Sunday, June 28, 2009

(No.35) Wilde, Coward & two festivals

The Shaw Festival in Niagara-on-the-lake, Ontario and its counterpart in Stratford, Ontario, the Shakespeare Festival, are both splendid cultural institutions attracting many thousands of Americans and Canadians each year. 

While the plays of George Bernard Shaw and William Shakespeare continue to be, respectively, the artistic icons of the two festivals, they do not dominate each festival's seasonal programs. This year only 2 of the 11 plays of the Shaw Festival are by GBS while at Stratford the Bard's plays account for 3 of 14 presentations.

In 1935 Noel Coward, among the playwrights Pat and I particularly enjoy,  did 10 one act plays in London under the heading of "Tonight at 8:30". Most of the 10 are little known today except "Still Life" which was later adapted by Coward for the screen as the the still well known "Brief Encounter"(1945).

This season the Shaw festival is presenting all 10 of these one act plays in the form of 3 'plays' of 3 each plus the 10th as a stand alone presentation. We attended the trio being presented in Shaw's Festival Theatre as "Brief Encounters": Still Life, We Were Dancing and Hands Across The Sea;  directed by Jackie Maxwell.

These 'playlets' are all set in the mid-1930s, all supposedly about relationships with hints of the gathering storm in Europe and all terribly English in tone, dialogue and context. Ordinarily that would endear them to us but the Shaw presentation of "Brief Encounters" is curiously irritating in some ways and only adequate at best in its performances. The unconvincing English accents of the Canadian cast ought to have been replaced by crisp non-accented delivery.

"Hands Across The Sea" is the strongest of the three parts but on the whole "Brief Encounters" as presented at Shaw this year is a disappointment.

Over the years we have seen several productions of Oscar Wilde's 1895 comedy "The Importance of Being Earnest". Indeed it has been staged previously at both Shaw and Stratford. It is a classic farce and still funny well over a century after it was written and first presented in London. 

This year's production at Stratford is directed by Festival veteran Brian Bedford (27th season) who also plays the part of the formidable Lady Bracknell. The cast's performances are generally strong , the delivery of Wilde's famous dialogue is crisp and the accents more than acceptable, the latter perhaps the result of Bedford's coaching (he is an Englishman). 

As Lady Bracknell I found Bedford in drag a bit of a distraction but Pat did not. It is certainly not new to have a male actor in this role. The late William Hutt, another Festival veteran, played the same part in a Stratford production more than 3 decades ago. 

It could be argued that the part of Lady Bracknell itself will tend to unbalance a production of "Earnest" if it is performed by an actor more well-known to the audience than the rest of the cast. We saw a production of the play in London's West End in which Maggie Smith did a star turn as Lady Bracknell. The audience gave her a standing ovation as soon as she first walked on stage. Satisfying for her but a distraction none the less.

This Stratford Festival production is enjoyable and well worth seeing but not particularly memorable, the latter opinion one from which Pat dissents. She liked this version more than I did.

* Brief Encounters continues at the Shaw festival until Oct 24,2009

* The Importance Of Being Earnest continues at the Stratford Shakespeare Festival until Oct 30


Alastair Rickard

email: Alastair.Rickard@sympatico.ca

Monday, June 22, 2009

(No.34) Can the provinces protect financial consumers?

For more than 25 years I argued and predicted that if the insurance jurisdiction of the provinces (generally agency matters) were to be challenged by the banks as it related to their insurance activity the Supreme Court of Canada would side with the provinces as had a House of Lords decision decades before, a decision which had forced on Ottawa the creation of the (then) new federal insurance legislation of 1932. This was the core of a modus vivendi between Ottawa and the provinces to deal with the federal government's having over-reached its constitutional powers involving the regulation of insurance. 

Of course I was far from being alone in holding a negative view of claimed bank immunity from provincial insurance jurisdiction but that constitutional reality was not widely appreciated outside a relatively small club of informed opinion inside the insurance business and certainly not acknowledged by the Finance Minister's mandarins who are the banks' regulators and in any case have -- in the view of some insurance people, including me --  a longstanding reputation of being pro-bank (i.e., banks being their federally regulated constituents). 

