition of Mutual/Clarica.

The reality of insurance sales and distribution problems for Sun Life in Canada is unlikely to be meaningfully addressed so long as Sun's senior leadership, so many of whom are unburdened by experience in individual sales and agency matters or indeed by much real knowledge of how it actually works on the ground, continue to delude themselves that -- for example -- an inadequately resourced but core distribution asset central to their individual product distribution and sales success in this country can be expected year after year to produce more and more based on less and less. This delusion is likely to continue so long as Sun's senior leadership refuse to pay real attention to and act on the views and advice of those few executives still remaining in its Canadian operation who know better.

Sun's desire to acquire the Mutual/Clarica career agency distribution system was animated, as Sun CEO Donald Stewart explained to a national meeting I attended in Toronto of the members of the (then) Sun 'managed channel', by a recognition that Sun's distribution of individual insurance in Canada was producing declining sales and decreasing market share. He might have added, although he did not, that the profitability of the policies Sun was using to compete for Canadian individual business from its non-exclusive sources (i.e., all its sources at that time) was highly suspect and for some products non-existent.

In my view the roots of Sun's sensible and understandable interest in acquiring the Mutual/Clarica career agency system can be found in the process beginning in the 1990s by which, as the result of a series of poor corporate decisions, Sun had pissed away its own proprietary career agency system in Canada.

It is looking more and more as if Sun is at risk of repeating that process: same company, same script, different career system.

However it needs to be emphasized that there is precious little reason for other life insurance companies in Canada to view Sun's stewardship of the Mutual/Clarica career system (as I have described it in this series and elsewhere) and feel the least bit smug or self-satisfied. If there is one area of the life insurance business which over the past 20-30 years has been consistently mismanaged by most of the Canadian industry it is individual product distribution.

So parasitic have most life insurance companies become in their efforts to tap a diminishing core distribution resource -- i.e., experienced, active, prospecting, sellers of life insurance -- to even the maintenance of which (never mind expansion) they contribute little or nothing of significance, that one is surprised the industry staggers on as well as it does cobbling together individual life insurance sales (profitably or not) however and wherever they can. As I observed in a speech some years ago (with only a hint at hyperbole) many companies would attach their life insurance applications to the backs of stray dogs if they could figure out how to get them to return.

Sun Life had the wit to acquire as part of its Clarica purchase what it no longer itself had in Canada -- effective, reliable, profitable, predictable, proprietary agency distribution with the capacity to go into the market-place in a major way and sell life insurance that can actually be priced so that, if the company chooses, it can make a decent profit. That assumes of course that it values real product profitability at least as much as it does trying to impress the 'financial services paparazzi' with top line sales growth as often as not itself based on over-compensated and under-priced products aimed at attracting brokerage business.

Sun still has in place in Canada the essential elements of a successful career agency distribution system. This is an asset which few companies could or would attempt to create these days for reasons of cost, degree of difficulty and executive incapacity in career agency management.

It remains to be seen whether at the end of the day the potential of Sun Life's career system will be enhanced or dissipated.

Alastair Rickard


Monday, November 2, 2009

(No.61) Pt.4 - Sun Life: Comments on its performance

This is the fourth in a series of columns commenting on the current performance of Sun Life's operation, particularly in Canada. Parts 1 & 2 in this series appeared in column Nos. 50 & 52.

The third part of the series (which is continued in No.61 below) appeared in No.60.

Other columns about Sun Life (as well as various non-business subjects) can be located by checking the monthly listing of columns going back to January of this year. This listing and access to each column appears beside each column.


Continued from No.60

4. Another factor in Sun Canada's failing to achieve the desired level of increase in new individual insurance premium is the Sun-orchestrated and promoted shift in emphasis and incentive for the members of its career agency sales force involving asset products (particularly CI mutual funds) and life insurance. In a nutshell: Sun has made it more attractive for many of its life insurance career agents in terms of compensation to sell more asset products and this has had the effect of reducing their efforts directed to new life sales.

Sun disturbed the relationship in compensation and other sales incentives between the hard sale (life insurance) and the much easier sale (mutual funds), i.e., what was a better balance if the company wanted to be both realistic and serious about utilizing its proprietary, prospecting life insurance distribution system to focus on selling its core product in the fashion that Sun's life insurance sales goals suggest it still wants. If anything needed to be increased it was the level of life insurance commissions; in fact there have been reductions.

