Is UK advisory model a sign of things to come for Canada?

Canada Life UK CEO contrasts Commonwealth nations' life and health markets

Is UK advisory model a sign of things to come for Canada?
Last week, Great West Lifeco announced its European subsidiary, Canada Life Group (UK) had completed its purchase of financial services firm Retirement Advantage. The UK is an important market for the Winnipeg-based institution, as this acquisition attested.

In life and health insurance, the Canadian and UK markets share some similarities, such as free public healthcare, but there are a number of key differences.

Doug Brown is CEO of Canada Life, UK and a native Canadian. A graduate of the University of Manitoba, he has lived in London for the past 14 years, assuming the top job with Canada Life’s UK operation in 2014.
As such, he is well placed to discuss what sets the two Commonwealth nations apart in the life and health space.

“There has been quite a bit of change with life and pensions in the UK over the last few years, particularly with the regulators,” he said. “A few years back regulation was under the FSA, but we now have two regulators, the prudential regulator the PRA, and then the Financial Conduct Authority, which looks at customer issues.”

The most significant change was undoubtedly the introduction of The Retail Distribution Review in 2013, banning commissions and forcing financial advisors to move to a fee-based practice. A similar move is under consideration in Canada, which is proving quite divisive within the industry. Brown explained what it has meant for the UK market so far.

“A lot of the banks got out of providing advice, but the overall advisor numbers didn’t change that much,” he said. “Some argue it has created an advice gap because advisors that are charging a fee, there’s a certain amount they need to earn for it to be worth their while. So they tend to go for higher net worth clients, leaving an advice gap in the mass market.”

Like its Great-West counterparts across the Atlantic, Canada Life UK uses the independent advisor channel as its main means of distribution. One area where the two countries do diverge is on group benefits, as Brown elaborated.

“We are the leader in the group benefits market in the UK, but here it is predominantly group life and group disability,” he says. “You do have a private medical insurance market, but the way the NHS works means you don’t have a huge amount of private healthcare through employers. The market is nowhere near what you see in Canada; I know group health and group dental are major product lines for Great-West Life.”

Private medical insurance is much more of a niche product in the UK, with only a few specialist providers. Usually it is used for certain procedures that would otherwise entail a lengthy wait under the NHS, and is usually only provided for high ranking employees and senior management.

The two markets do find common ground when it comes to digital offerings, however, which is a priority for all of Great West’s companies.

“One of the reasons we wanted to buy Retirement Advantage was for the technology they have,” said Brown. “It has a more modern administration system that enables us to provide more flexibility for advisors and customers.”
Another point of pride is the CLASS (Canada Life Automated Self Service) platform, which enables employers to manage their group life and disability accounts digitally.

“Just over 10% of the UK market is on that platform, so we have had quite the success leveraging that technology,” he said.

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