After years of being dormant, one distribution channel is making a comeback in the U.S. Could it be heading north next?
“Some companies actually are finding more ways to go back to an environments where captive distributions to where they can control both the manufacturing of the product and the distribution of the product,” said Forester’s President and CEO Tony Garcia, while also pointing out independent distribution is still going strong.
According to the Insurance Information Institute, nearly half of all new individual life insurance policies are sold by independent agents, with captive agents accounting for about 41 per cent.
But will it head to Canada?
“My sense is (not coming to Canada),” Garcia said. “Sun Life has done a wonderful job with their career system but nothing in my intelligence tells me that you’ll see a bit of that re-emergence that you’ve seen in the States.
While the products are generally similar, the distribution side of the industry is where he sees the greatest differences.
“There is much less career captive distribution left in Canada than there is in the US. I would say that the Canadian market is dominated for pure life insurance by the MGA independent system,” he says. “The banks have a larger piece of some of the critical illness [and] mortgage protection products than you would see in the States.”
But as demonstrated by Hub Financial’s acquisition of Cortex Financial’s assets, the Canadian MGA market is continuing to consolidate. “Larger MGA distribution systems are buying up or consolidating smaller agencies into their broader system to be able to give a better level of training, support and access to carriers,” Garcia says.
