Monday, January 21, 2013

(No.227) New LLQP & agent licensing: views pro & con

"More about revisions to life insurance agent licensing: 
pro and con on a new LLQP"

by Alastair Rickard

I have written two columns expressing my scepticism about the plan from the provincial life insurance regulators in Canada who comprise CISRO (the Canadian Insurance Services Regulatory Organizations) to introduce a new modular regime (exams and content) to be developed by Quebec's AMF (the Autorite des marches financiers) for use in both Quebec and the common law provinces.

[Those two columns on were: (No.216) "CISRO's 'harmonizing': the life insurance agent licensing regime of LLQP revisited", posted Oct.8, 2013; and (No.222) "CISRO, the AMF and a new LLQP life insurance licensing regime: to whose benefit?", posted Dec.9, 2012.]

The new regime has been given the designation of "the harmonized Life Insurance Licensing Qualification Program". Under the CISRO/AMF plan it would replace the content and exam of the existing LLQP program (the Life Licensing Qualification Program), a program with the development of which I had more than a casual involvement a decade ago.

I will add some further comments on the subject at the conclusion of this column. However in response to my previous columns I received various reactions, pro and con. I have selected some excerpts.

I received a thoughtful reply disagreeing with my views from a person who is involved with one of the CISRO-approved LLQP course providers. He wrote that "I usually agree with you ... but in this regard I believe you are mistaken. ... the [existing] LLQP has many great attributes and it has been a good initiative. However in recent years many of its weaknesses have been exposed. We have internally expressed concern that the LLQP may be on the verge of obsolescence due to some untended to housekeeping issues. Four years of failure to tend to these issues has substantially weakened the LLQP."

The writer's "specific concerns" include that "the LLQP is, outside of BC and to a lesser extent Saskatchewan, almost exclusively overseen by one person. That one person ... has little or no accountability. There is no oversight or review that I am aware of concerning LLQP examination questions."

He continued: "It has been four years since the LLQP Design Document was reviewed" and "the actual examination process, especially in Ontario and BC, is a disaster. The cost may be low (approx. $100 per attempt ...) but this is a case where you get what you pay for."

In terms of my concerns about the inevitable increase in the cost of the LLQP licensing process for applicants the correspondent said that "I believe that it will still be possible to enter this [life insurance] industry with an initial cash outlay of somewhere less than $1200, which is a very low barrier to entry."

He concluded that while he knows that "many in the common law provinces will be critical of the AMF, I have dealt with the insurance regulators in all jurisdictions across Canada, and I find the AMF to be an excellent organization. Further, their licensing materials are quite good, at least on a par with most of the LLQP materials currently in use. ... I like the concept of breaking it [ i.e., the licensing exam process] down into its core components."

On the other side of the issue I received a comment from a Quebec-based life insurance executive (a francophone) whose view of the AMF was not as favourable as the foregoing correspondent's.

He said that "I truly enjoyed your article on AMF and your other comments on the political situation in Quebec under the PQ government. I am personally concerned about the role of the AMF and its capacity to undertake such a major task. They already have enough problems coping with the role they may be asked to play in the supervision of the placement of construction workers!!! They already have enough problems policing the insurance industry operation in the province!!! ..."

From a life insurance executive who has had considerable experience with agency matters in Canada, including those in Quebec, came this comment: " A very well written and extremely important document. I assume you have forwarded a copy with a separate note to [ certain named senior industry executives]. Your insights and suggestions are key to help pull us back from an unneeded and unnecessary cliff."

He continued: "You have done an exccllent job of summarizing a very puzzling solution in search of a problem. The Quebec regime has not produced any measurable improvment to either advisors as measured by productivity or retention or to policy owners as measured by lapse or persistency rates. One can only hope that the [life insurance] industry responds with the needed vigour to prevent a process that will conspire to reduce the number of new advisors, put up barriers to new Canadians and add no value to the public."

Finally, from someone with many years of agency experience in Canada as both an industry executive and as an agent, a comment that goes to the heart of actual agency distribution in the real world: "More barriers [to entry] and less new agent compensation. Does not look promising for the industry. I think I may stick around a little longer as we can't even hire enough new blood to look after existing blocks [of life insurance in force]. Good for us old timers. What a business."


I have not changed my views as I expressed them in my previous columns on this subject. Based on what I have read and heard since they were posted, this 'son of LLQP' process initiated by the insurance regulators is, in CISRO's dealings with those directly concerned, every bit as arrogant in its presentation and the imposition of a plan to bring in a new LLQP regime as it was a decade ago.

So far as I can make out it will likely cost $4 or $5 million to impose when all is said and done with the benefits (if indeed it can be said that there are any useful ones) flowing to the insurance regulators. They will, of course, continue to use as camouflage for their arrogance a claim of benefits for the consumer. The as yet to be provided answer in a real world context (as opposed to a bureaucratic one) is to the key question:  what benefits?

Had the provincial insurance regulators actually been interested in serving core interests other than their own the CISRO consultation with the life insurance industry and other LLQP stakeholders would have occurred before the plan was presented in July 2012 on a 'like it or lump it' basis. But that would have risked insurance regulators being forced to defend their proposed regime on the facts.

CISRO's so-called consultation with stakeholders that has thus far taken place has been little more than window-dressing, arbitrary and bureaucratically self-serving.

Plus ca change, plus c'est la meme chose.




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