Here is an example of the sort of current compensation reality that can influence the choices that established Sun agents can and do make about where more (or less) of their sales time and effort are best allocated as between easier sales and harder sales:

Sun Life career agent, level 6 in production, with the company 5 years -- a $3000 annual premium on a Sun Universal Life sale will generate first year commission of approximately $1500 including all business development commissions and the like. Compare this to a $100,000 asset product sale (e.g., from a mutual fund RRSP rollover from another company) which would generate a commission of $3300.

If there are Sun Life executives (and there are) who believe that this sort of comparison does not influence some agents and does not contribute to the evident subtraction from some agents' time and effort spent making new life sales, then they ought at the very least to be exiled to one of Sun's corporate islands for downgraded executives where their ignorance cannot continue to endanger greater sales success by the career system.

OR Sun could increase life insurance sales compensation and incentives.

OR Sun's senior management could indicate, especially to their career agents, that they have forsaken their foolish notion that in this respect the company can have its cake and eat it too.

Certainly the Sun distribution system has experienced greater emphasis than formerly on asset product sales by its career life insurance agents, an emphasis dictated from the top. This benefited Sun because of its 1/3 ownership of CI mutual funds although, if anything, it has had a negative overall effect on the Sun career agency system.

It certainly enriched CI which was given preferred access to the Sun career agents even though CI was not required to pay an appropriate surcharge or a special 'fee' for it. There should have been a special CI contribution made to the ongoing support and enhancement of the distribution system on which CI came to depend to a significant extent. In one year that I recall perhaps 2/3 of CI's mutual fund sales when viewed on a net basis were generated by the Sun career system; at least a 1/3 share on a net basis has not been unusual.

In any case Sun has now sold its interest in CI to Scotiabank and the continuation of CI's preferred access to Sun's proprietary distribution is not just unwise, it is counter-productive unless CI is prepared to pony up the sort of financial support for the Sun system on which Sun senior management ought to have insisted long since.

While mutual funds are an easier sale than life insurance the sales of the mutual fund industry's products are also largely about effective distribution and Sun should, however belatedly, ask a fat fee from ANY mutual fund operator wanting to gain any sort of preferred access to one of Canada's largest, proprietary, prospecting and exclusive financial services distribution systems. Why Sun has dragged its feet when there are other operators which would welcome the sort of preferred access to the Sun career system CI has enjoyed is a matter for speculation among those most affected.

5. Sun's senior management continue to set life insurance sales goals that ignore certain distribution and marketplace realities including handicaps they have imposed on their own distribution system. These annual sales goals are laid down as if their creators are oblivious to the fact that Sun itself has tilted its own principal distribution system in Canada for individual products away from the harder sale -- an easier thing to do with career agents if they are established in the business and have a substantial block of in force level commission business.

The Sun career agents are operating under essentially the same lifetime commission system which Andre Anderson wisely convinced Mutual Life to pioneer and which was implemented in mid-1989. Today I fear that too few in Sun's senior management understand that the lifetime level commission system is the glue holding the Sun Canadian career agency system together in the face of increasing challenges (many the fault of Sun), in spite of tampering with the system by Sun and the evident lack of interest by the company in strengthening that compensation system -- perhaps in its maintenance at all.

Indeed so much has Sun Canada's individual insurance strategy become the captive of 'big case-itis', the chasing of new life business top line growth from that marketplace rugby scrum called brokerage (the longtime source for so many companies of low or no profit business) that it has largely ignored the new life insurance product needs of its career agency system. For example: the lack of a new mid-market, permanent Sun life insurance product with appropriate guarantees and cash values has been another factor in the cannibalizing of risk sales by low margin asset/wealth product sales which I have described.

[ To be continued in Part 5 of this series in the next column -- No.62].

Alastair Rickard


Tuesday, October 27, 2009

(No.60) Pt.3 - Sun Life: Comments on its performance

This is the third in a series of columns this year commenting on the current performance of Sun Life's operation, particularly in Canada. Parts 1 and 2 appeared in column nos. 50 & 52.

