Tuesday, January 20, 2009

(No. 8) The day the music died

My years as a participant in the life insurance business as an employee, an observer, a writer and a critic began in the 1970s. They were distinctive years, even more so than I realized as they went by, perhaps because of the effect described by the Victorian prime minister W.E. Gladstone when he wrote in his diary (and I am recalling from memory here) that "while swimming for one's life one does not have time to enjoy the countryside through which the river passes". 

I recently asked a longtime friend (one of the sharpest industry people I know) to cite one or two of what he regards as the biggest changes he has seen during his lengthy career in the business.

He said: "You and I entered what was a business with a long term perspective; that's what the life insurance business was. We were taught to act in the best interests of policyholders yet unborn; what we in the life insurance business do is for the future as well as the present. Today too few in the industry seem to care very much about the industry's change to a short term perspective, long term now being treated as the end of the 4th quarter from now. Today, while in reality it remains a long term business it is now one with executive leadership that too often has a short term outlook."

He concluded: "I can't pretend anymore that sense and understanding exist in those industry locations where they don't."

As for me I have never been much good at pretending, a deficiency which made my survival for so long within the corporate tent all the more unlikely.

As a sometime historian I am well aware that age combined with selective or retiform memory can make years past seem better than they really were. Still, most of my years in the financial services business (associated as I was with Canada's first and best mutual life insurance company) were for me a fortunate time indeed, partly because of so many colleagues with whom I worked in Mutual Life/Clarica Life (as well, latterly, in Sun Life) who took their duties and their obligations to policyholders seriously. 

During most of my years in the business stock company rules and objectives had not yet made management by quarterly shareholder dividend the priority; freedom to manage in the longer term interests of a company's par policyholder-owners had not yet disappeared from many of the large life insurance companies in Canada and the U.S. Looking to the future of the company was a hopeful process rather than a reflection of an ongoing search for repetitive novelty with which to impress financial analysts, journalists,rating agencies and others possessing only a nodding acquaintance with the reality of the North American life insurance business and its long term relationship with both its policyholders and those who sell them insurance.

For me 'the day the music died' was Dec 8,1997 when the intention to demutualize the Mutual Life of Canada was announced, foreshadowing not only the unnecessary and undesirable elimination of a great Canadian, policyholder-owned company but also guaranteeing the disappearance of the company itself. This was made real on Dec 17,2001 when the acquisition of Clarica Life (Mutual Life's name as a stock company) by Sun Life was announced.

During most of my career a great deal of my job satisfaction came from working with career agents and for the par policyholder-owners of a mutual company, specifically from working on behalf of what I conceived to be their best interests, however small or indirect my contribution.

It would be disingenuous of me to now claim to have arrived after all those years at a point at which I have somehow become disappointed or disillusioned. I have not. I was in the business too long as both an observer and a participant for that to be so. For one thing the fine people I have come to know in the business have never been found only in association with mutually organized companies. 

Nor am I much surprised by what I have seen, especially in recent years, that has not been positive. How could I be when (for example) I have too often observed executive mediocrity and even incompetence rewarded -- as well occasionally as deviousness -- especially when married to corporate political skills? But I have been unable to derive much job satisfaction from, say, trying to contribute to a steady increase in the quarterly dividend paid to institutional investors in the never-ending corporate priority and quest for investment community applause.

However I do not forget or ignore how important the life insurance business continues to be to the social and economic fabric of Canada. I believe that the active, prospecting, selling agency system in its several forms will continue to serve Canadian buyers -- and it is likely to do so because it works. It still succeeds in selling client resistant products but it does so far less because of the companies whose executives sponsor or enable various agency distribution systems than in spite of them. Rather it comes down to those at the sharp end, the agents and brokers in the field,  who have -- if they choose to use it effectively  -- the opportunity to gain satisfaction as well as reward from making a real difference in people's lives.

Long before 2008 drew to its close it had become plain as a pikestaff to me that the time was past due for me to remove myself as a participant from the industry's ill-considered love affair with its brands of 'new coke', from aspects of its current approach to the life insurance business generally and from its handling and mishandling of agency distribution in particular.

That separation, now accomplished, does not preclude me from continuing to voice my opinions publicly. I do not intend to restart the Canadian Journal of Life Insurance, a project requiring more of my time and energy than I am prepared to commit to it. However there are other forms of public expression available to me which are more appealing but less demanding, such as this blog, where those who are interested in my views on various subjects many find them.