Taking a Stand for Independent Advice

Jan 14, 2019

battle-1846807_1920Insurers in the Canadian group benefits market have always supported the idea that the key to a healthy vibrant benefits marketplace is rooted in the availability of independent advice for consumers. Consider it a system of checks and balances where the plan sponsor and their members need support to navigate the maze of decisions needed to make the right choices at the right time.

This might be because stewardship of benefit plans and their effective delivery to plan members requires a complex skill set. It has moved far beyond spreadsheet reviews and buying the lowest cost provider. You’d need to balance the technical requirements of advanced drug management, have a proven process to identify and assist plan sponsors in the execution of their vision or strategy, manage that vision to successful implementation and a comprehensive approach to delivering and educating the end user. With everyone’s time constrained schedules, delivering sustainable and valued benefits within the insurer maze is not for the “Do It Yourselfer” anymore. Maybe it never was.

Stating the obvious, we also believe the foundation for a healthy consumer-centric model is independent advice and we try to deliver that to every client, every day. Our goals ARE aligned with the consumer and our ultimate master, is the benefit plan sponsor. We work hard to understand what our client’s goals are, and then attempt to execute on their behalf.

The past 18 months have been interesting for our firm and firms like us. This past year, we have been thrust into a fight for the right to represent the consumer. The independent advice we offer is under attack by the very same insurers for whom we distribute product.

The insurers have reached into the regulatory world to create rules single handedly around conflict of interest. They call these rules G19 and they give us guidelines to follow for disclosure in the group insurance marketplace. These practices, however, do not apply to everyone and we’ll return to that in a minute.

For the record, TRG has long established disclosure practices and protocol around conflict of interest. In fact, we adopted a firm-wide policy to decline participation in sales conferences offered by the insurers that were based on the achievement of sales targets. There isn’t a lot of education or business at these events and we believed our time would be better spent one on one with an insurer, on our dime, and with an agenda created for the benefit of our clients.

We believe in disclosure and dream of a fully transparent and vibrant market. G19 in its current form will fail to deliver or support a healthy vibrant marketplace for too many reasons to list here.

One reason in particular for honouring the premise of a level playing field, is critical for the future of independent advice and the consumer.

The insurer created policy seemed doomed from the beginning as it lacked collaboration and consultation of all stakeholders, including the regulators themselves. In the end, they created a guideline that will create an imbalanced consumer marketplace and sadly, the proposed approach does not address conflict of interest on any level. The end result will be fewer advisors and impeded access to independent advice for the very people the insurers are trying to protect. In particular, these are small and mid-sized businesses.

An emerging problem in Canada is that small business enterprises have never sponsored a benefit plan. Said another way, the percentage of Canadians families without benefit coverage is increasing. There are many reasons for this statistic, but the complexity and administrative issues surrounding the launch of a benefit plan is a big obstacle for many for small businesses. Less access to an independent advisor to navigate through this complexity is not going to make this better.

What makes G19 so problematic is that the prevalent imbalance in favour of insurers for control of the consumer and their independent advisor will be even more tilted in favour of the insurer. This is not a good thing. The insurers’ proposed new rules on dealing with conflict of interest will NOT apply to them. Canada and the insurance community have an opportunity to get this right and create a balanced solution for the protection of the consumer. The unilateral G19 model misses the mark entirely.

So, it is time to take a stand for independent advice and protect the consumer in Canada.

Advisors do not oppose true transparency as long as the playing field is level. We are especially good with insurers attempting to tackle conflict of interest and we are still hoping they will find their way to the creation of a superior policy not yet implemented in any other developed country. We have provided a lot of feedback over the past 18 months and any suggestions we made to date to help restore some balance continues to be ignored.

In its simplest form, we saw insurers get together within their trade association (CLHIA) to discuss this significant change to our business in isolation. They are just speaking to themselves, really.  The CLHIA’s sole mandate is to further its own interests and they did so with zero acknowledgement of the legitimate concerns voiced for months by many independent advisors across the country.

It will be interesting to see what the regulators have to say once they begin to peel back the layers of G19. It will not take long to see it for what it is – a self-serving policy that is challenged on the fundamental issue it is trying to resolve: conflict of interest.  It will result in even more conflict, harm the market and the businesses that operate in it, and ultimately the consumer by creating an imbalance skewed even more in favour of the insurance company.

The insurers continue to declare the key to a healthy consumer market is rooted in a healthy independent advisor stakeholder. It is too bad their actions in G19 don’t align with those words.

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