Other columns about Sun Life (as well as many other non-business subjects) can be located by checking the monthly listing going back to January of this year. This listing and access to each column appears beside each column.


In terms of individual insurance sales Sun Life's Canadian career agency operation (which accounts for the bulk of its individual product sales) will be lucky to hit 95% of their 2009 plan sales objectives. Indeed by the end of December a real stretch may be needed to hit 90% of plan or even to equal 2008 sales.

There are a variety of factors relevant to this situation. Here are a few:

1. There was a cutback for 2009 in an already reduced and inadequate operating budget, especially as it relates to distribution. The 2010 Sun budget process now underway involving this area of operations requires a flat year-over-year profile. This means of course, given the effect of inflation and rising operating costs, that 2010 will see yet another in a series of budget reductions mandated by % or de facto by inflation.

2. Not only is the recruiting of new people into the Sun career agency system lagging (again), there continue to be insufficient recruits of the sort best suited to success in desirable market segments. Why? One reason is a level of financing for new agents that is inadequate for attracting people already experienced in careers appropriate to success in life insurance selling.

Why? Years of budget reductions so that today's level of supported income for new agents while becoming established in a very difficult role is insufficient to attract enough of the likeliest recruits and is low compared to what it once was in the Mutual Life career system of which today's Sun system is the continuation. At one point the Mutual Life career system achieved an industry leading 4 year agent retention rate of 40%; today's Mutual/Clarica/Sun career system would excel if it could manage to stick at 25%. It should be noted however that the Sun retention rate is still superior to industry averages.

3. In 2009 Sun Canada is devoting several million dollars of scarce operational budget better spent supporting the enhancement of Sun agency distribution to the cause of trying to get 'direct' insurance sales -- and at a time when agency distribution budgets are severely squeezed. It is a reflection of the triumph of hope over experience.

Like so many life company executives inexperienced in the reality of how a company can go about getting -- in quantity -- individual insurance sales, Sun's Canadian operation senior leadership are chasing a fantasy, i.e., the one that purports to offer the prospect of significant direct non-agent sales as the silver bullet to greater and easier sales success of a client resistant product. This is hardly new.

One example: Mutual Life/Clarica, with the best career system in the business, dropped $10+ million pursuing a fantasy not all that long before Sun took control of the demutualized company. The objective was to show the potential of direct sales, to show that lots of people would initiate the purchase of an insurance product of some substance by going online (i.e., a product to be distinguished from, say, accidental death insurance -- a type of life insurance much beloved by direct marketers but coverage of no value to the buyer except as a form of insurance lottery ticket promoted by life insurance companies for purchase by the foolish and the gullible).

The real sales results from this online effort were laughably low, a fact camouflaged by requiring agents in certain agent-involved sales to use a specific online process. The reality of only a few policies having been purchased as the result of buyer online initiative was of course never highlighted.

Online product offerings included, for example, a mutual fund. If purchases by the company's own people were excluded, external buyer-initiated purchases were few. With a 4 benefit critical illness insurance policy "only available online" notionally the clients who bought were applying directly for this CII plan. The reality was that actual purchases online were largely assisted by agents who were required by the company to use the online process to make the sale of this product. Best estimate: fewer than 100 genuine buyer-initiated, non-agent-involved, online sales.

This expensive non-result, one that had been predicted by some, was like the project itself -- quietly put aside. Of course there is usually adequate cover available in such situations for those executives who wish to create the appearance of significant, non-agent-involved, direct sales success where it does not exist.

Concerning Sun's current 'direct' sales initiative one can read the words of Sun's Canadian president (August 6) that "in direct distribution, sales continued to exceed expectations" in the second quarter of 2009. The expectations must have been modest indeed even with the "launch of a revised website for the online sale of Personal Health Insurance". Although the latter is the type of individual insurance product most likely to be the beneficiary of buyer initiative, Sun agents are still the ones moving the bulk of what Sun sells in PHI policies.

"Exceeding expectations" is always useful phrasing, vague enough to be reminiscent of the progress of other executive 'visions' to which I have borne witness during my insurance career. The industry reality is that the share of new premium generated by genuine direct individual policy sales initiated by the consumer without agent involvement is minor relative to the life sales generated by active agency systems in all their various forms.

