Sunday, November 28, 2010

(No.124) Names to ponder: Great-West Life, Joseph Belth, Alan Press, Primerica

Joseph Belth
, editor of THE INSURANCE FORUM (Ellettsville, Indiana), has long been regarded by many people in and out of the North American life insurance industry as one of the most effective, informed and fearless critics the industry has. He has long been an inspiration for me.

Joe and I first met years ago in Toronto at a hearing of the Ontario Legislature's Select Committee on Company Law. He was testifying as an expert witness because the Committee was looking into the life insurance business.

I have always thought that one of the keys to Joe's effectiveness as a critic of the life insurance business as well as to his understanding of its reality lies with his experience in the business. Before Joe did his graduate academic work and began his long career as a professor of insurance studies, he was an agent. [His Ph.D dissertation was on the subject of participating life insurance issued by stock life insurance companies.]

Unlike too many of the life insurance industry's critics and 'analysts' as well as far too many of its senior executives, Joe Belth learned early on that the business is at the end of the day -- as I never tire of pointing out -- about "selling stuff".

After Joe saw my Oct.8, 2010 column " Great West 0, par policyholders 1 " on (No. 118) about Bill Rudd's successful challenge to Great-West over the use of money from London Life's par policyholder fund to help finance its takeover of London, he invited me to do an article on the subject for his INSURANCE FORUM. It is the monthly publication he's been editing for nearly four decades.

I was pleased to do so and the article, an adaptation for a mainly American audience of my column on, is entitled " An Important Court Decision Relating to Rights of Participating Policyholders in Canadian Stock Companies". It appears in the Dec 2010 issue (VOL.37, NO.12) of the INSURANCE FORUM.

I am pleased to appear in the pages of Joe's publication not only with him but also with another American friend from the life insurance business: Alan Press, CLU. He is today the senior v-p of Wealth Advisory Group and was for 34 years a general agent in New York City for Guardian Life. He is a distinguished and much honoured member of the U.S. life insurance industry.

The first time I recall reading any serious criticism and comment about the A.L. Williams life insurance organization in the U.S. (now called Primerica) was more than three decades ago and it was written by Joe Belth and published in his INSURANCE FORUM.

His work on the subject of A.L. Williams caused me to pay particular attention to the Williams bunch when they came to Canada at the beginning of the 1980s. I editorialized about ALW in the pages of my Canadian Journal of Life Insurance, gave speeches and a guide to ALW in Canada which I prepared enjoyed some popularity with Canadian agents.

Meanwhile in the U.S. Alan Press became the most energetic and hard-hitting industry critic of the Williams/Primerica organization and its distribution strategy revolving (then as now) around systematic and indiscriminate policy replacement. As I recall I got to know Alan at the time of our joint assistance to a Canadian freelance magazine writer in her writing of what turned out to be an award-winning article on ALW in Canada.

I well remember attending an industry meeting of life insurance agents in Ontario some years ago at which Alan was the featured speaker on the subject of ALW/Primerica. A phalanx of ALW people arrived and tried to give him a hard time with their aggressive questioning and heckling; in short they tried to intimidate him in front of an industry audience -- but they did not know him. He handled them with ease.

I mention this anecdote here because Alan Press recently wrote a very interesting update and critique of the Primerica operation in the U.S. today. It too appeared as an article in the INSURANCE FORUM: "The Primerica Replacement Empire", in the Nov. 2010 issue (Vol. 37, No.11).

For those interested in how much or how little ALW/Primerica has changed as a life insurance distribution organization: contact the INSURANCE FORUM for a copy of the article. To give you a taste of its flavour here are several numbers from Alan's article concerning Primerica's 2009 performance in the U.S.:

-- number of new Primerica recruits in the year: 221,920

-- average number of life insurance licensed Primerica sales reps in the year: 100,569

-- number of policies issued in 2009 per licensed Primerica sales rep: 2.3 [2007 - 2.5]

-- fee income to Primerica derived from its new recruits in 2009: $27.5 million

Joe Belth and Alan Press: two men I am pleased to know and with whom I am happy to appear in any forum.

contact information for the INSURANCE FORUM:

PO Box 245,
Ellettsville, Indiana 47429
(812) 876-6502
Alastair Rickard


Tuesday, November 23, 2010

(No.123) Insurance journalism & James Daw of The Toronto Star

I have been out of the country for several weeks and did not post any columns to during that time. In the previous 22 months I had written 122 columns on various subjects so it seemed that both I and RickardsRead readers were due a respite.