Indeed it was not uncommon for supposed expert and high-priced opinion to take a pro-bank view: i.e., banks are federally regulated financial institutions, whatever banks do they are entitled to call banking, hence the provinces have nothing to say about banks' insurance selling activity in those provinces.

I confess that for years I absolutely longed for the banks to make the mistake of challenging provincial insurance jurisdiction. If they were to follow their longstanding habits and be arrogant enough as the long-favoured, pampered and protected federally regulated financial institutions then they might believe (I speculated) that they could kneecap the provinces by taking even a weak case to the Supreme Court and do so successfully. That mistake the banks finally made with the Canadian Western Bank v. Alberta case, the decision being handed down May 31, 2007. It favoured the provinces.

Why was that decision of great interest not just to the provinces but also to insurance companies and licensed sales intermediaries (the latter being provincially licensed and regulated)? The answer: the potential leveling of the regulatory playing field on which various institutions sell insurance.

My most recent post to the blog www.RickardsRead.com, "(No.33) Banks, insurance & the internet", explained why in its competitive implications the Supreme Court decision in the Western Bank case reduces to comparative insignificance the recent federal regulatory decision by OSFI which supposedly (according to a breathless June 10 article in the Globe and Mail) heralds the "crumbling" of the barriers to an expansion of bank branch retailing of insurance. In fact it does nothing of the sort.

All of this returned to my thoughts with the recent loss by the banks in Quebec Superior Court. They had tried to be excluded from new provincial consumer protection laws. The court agreed with Quebec's Attorney-General that provincial laws intended to protect the consumer should apply to banks on a broadly defined basis -- as indeed I agree they should; in fact it is desirable and appropriate that they should apply to any and all financial institutions including insurance companies doing business with Quebec consumers.

In an echo of the Alberta insurance case decision the Quebec Superior Court refused to accept the banks' argument that they should not be subject to provincial consumer protection legislation because they operate under federal law.

Don't bet against the banks eventually taking the Quebec decision to the Supreme Court of Canada to try to get it reversed on appeal. In this matter I am not as confident about the outcome as I was with the case involving the banks and provincial regulation of insurance, that when it comes to provincial consumer legislation the provinces have as strong a case with which to convince our high court. 

I hope the government of Quebec can make its recent court victory hold up.

Alastair Rickard

email: Alastair.Rickard@sympatico.ca 


Thursday, June 18, 2009

(No.33) Banks, insurance & the internet

A June 10 Globe and Mail article by Tara Perkins ("Bank websites may sell insurance: regulator") made a financial services mountain out of a molehill. Proclaimed the Globe: "banks have notched a rare victory in their fight with Ottawa over selling insurance ..."

What was the magnitude of this victory, this decision by the federal financial regulator (OSFI)? We are told that it means that "the barriers the federal government has long maintained around bank sales of insurance could be crumbling ..." Gee that would be really something -- if it represented more than breathless credulity. 

The article in question ignores a key reality about any expansion of bank branch retailing of insurance beyond the present permitted types: any decision to expand significant bank insurance retailing activity will be a political decision, not one made by Ottawa bureaucrats; any such change is one that remains not merely unsupported but opposed by the government and opposition parties. 

The specific "victory" to which the Globe article refers? OSFI has not accepted a complaint from the p&c brokers about insurance and bank websites -- that's the big news, I kid you not. Since all the big banks have also had for years their own insurance subsidiaries and these in turn have their own websites, one wonders how this OSFI 'decision' represents all that much by way of change.

The complaint to OSFI, to the extent that it was prompted by concerns about the online 'direct' sale by banks of property & casualty insurance products,  was I suspect more about precedent than potential bank sales even if they involve buyer-initiated product. That is not the case in the main when the direct sale by internet or otherwise involves individual life insurance which remains highly resistant to the generation of buyer initiative; its purchase is, after all, inseparable from contemplation of the buyer's own mortality.