How then is it possible to support claims of 'direct sales' success by agency companies not occupying that direct distribution marketing niche (whether by choice or out of necessity)? One method is by classifying and counting certain kinds of transactions as part of and the result of a direct buyer purchase -- even when they involve counting apples with oranges. Such direct sales numbers can be easily enhanced by counting as 'direct sales' transactions like pension rollovers, group conversions, agent online applications and the like.

For example: conversions of group life insurance coverage held through employment by exiting employees exercising their conversion rights to individual coverage, employees being directed to or contacted by Sun call centre people who refuse, even when asked to refer the caller to an agent for advice and service, to do so.

This sort of thing is not only a source of dissatisfaction among many Sun career agents, it is another example of the company trying to tilt the table in favour of creating apparent success with 'direct' sales. Agents know that the individual policy(s) available on most group conversions are rarely comparable to the policy choices an agent can offer to the departing group plan member. The fact is that if a departing employee is insurable at standard rates, it's a safe bet that a Sun career agent can find a better individual insurance option than what is available under the group conversion right.

[ To be continued in Part 4 of this series. It will appear in the next column (No.61) of]

Alastair Rickard


Monday, October 19, 2009

(No.59) Banks & insurance: like Wellington's horse

Canadian banks received a letter from federal Finance Minister Jim Flaherty the other day in response to which they expressed shock and surprise -- or pretended to do so. I say pretended because, in spite of the inbred arrogance and ignorance of the big banks in Canada, it is hard to believe that they were really surprised by the minister's direction to stop bank websites from hustling insurance (as distinct from the websites of the banks' insurance subsidiaries).

In June this year I took note (see, No.33) of a Globe and Mail report (June 10) that I characterized as having made a mountain out of a molehill by proclaiming that " banks have notched a rare victory in their fight with Ottawa over selling insurance". The article then went way over the top. It declared that a decision by OSFI, the federal regulator -- one refusing a request for action from insurance brokers -- not to prohibit bank websites from promoting insurance meant, expressed in an absolutely orgastic bout of hyperbole, that "the barriers the federal government has long maintained around bank sales of insurance could be crumbling".

I described this interpretation by the Globe as "breathless credulity" and emphasized that their story had ignored "a key reality about any expansion of bank retailing of insurance beyond the present permitted types: any decision to expand significant bank retailing activity will be a political decision, not one made by Ottawa bureaucrats; any such change is one that remains not merely unsupported by the government but opposed by the government and the opposition parties".

Minister Flaherty himself should now have made this fact of life clear even to the banks and their expensive but poorly informed advisors (perhaps the same ones who advised the banks when they made the mistake of appealing their losing Alberta case challenging provincial insurance regulation to the Supreme Court of Canada). The minister accompanied his recent direction to them to shut down their website insurance activity with a clear statement that he was carrying through with a Conservative government commitment to insurance brokers.

The action itself and the comment were yet another illustration in a line stretching back 20 years of the political power of the insurance industry, a lobbying power based more and more in recent years on the work of agents and brokers (particularly on the p & c side) and even less and less on insurance companies -- for reasons that constitute another story.

In an Oct 9 Report on Business "analysis" of "How a scattered army of insurance brokers outmuscled the Big Five" the Globe did a reasonable job of citing relevant facts and factors but omitted to make a number of key points. For example:

1. The "insurance brokers" to whom the Globe's story were devoted and who were quite accurately depicted as being so effective this time around in reminding the government of their commitment to restrict bank involvement with insurance were property & casualty brokers, not those on the life side of the insurance business. Indeed the p & c insurance people took over the de facto lead some time ago in opposing the banks' long desired expansion of their existing role in insurance retailing.

2.Partly this is the result of the life insurance agents' own trade association, latterly called Advocis, declining in terms of strong leadership, membership size, finances and effectiveness since the days in the 1980s and early 1990s when it was the key player on the insurance side of political lobbying in Ottawa.

