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Investor Economics

Insurance Advisory Service October 2014

Change has been the operative word in the insurance industry for the past few years. The landscape—product and distribution—continues to evolve as regulation, competition and economic pressures continue to bear down.

This year’s Insurance Advisory Service’s special research feature on the insurance distribution channels—our third annual take on this topic—takes a new tack on comparing insurance distributor groups. The analysis juxtaposes insurance business volumes in the three insurance-focused distribution models—MGAs, dedicated sales and directly-contracted advisors—with those achieved by the two investment-focused distribution models involved in the distribution of insurance products: full-service brokerage and financial advisors.

The analysis illuminates the role that advisor practice management and focus plays in the delivery and growth dynamics of the insurance business. This is an important read for those insurers and distributors with an interest in evaluating their position, rank and progress within insurance delivery channels. The feature will be of interest to other wealth managers and distributors keen to understand the rapidly changing landscape of insurance-focused distributors. Of particular interest to other financial services providers will be the progress of the MGA channel, where several distributors already have a parallel presence in the investment arena and several others are eyeing wealth management with growing interest. Will large—and growing—MGAs become the next “disruptor “ in the world of traditional intermediated advice-givers, such as financial advisor firms and full-service brokers?

With financial growth set to slow and client costs set to rise across all wealth and insurance delivery channels, the imperative of deepening client wallet penetration will overtake client growth as the key business metric. The competition for clients—and for the attention of Canada’s 100,000 investment and insurance advisors—is bound to intensify. Just like all financial product manufacturers, insurers must continue to innovate and assist advisors with deepening their client relationships lest they risk displacement by their competitors, arriving from both the usual and unusual places.

 

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  • Tags: annuities, insurance, Insurance distribution channels, MGAs, segregated funds

  • Date Posted: November 6, 2014