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