3. In part this latest episode's key insurance players were who they were because most life insurance agents and brokers know, based on both experience and instinct, that they are not significantly threatened competitively -- despite the illusions of various life company executives who keep discovering 'direct' life sales to be what they think will be some sort of silver bullet to greater sales success-- by buyers initiating the purchase of individual life insurance via bank websites ( although it is important to note that life agents are far from indifferent to the prospect of any expansion involving bank branch sale of individual life insurance) .

P & C brokers do feel threatened and for greater reason: they understand the marketplace reality that their insurance products, unlike life insurance, are ones most people accept they must have (auto insurance) or really need (fire insurance). It is a very different buy-sell equation from individual life insurance. Hence the leadership on this bank website issue
from the p & c side of the insurance business.

4. The fact that the banks were defeated on this issue by insurance sales people's lobbying is unsurprising as well as consistent with the history of their successive political losses in Ottawa since they began their fight going on two decades ago to get government to change the rules to permit an expansion of the permitted types of insurance that can be sold in bank branches where inevitable even if subtle bank-based pressure can be brought to bear on bank customers.

On this whole banks and insurance issue the big banks today remind me of nothing quite so much as the aphorism about the Duke of Wellington's horse at the end of the Napoleonic Wars: it had been everywhere, seen everything and learned nothing. The back benches of all the parties are occupied mainly or exclusively by MPs with no sympathy for the banks, an absence reinforced not only by the effective lobbying of insurance sales people (who have long been systemically active in constituency associations for all parties except the NDP) but also by the consistent absence of public sympathy and support for the big banks.

5. Finally, a note to financial journalists and analysts: in writing about the issue of banks and insurance note that any federal government could, anytime it wished to do so, expand bank branch retailing of insurance without the obstacle of going to Parliament for a legislative change. The ground could be altered tomorrow by a change to existing regulations using an order-in-council.

That is one reason why insurance people move forcefully and promptly when they see the banks trying once again to change any of the ground rules governing bank involvement with insurance.

[More of my comment on banks and insurance and relevant facts and cases can be read in a number of columns to be found on For example: Nos. 33,34,47 & 48].

Alastair Rickard


Wednesday, October 14, 2009

(No.58) Stumbling toward Steichen

As I stumbled and fell the last few steps in the Jeu de Paume gallery in Paris I cannot claim to have been distracted by thoughts of the Edward Steichen portraits Pat and I had come to see or about the 'degenerate' paintings the Nazis had put into bonfires outside the building but rather how much I must have looked at that moment like an extra in a Three Stooges movie. That thought is validated by the fact that the memory of seeing my pratfall can occasionally still convulse Pat with laughter -- although she certainly wasn't laughing at the time.

We had come to the north-west corner of the Tuileries gardens in Dec 2007 to view the renovated structure housing the Galerie Jeu de Paume as well as to attend the special exhibition of photographs by the American Edward Steichen presented under the heading: "Edward Steichen -- Lives in Photography". Steichen, actually born in Luxembourg in 1879, was a famous New York fashion and celebrity photographer of the 1920s and 1930s whose photographs appeared in Vanity Fair magazine. He died in 1973 and now seems to be undergoing a renaissance of interest in his work.

The Jeu de Paume, built in 1861, originally housed tennis courts during the time of Napoleon III. It was used by the Nazi occupiers of Paris during 1940-44 to store Jewish cultural property looted from its owners in France during the German occupation. Works by artists such as Picasso and Dali were indeed regarded as "degenerate art" by the Nazis and some pieces were burned.

After the war the building again served as a French art museum housing paintings by French impressionists. The Jeu de Paume was closed in 1986 when its collection was transferred to the magnificent D'Orsay Museum which occupies the grand space and structure of the former railway station. The Jeu de Paume was renovated and reopened in 1991 as a space for special exhibitions involving the history of photography among other things.

With Pat's reminders ringing in my ears I remembered to focus on avoiding a similar stumble when visiting a different Steichen exhibition currently in Toronto at the Art Gallery of Ontario: "Edward Steichen: In high fashion, the Conde Nast years, 1923-37". [It continues through Jan 3, 2010].

The exhibition is comprised of black and white photographs of fashion models (especially Steichen's favourite Marion Morehouse) as well as celebrities which appeared in Vanity fair and Vogue magazines, both Conde Nast publications.

