Disclosure in group benefits space is only the beginning, believes CLHIA member Mark Sylvia
As part of the CLHIA, Empire Life president and CEO Mark Sylvia is receiving plenty of feedback on the upcoming guidelines for broker compensation in group benefits. G19 – Compensation Disclosure in Group Benefits and Group Retirement Services, has proven contentious, with advisory groups critical of the consultation process. According to insurance providers, the measures were held back until January 1, 2019 in order to receive greater consensus among providers and their distributors.
“I’m involved with the CLHIA and I have also been talking to our own advisors,” says Sylvia. “I think what we are seeing right now is a situation where we define what is compensation, what is fee-for-service and what is an administration fee – that needs some work between the insurers and the distribution network.”
Both the Canadian Group Insurance Brokers (CGIB) and National Coalition of Benefit Advisors have expressed their displeasure with the process, and question why group benefits is the segment being targeted. There’s a simple explanation for that, believes the Empire Life head.
“Currently the CCIR (The Canadian Council of Insurance Regulators) is looking at guidelines for seg-fund disclosure,” he says. “I think a lot of the insurers say there are still a lot of regulatory issues being sorted out in that area of the business, so it would be premature to bring guidelines there.”
He adds: “When it came to group benefits, there was no regulatory initiative underway, so the insurers decided to come up with a voluntary guideline. The feedback from the regulators was very positive – that the industry took that initiative.”
With fee disclosure a hot topic in the investment world, Sylvia is not surprised that the same drive for transparency is also taking place in the insurance space. It’s something brokers and advisors will have to get used to, no matter what product they are distributing, he says.
“The regulator is highly focused on the retail environment, because that’s where the consumer is involved,” he says. “The group side is more of a business-to-business transaction. But let’s face it, disclosure across all product lines is the wave of the future.”
Outside of deliberations with his advisor network, it’s been a busy few weeks for Sylvia as Empire reported its 4Q 2017 results at the end of February. Although earnings were down in the final quarter, it was a record year for the firm with an 11.9% increase in net income in 2017 to $170.9 million. Assets under management also increased 9.5% year-over-year to reach $17.6 billion and Sylvia is optimistic for that trend continuing in 2018. To achieve that, Empire Life has committed to its enhancing its digital offerings, as he explains.
“We are probably the leaders in online applications for retail insurance,” he says. “We have the most advanced system called Fast & Full, which by most accounts is the premier online life insurance application system.”
In 2018, consumers expect convenience in most aspects of their life, including shopping for life insurance or an investment product. Regardless, certain purchases need to be thought out, and the guidance of an expert is always welcome. To that end, Sylvia is happy with how Empire is responding.
“We introduced electronic delivery of policies earlier this year where we created dual screen technology,” he says. “So it’s possible for a customer to go online and buy a plan, but they can also go on an off-ramp and get advice. We have created screens that our agents and customers can look at the same time, discuss the transaction and actually do that electronically. No one else is as far advanced with these tools as we are.”