Defining themselves as a group benefits Managing General Agent (MGA), Group Force Benefits says it wants to focus on transparency in the insurance market, for the benefit of advisors.
The Insurance and Investment Journal met with three of the company’s managers to discuss its expansion plans. The company, a subsidiary of the American corporation NFP, operates in Quebec and Ontario. It works with around 70 advisors in Quebec and 160 in Ontario. Its revenues are approximately $20 million.
Michel de Paiva, vice president, Eastern Region, said Group Force is a true MGA. “We offer all possible services to advisors who bring us a mutual client in group benefits. Our client is first and foremost the advisor. We leave him his full commission. The insurer pays us, without it affecting the advisor’s commission nor his bonus.”
Group Force presents itself as the advisor’s administrative support team. The MGA conducts its own studies of the market, to which advisors have access. The company also offer advisors the opportunity to review insurers’ analyses at renewal to ensure they are fair to the employer and employees in relation to the group plan’s use. Group Force can also offer support for employers, notably to calculate employees’ deductions and taxable benefits.
Martin Shaw, NFP’s Managing Director, Canada, says life insurance MGAs in Quebec don’t act the way a real MGA should. “They act as representatives for the insurers. An MGA should be at the advisor’s service, not the insurer’s. They shouldn’t only offer a price on an advisor’s commission.”
To back this argument, Shaw contends that each MGA in Quebec identifies itself with the main insurer with which it does business. He adds that the situation is the same in the rest of the country as well.
Group Force distinguishes itself through its transparency towards advisors, says Mr. Shaw. It’s one of the reasons Group Force will not touch the advisor’s commission. He adds that the MGA focuses on working with advisors who disclose their fees to their clients.
“CRM2: a great thing!”
Shaw adds that he thinks Client Relationship Model - Phase 2 (CRM2), currently being implemented in the investment sector, is a positive development. He deplores the fact that the life insurance sector has not followed quickly ensuring clients understand how much they pay in fees. He says he is sure that the group insurance sector will be even slower to follow.
Shaw says he finds it abnormal that the MGA chosen would have an impact on the commission paid by the client. Advisors should be making their choices based on the services offered by MGAs.
Though such strategic choices could irritate some advisors, Group Force’s management team believes the firm will keep growing in Canada. “The advisors who we work with appreciate our value proposition. When we approach a firm, it is because we believe we would work well together. We are aware there are many with whom we would not be compatible,” says Michel de Paiva.
Group Force says though it intends to expand, it will remain selective. “We do not want to be the MGA that works with 800 firms, 500 of which give us just one contract per year. We will not be the Wal-Mart of the insurance industry,” says Shaw.
In an effort to remain transparent, Group Force limits the number of insurers to those deemed essential. The MGA prioritizes two insurers at the moment, Manulife and Great-West Life. The company hopes to add Sun Life Financial in the near future. In Quebec, Group Force also has some specific agreements with La Capitale and Empire Life.
In addition to group insurance and benefits, Groupe Force has developed expertise in group RRSPs. “We want to become the advisor’s key partner,” says de Paiva. “We must offer the best support possible. We want to be a strategic ally.”
Sally Hagan, Director, Group Benefits & Retirement at NFP Canada, said advisors should feel their performance will be enhanced by working with Group Force. “They must think they will be capable of offering better service,” she said.
“That is what a real MGA does,” added Shaw.
Though Shaw may seem critical of life insurance MGAs, he says he does not intend to enter their market. “We will do all we can to facilitate the work of advisors. The Canadian market is flooded with MGAs.”
Open to acquisitions
Group Force is open to making acquisitions in the Canadian market, as long as it brings value to what the MGA is doing. “We do not want to be a retirement plan for advisors who are selling. The transaction should be efficient. That explains why we do so few,” says Shaw. He believes acquisition opportunities in the group benefits field is best in Quebec.
In Quebec, Group Force has $50 million in premiums. The company aims to reach $80 million in the near future. In Ontario, this number reaches $200 million, and the goal is to get to $250 million. “We need to create opportunities to reach these objectives soon.”
What is Group Force’s biggest rival? Stereotypes, says Mr. Shaw. “No one does what we do the way that we do it.”
He names GroupQuest Benefits, more present out West, as a worthy opponent. He also says he comes across PPI Group when he approaches firms. In Quebec, he sees Group Censeo as his company’s main adversary.
“What we offer is unique. That eliminates competition. We want to create a sticky effects with advisors,” says Hagan.
Shaw says, however, making people understand what Group Force does can be a challenge.
“We are like a back office that makes (advisors’) firms more efficient”, explains Hagan.
In some cases, Group Force can directly serve clients. Shaw compares Group Force’s approach to the likes of Hugo Boss luxury goods, which sells its products through its own stores, but also through other retailers. “Both markets are important. We use their strengths. The added value should be the same in the end.”
Mr. Shaw says his company has an array of products to help advisors with their work. “We believe what we offer is very attractive. We offer everything in a paper-less environment. We also can offer them business cases and act as consultants, while exercising caution when it come to projections. Above all, we need to offer added value.”