It is interesting to see such finely executed pictures from an era now more than seven decades past -- for Steichen was a talented photographer: to see Noel Coward before the dissipation was evident and Marlene Dietrich pre-body suit and Joan Crawford when she had a natural beauty or Leslie Howard looking effete. Only some of what is displayed in Toronto overlaps the Paris exhibition in 2007 as I recall its subjects.

Another indication of how fashionable such events involving Steichen have become is another Toronto exhibition being held at the Royal Ontario Museum in Toronto: "Vanity Fair Portraits: Photographs 1913-2008". It features the work of Steichen but also of his contemporaries like Man Ray and Cecil Beaton and (latterly) Annie Liebowitz. This exhibition too will run until Jan 3, 2010.

Even if one is not consumed with a desire to see historic portrait photography from New York fashion magazines, the recently expanded galleries and permanent collections of both the AGO and the ROM make visits to both places rewarding.


In Victorian England in the late 1840s a small group of artists -- Dante Gabriel Rossetti, John Everett Millais and William Holman Hunt -- launched their Pre-Raphaelite rebellion against London's Royal Academy of Art. They opposed the Royal Academy's promotion of Raphael as the ideal artist, hence their self-description. Their subjects, taken from literature and poetry, dealt mostly with love and death and were painted in a realistic style.

John William Waterhouse (1849-1917), born just at the time of the launching of the Pre-Raphaelite rebellion, became a late Pre-Raphaelite. A special exhibition of Waterhouse's art has now been organized by the Royal Academy in London, the Groninger Museum in the Netherlands and the Montreal Museum of Fine Arts. This show is the largest retrospective (80 paintings) of Waterhouse's works ever mounted.

The exhibition, entitled "J.W. Waterhouse: Garden of Enchantment" is at the Montreal Museum of Fine Arts until Feb 7, 2010 for its only North American stop.

Waterhouse as an artist was, within a decade of his death, completely out of fashion where he remained for some decades. But today his paintings are even more popular than during the peak of his popularity. Indeed, without knowing the creator of them many people will be familiar with the much reproduced images created by Waterhouse (like his best known, the Lady of Shallot, four versions of which done by Waterhouse appear together for the first time in this exhibition).

The Waterhouse exhibition in Montreal is well worth a visit, all the more so given the fact that it is unlikely that there will be another like it in the foreseeable future anywhere in the world.

Alastair Rickard


Thursday, October 8, 2009

(No.57) Me & mutuality: for whom the bell tolled

Before joining the life insurance business I had several jobs and along the way earned three university degrees in history. The non-financial services experience was valuable to me as was the training in history although my graduate degrees made me an object of suspicion among some people in an industry still prone to regard such ivory tower achievement as indicative of one who was apt to have only a tenuous grip on what they regarded as 'the real world'.

My study of history has, among other advantages, helped me gain an understanding of the importance of learning from the past as well as informing my understanding of the present and occasionally some possible features of the future. However, learning from the past is not something I observed as being all that common a trait among life insurance executives or, come to that, executives in other pillars of financial services.

In terms of my education in the reality of the life insurance business, at root a business dependent upon selling stuff, the most valuable part came early on working in the field as a financial planner with career agents of Mutual Life and their clients. Indeed it was that experience which both created and propelled the growth of my unlikely interest in the business.

I well remember during drinks following my defence of a thesis that my erstwhile colleagues in Milton's grove of academe made clear their view that I had lost my ability to make wise judgements, the evidence for which was my having declined a Canada Council fellowship I had won (and had deferred taking up), thereby stepping off the path to a professorship in favour of pursuing my then budding interest in the life insurance business. I was not deterred by their scepticism.

Within a very few years I had cause to reflect on the quality of my judgement compared with that of two of the professors who had shared their opinions over sherry that afternoon: one ended up in prison while another was murdered by a stranger he invited to his Mexican hotel room.

The company I had joined was the Mutual Life of Canada (founded in 1870), the first and the only significant Canadian mutual life insurance company founded as a mutual. The other big Canadian companies in this category (Sun, Manufacturers, Canada, Confederation) had all been stock companies that mutualized in the late 1950s and early 1960s as a means of avoiding foreign takeover, an optional solution to their problem devised for them by then federal Supt. of Insurance K.R. MacGregor.