As readers of may know I worked in the life insurance industry at the head office of the first Canadian mutual life insurance company: The Mutual Life Assurance Company of Canada. At the beginning of the millennium the company was unnecessarily and mistakenly demutualized at the instance of its senior management, became a stock company [as Clarica Life] and was soon thereafter taken over by Sun Life Financial.

During more than a decade out of the years I spent at Mutual Life I also (as a spare time activity) published and edited the Canadian Journal of Life Insurance. I conceived it to be my modest contribution to the industry's mental health although whether it had any measurable effect is open to debate.

CJLI was intended to be -- and always was -- an independent forum for informed criticism and comment about the industry and (contrary to the public and private assertions of various know nothings over the years) the Journal was always entirely separate from my then employer. In fact after the first issue appeared (a rather large surprise to Mutual Life's senior management) I came within a hair of being terminated and I was informed in writing by the CEO that my employment was hanging by a thread. It turned out to be a thread with remarkable tensility.

After more than a decade CJLI gradually went to sleep as the spare time I used to prepare and publish each issue was subsumed by the increasing proportion of my 'spare time' on weekends spent working on Mutual Life business.

During these years I became known by and acquainted with various media people who had a regular or occasional interest in the life insurance business. I was contacted regularly by such persons, usually on the basis of being an unnamed and often unacknowledged source by journalists seeking information/perspective/story angles/quotes.

My experience with the financial media over the years as a source, an observer and an informed consumer helped shape my less than worshipful attitude to those to whom I have often referred in these columns as members of the financial services paparazzi.

In this connection my favourite anecdote involves a piece written by a journalist at the (Toronto) Globe and Mail's Report on Business. The deadline was looming for this reporter and an editor was pressing for copy and I was called for help. When the article appeared the next day it was the only occasion in my life I became three people: an "informed observer", an "industry expert" and a "life insurance industry executive".

All of the foregoing is by way of being a preamble indicating that my opinion of the financial media is informed by direct experience over many years.

The leading exception to my scepticism involving the financial services paparazzi and the financial media in particular is financial journalist and columnist James Daw of The Toronto Star, Canada's largest circulation newspaper. After a career of several decades with The Star he is taking early retirement at the end of this month, an occasion that deserves to be marked.

I have known Jim Daw during most of his career (and mine). I made it a point to read his work. I have not been reluctant to offer my opinion publicly and privately that I regard him as the best informed newspaper journalist in English Canada on the subject of insurance and the insurance business -- both life and p & c.

Based on experience, hard work and study he acquired a thorough understanding of what is so often missing in those whose contact with the insurance business is brief and callow: an understanding of how it really works and why it works the way it does. Indeed he has an understanding superior in its breadth to that of many of the insurance executives I have known.

Just a couple of examples: Daw co-authored an award-wining examination of a subject that was opaque to many in both the media and the life insurance business: the financial collapse of Confederation Life. His annual survey of out-of-Canada health insurance is not only superbly useful but unique in its comprehensiveness and reliability. He was the journalist who from the outset (publicly) understood the potential significance of the class action on behalf of London Life par policyholders against Great-West. Since the 1990s Daw consistently paid attention to the subject in print up to and including the judgement ultimately handed down recently in favour of the par policyholders [see "Great-West 0, par policyholders 1", column No.118 on].

Over the years I have respected Jim Daw's integrity, his high standards of reporting and writing, the quality of his research and his informed opinions and perspective. During my decades in the life insurance business as an executive, a writer and an editor there has been no Canadian journalist for a mainstream publication writing about the insurance business who equals the consistent superiority of his work.

I salute James Daw for a journalistic career of fine work and genuine merit -- and so should the life insurance industry, or at least those within in it who know enough about the reality of the business which employs them to recognize quality work.

In January 2011 Jim Daw will be joining on a contract basis the Insurance Bureau of Canada as a senior writer. He will be working initially on an examination of auto insurance systems around the world. The IBC has made a smart move.


Alastair Rickard