The evidence of the insurance industry's record on this point is clear and of long standing [see my comments on this subject in various postings to this RickardsRead blog]. As I have never tired of pointing out over the years to life company executives, journalists and assorted industry 'experts': the active, prospecting, selling agency system in its various forms continues for very practical reasons to be the foundation on which rests the bulk of individual life insurance distribution. 

Also -- the next time you read more of the Royal Bank-generated 'spin' about all the wonderful insurance branch offices RBC is setting up cheek by jowl with their own bank branches as a way to circumvent restrictions on bank branch retailing of insurance, take a moment to wonder how much life insurance is actually bought there by customers who walk in and ask, in Dickensian fashion, 'please sir, may I buy some life insurance?'. Or, is the typical RBC 'insurance branch' more like a life company office in which are based licensed sales intermediaries [aka agents] who actually have to acquire new annual premium by selling the insurance? 

Banks being in a position within their branches to pressure their banking clients to buy individual life insurance would indeed be a change light years away from that of trying to use their bank websites to generate direct [non-agent] sales -- to sell their life insurance products in serious quantity directly, relying on buyer initiative. That is so whether the website is the bank's own or that of its insurance subsidiary.
  
This great 'victory' for the banks means next to nothing in terms of enhancing sales of client resistant insurance nor does it constitute the"crumbling" of either the "barriers" to expansion of bank branch retailing of insurance (i.e., what the banks really seek) or dissipation of the highly effective political opposition to this change in Canada by the sales intermediaries on both sides of the insurance fence, life and p&c.

One could fill the pews of a cathedral with assorted insurance industry 'experts' in life companies or hired as consultants by North American life insurance companies over the years who may even have believed the filigree work they did in recent years on the myth of the internet as the future of insurance distribution [remember when the future of distribution was to be 'one stop financial shopping'?]. Journalists and bankers can be just as gullible.

I will return to the subject of recent developments involving Canada's big banks in my next posting (No.34).  

Alastair Rickard

email: Alastair.Rickard@sympatico.ca 

Thursday, June 11, 2009

(No.32) Blogging & fighting

I was the keynote speaker last week at the annual meeting of the Canadian Association of Independent Life Brokerage Agencies (CAILBA) whose members are managing general agents.

Before I delivered my analysis and advice I shared with them a few personal comments about both blogging and fighting.  

I have spent more than three decades speaking and writing about life insurance industry issues (among other topics) within the companies by which I was employed, in my own magazine as well as in publications like the Globe and Mail. Thus when I left Sun Life at the end of 2008 I had reached the point where there were many days when I felt as if I said everything I ever wanted to say about the life insurance business and financial services -- at least twice.

And yet, once I had left my perspective changed a bit. 

I was not prepared to make the sort of commitment of time and energy necessary to restart the Canadian Journal of Life Insurance. I had started CJLI in 1978 as a spare time avocation and as my contribution to the industry's mental health. It quietly and gradually went to sleep years later as personal spare time from the demands of my employment largely disappeared. 

But I did decide that for therapeutic reasons (among others) I would start a blog: RickardsRead.com. What you are now reading is my 32nd 'post' so far this year of columns on various subjects. I must admit that for me the beneficial effect has been rather like that experienced by a deep sea diver decompressing. 

Among other matters I use this blog to offer publicly to the life insurance industry opinions and advice of the sort for which I gained only sporadic agreement over the years from within life insurance companies, trade associations and the regulatory community. The continuity of such consistent disagreement I still find satisfying.

I fought many editorial battles over the years involving life companies, their managements and decisions and in particular their handling and mishandling of agency distribution -- both career agency and brokerage. A couple of months ago I was a guest lecturer at the business school of the University of Alabama in Tuscaloosa where I met with insurance studies students. It is not unusual in Q & A sessions to be asked how many of my 'fights' I have won. 

My answer to such a question depends for its appreciation on a hockey analogy and it is this:

I recall fondly the career of a combative NHL player of the 1970s and early 1980s named Dan Maloney. He was asked by a journalist how many of his fights he had won. His answer pretty much sums up my own view then and now: "It's not how many you win," replied Maloney, "it's how many you show up for."

It is to that attitude that I attribute both my universal popularity in the industry and having been kept out of the big money.