By the time I entered the industry these 'stock company mutuals' were chafing at the organizational restrictions imposed by mutuality, an approach to the life insurance business and to policyholder ownership and benefit in which their senior managements (it seemed to me) did not believe and to which they paid no more than lip service in any case -- and precious little of that. Only in Mutual Life had a fairly significant tradition and reservoir of belief in and practise of mutuality survived down the years.

The tolling of the final bell for a fine, historic Canadian company, one owned by its participating policyholders in Canada, began on Dec 8,1997 when Mutual Life's senior management and board announced that the company would demutualize and become a stock company (Clarica Life). Within the company this event had been presaged some time before, a signal some picked up while most did not, by senior management's newly discovered obsession with mutual company equivalents of irrelevant stock company ROE numbers.

The tolling of the bell concluded on Dec 17,2001 with the announcement of the purchase of Clarica Life by Sun Life (also demutualized). However the disappearance of Mutual Life (like Canada Life) was inevitable once demutalization had occurred and Ottawa's short term post-demutualization protection from takeover applicable to them had expired. Neither Mutual Life nor Canada Life was the beneficiary of the sort of ongoing backstop of federal 'permission for takeover' enjoyed then and since by both Sun and Manulife.

The fact that only half of the quartet of big demutualized Canadian companies (Confederation Life having become insolvent) had protection going forward is something for which the senior managements of Mutual Life and Canada Life, so eager to have their companies become stock companies available for takeover (which of course they were), can share as much blame -- or credit, depending on one's point of view -- as the feds.

Some of us who were associated with the Mutual Life of Canada will continue to remember job satisfaction not associated with a quarterly results perspective, nor with decisions aimed at winning smiles of approval from institutional investors, financial media, rating agency analysts and various toads in the life insurance garden, nor with the priority routinely accorded in recent years to the financial aggrandizement of a financial services company's senior management group.

Alastair Rickard


Sunday, October 4, 2009

(No.56) In order to stab someone in the back ....

I derive some wry amusement from the fact that as a life insurance company employee, a 'salaryman' as the Japanese have it, as well as in my spare time an editor, writer and industry critic, I have been threatened with termination of my employment as well as with libel action by several life company CEOs.

These threats related to my publicly expressed views on industry issues as well as about various companies, views that in some fashion offended some senior executive's delicate sensibility. I have a letter somewhere written more than 25 years ago by a CEO (a fine man actually) warning me that my job was hanging by a thread. That thread turned out to have remarkable tensile strength.

If my transgressions against corporate propriety or bans on unlicensed expression escaped notice by those who from their lofty corporate perch might exercise their authority, I could always count on at least one or two of those who -- yesterday -- told me privately of their great admiration for my frank expression of views to point out -- today -- to senior management my high crimes and misdemeanours.

Disappointing and servile behaviour one may say but really not all that surprising. In order to stab someone in the back it is first necessary to get behind him. Like company gossip, such politically driven career management is in the mother's milk of corporate culture.

It still strikes me as beyond bizarre that for the past several years my employer has been Sun Life Financial, a solid company in many respects but one which I had regularly criticized editorially in the pages of my magazine the Canadian Journal of Life Insurance, a pattern of frank comment that I maintained within the company after it had taken over Clarica Life (the demutualized Mutual Life of Canada), my then employer.

I have remained faithful to this tradition since I began as my columns about Sun and the industry attest, including the intermittent series about Sun Life that I began recently with Nos. 50 & 52, the first two parts of a series I intend to continue whenever the spirit moves me.

In golden days long past I was (as I am still ready and happy to lay claim to have been) a vigorous public critic of the process by which Sun Life orchestrated its highly questionable move of its long-time Montreal head office to Toronto.

Had anyone asked me then how likely it was that I would (1) ever see the takeover of Mutual Life by Sun Life (both then being mutual companies), and (2) that if such an unlikely event were ever to occur that my employment would not only survive but continue in the form of an executive role with Sun Life while 1800+ good people found themselves on the street in the cost-cutting wake of that takeover, I would have put the odds on a par with those predicting the likelihood of Her Majesty The Queen appointing me Archbishop of Canterbury.

