Tuesday, August 10, 2010

(No.107) Executives addicted to cheap mortality

RickardsRead.com received a number of interesting responses to the views I had expressed in column No. 105 "Making money in a race to the bottom" (posted July 29). I have selected excerpts from several of them.

As in previous columns presenting emails from readers, for reasons of privacy I have withheld email writers' identities unless they write to RickardsRead.com in an official capacity. However in order to provide context for the views expressed I have preceded each excerpt with a brief reference to the writer's role or connection to the subject.

Words in italics are mine.



1. from a former member of Sun Life management:

Well said! On all counts ....

2. from a Sun Life agent:

Great commentary and right on the money. I can confirm that my b.s. detector has never beeped in the presence of any of the Sun executives you mention [i.e., Kevin Dougherty, Kevin Strain and Vicken Kazazian, senior executives in Sun Life's Canadian operation].

Keep up the great work.

3. from another Sun Life agent:

Gotta love your way of expressing things. ..

Don't bullshit a bullshitter ... as in "Such executive pretence is almost always counter-productive since most agents have highly developed bullshit detectors." You are so right.

As to how I, as an agent, feel, the jury is still out [on Sun Life and its Canadian career agency system ]. I do agree with your assessment as in: "Sun career agents came to like Dougherty and have been pleased to see him back. ...".

... As always, love your columns.

4. from a former Sun Life executive:

... the [Sun Life] stock is up a buck or two since you wrote this one so one never knows the impact of your views and how it all plays out.

5. from a former staffer and member of the London Life sales force:

Loved it!! Especially the comment "most agents have highly developed bullshit detectors". Bulls eye!

I can also attest to your comments about London Life, the Jeffery family and "its lingering culture". Too bad that even though they still have a Par [policy sales] culture, all the agents are selling so little life insurance of any kind, e.g., about 35% of what was the industry norm 'back in the day' ... or should I say 'hay day'.

It'll be no surprise to you that given my London Life roots ... I'm a big believer and owner of Par [life insurance].

... I am dismayed,shocked and appalled at how few life licensed advisors and insurance specialists understand that the cash value of any permanent contract -- par or non-par -- is the property of the insuring company as the reserve for that contract.

I am a member of a [industry discussion] group ... and someone recently started a "discussion" asking for explanations for the difference between term and whole life. The responses ... drove me to distraction!

6. from a senior life insurance business insider with a wide variety of experience in the industry:

Another good article but it left one unexplained point when one compares Canada to the USA.

In spite of tight money and difficult times for financial institutions south of the border they reinsure far less of their [life insurance] business than Canada. In 2009 the US reinsurance industry saw their share of risk drop as a percentage for the 7th straight year and now sits at 33.9% (falling from a high of about 63% in 2002).

I am perplexed by the huge difference and can only explain it that Canadian pricing actuaries and company executives are so addicted to the cocaine of cheap mortality and morbidity from reinsurers they cannot fathom the withdrawals they would face should they wean themselves.


Alastair Rickard


email: Alastair.Rickard@sympatico.ca