Thursday, June 4, 2009

(No.31) Will the 'selling of stuff' be strangled?

In my most recent posting to this RickardsRead blog [No.30 "When is financial regulation like airport screening?"] I referred both to an upside to financial services regulation -- prudential/solvency supervision -- and to an example of a downside: the hugely expensive anti-money laundering rules aimed at achieving a dubious enhancement of public security against 'international terrorism'.

The life insurance industry is every bit as much involved in both of these areas of government regulation and risk management as the big Canadian banks, the same banks now taking bows over their comparatively solid financial standing coming out of the US-generated financial crisis. These were bows for behaviour and prudential rectitude the credit for which belongs as much or more to the federal regulators (OSFI) who both required and enforced over the years that admirable financial behaviour. But that is a story for another day.

The membership in the Canadian life insurance industry's church of compliance and risk management has grown steadily in recent years. When the life insurance company adherents of this new church gather to bow their heads before 'enterprise risk management' [ERM] icons it is an impressive occasion indeed -- one I have witnessed. I confess my own baptismal certificate in this church is not yet signed: I lack even probationary status.

Nor have I begun to memorize the ERM catechism much less have I made my first profession of faith. Why? One reason is that I have increasingly come to wonder whether many compliance people in companies and the regulatory community alike will not really be content until each agent/broker has a compliance officer at his or her shoulder every time they meet a client. That is hyperbole but it reflects a certain compliance mentality that is not only far from rare but on the rise.

Although I have long been an advocate of effective but practical regulation of the market place for insurance and of those who sell it, I am increasingly sceptical about the negative effect on genuine opportunities to buy individual life insurance (a socially important but client resistant product) of the trend toward loading up career agents and brokers like a tinker's mule with an increasing volume of unnecessary and unrealistic obligations and restrictions. For a convincing example of the negative and counter-productive impact this can have on the effectiveness and viability of active, prospecting agency distribution systems and on genuine opportunities to buy individual life insurance one need look no further than the United Kingdom.

This is where the central question is joined: the appropriate regulatory balance between market conduct and the need, by companies and consumers alike, for intermediaries to actually be able to 'sell stuff' in the real world. Many in both the industry and the regulatory community don't seem to have a firm grasp on a fundamental reality of the role of the life insurance business in serving the consumer: it is first about selling stuff.

There is a core risk too little considered by too many executives and regulators -- the risk of inducing partial paralysis or worse for life companies and their agency distribution. It also involves a failure to recognize adequately the reality that in any type of effective, active prospecting agency distribution system for selling stuff -- activity that occurs largely one-to-one -- occasionally shit happens.

That fact does not invalidate or call into serious question the importance of one of agency distribution to most insurance product manufacturers, i.e., the life companies. Rather it is a fact of life in a sales-based, one-to-one agency distribution system involving a client resistant but very socially and economically important product like individual life insurance.

The reality of the marketplace means that a life insurance company should be preapred to understand and live with sales reality and should stand ready to make whole the occasional buyer who is disadvantaged by the inappropriate conduct of a sales intermediary. If not then that company should get out of the business of selling stuff. Acquiescing to or even endorsing regulatory 'compliance creep', the effect of which if it continues unabated may well be the gradual strangling of the sales effectiveness of the active agency system, is foolish and ultimately self-destructive.

I have no doubt that some ( but certainly not most) regulators and life company executives would be privately pleased to see the disappearance of those they perceive stereotypically not as professional financial advisors but as commission-driven intermediaries who sell insurance to reluctant consumers. I have certainly encountered many with this prejudice. Perhaps the single benefit of the strangling of the active, selling agency system in its various forms would be to demonstrate to such people its central role by the magnitude of the resulting reduction in individual life insurance sales in the North American market.

Finally, as a footnote, I offer my view that all the fashionable and trendy chatter in both the life insurance industry and regulatory community about the desirability and advantage of principles-based insurance regulation does not seem to be changing all that much the rules-based environment in which the selling agent/broker must operate in the real world of the market place.

Alastair Rickard

email: Alastair.Rickard@sympatico,ca