More in this vein in my next column.

Alastair Rickard


Monday, September 28, 2009

(No.55) Fear & loathing in U.S. health insurance reform

Since my last column about reaction from the U.S. to my Toronto Star op-ed piece about the health insurance reform debate in that country (see No. 51, I have wondered about the apparent extent of citizen opposition not just to health care reform itself but specifically to a "public option" (i.e., government health insurance) as an alternative to insurance company health insurance in a 'reformed' American health insurance system.

It seems foolish to me (and I suspect to many Canadians following U.S. news) to oppose having available at least one alternative that does not involve health insurance companies with whose coverage, cost and claims practices so many Americans are dissatisfied.

Doubtless one could compile a long list of reasons for this but several seem to me to be major factors in how this debate is playing out.

1. Large, well-funded misinformation and anti-reform propaganda campaigns by various groups with vested financial interests in the outcome of all or specific aspects of proposed health care reform -- from the health insurance companies to the pharmaceutical companies into the medical establishment and over to the Republican Party and beyond on the political right.

2. Among Americans there are those who by tradition and belief tend to see ANY government involvement in a reformed health care system as dangerous and another step toward even bigger government and therefore greater government control of their lives. Health care reform, as much needed as it is by the 45 million uninsured and to address the rising cost of the existing unreformed health system, is inextricably bound up for many Americans with the ongoing ideological debate about the proper role of government, appropriate limitations on it and indeed about ethics and equity in U.S. society.

3. Fear of endangering or losing what they already have in the way of health care, especially since government subsidy will be required to provide those now uninsured with access to affordable health insurance.

Polls show this to be a particular concern among more than half of Americans 65 and older covered by Medicare because the President's reform includes the saving of $400 - $500 billion dollars (depending on whether it is the Senate or House version) in Medicare costs by lowering payments to private providers -- the Medicare "Advantage" program -- involving a quarter of those in Medicare AND reinvesting all of these savings in the U.S. health care system. This has been used by reform opponents to try (with some success) to frighten this important voter constituency. Hardly surprising action coming from supporters of the Bush administration's shameful surrender to the pharmaceutical companies that obliged the federal government NOT to negotiate for lower drug prices based on its status as a massive customer under Medicare.

4. The health care reform proposals are being negatively affected as more Americans become increasingly concerned, in the wake of Wall Street and auto company bailouts plus a giant economic stimulus package, that health care reform may be the financial straw that breaks the U.S. camel's back in terms of both the economy and the huge accumulation of $trillions of government debt. Such concerns are entirely understandable.

5. The facts of health care reform have been confusing for many if not most Americans. In a CBS poll in early Sept. 67% of respondents said they did not understand health care reform ideas because they found them to be too confusing. Not all of this confusion is the result of deliberate misinformation directed at the public by various special interests. In part it is because there has been too little during the debate in the way of firm detail about what the FINAL health care reform package will look like and what it will actually mean to currently insured Americans. It is a complex subject made more confusing by the absence of clear explanation as five different proposals were being developed and debated in the U.S. House and Senate.

In terms of the ongoing negative propaganda campaign being directed at the Canadian single payer government health care system by various anti-public option lobby groups in the U.S., there are several key indices which effectively refute this nonsense. For example:

-- life expectancy: U.S. 77.8 ; Canada 80.4

-- child mortality: U.S. 6.37 deaths per 1000 ; Canada 5.4 per 1000

-- % of GDP on health care: U.S. 16% ; Canada 10%

-- health care insurance company premiums as a % of U.S. GDP: 1970 1.5%; 2007 5.5%

-- number who were uninsured throughout 2008: U.S. 45.3 million ; Canada 0

Although one needs to be on guard against easy exaggeration, it must also be noted that an unknown (and unknowable) number of Americans -- encouraged by propagandists on the loony right -- are taking strong public positions against health insurance reform as camouflage for a visceral dislike of the Obama presidency.

It would be tragic if there were to be a repetition of the defeat of the Clinton health care proposals of the early 1990s, if the combined effect of fear and loathing robbed Americans of even a comparatively modest "public option" in this latest round on the very long road to effective and meaningful health care reform in the U.S.

Alastair Rickard