Despite sitting among the top five companies for disability insurance premiums in force in Canada and first in the blue-collar sector, Mississauga-based insurer Penncorp continues to struggle to make its name known. In a bid to emerge from the shadows, it is adopting a three-year plan that will see it further align itself with its natural market.
With its new triennial mutual insurance plan, Penncorp is preparing to make its mark. And it will do so by following in the footsteps of its parent company, La Capitale, affirmed Steven Ross during a strategic interview with The Insurance Journal. President and chief operating officer of Penncorp, Mr. Ross is also executive vice-president, individual insurance and annuities, at La Capitale.
Penncorp has specialized in Canada since 1971 in accident and health insurance for the self-employed and blue-collar and "grey" collar workers. It also sells whole and term life, long-term care and mortgage insurance. La Capitale purchased Penncorp in December 2006.
On July 31, 2008, Penncorp held assets of $311 million, of which $241 million was attributable to its business lines. Penncorp products are offered across the country and has over 150,000 clients.
Mr. Ross explains that Penncorp’s new business is generating two-figure growth, which, in his words, is "superior to the industry average." In fact, Penncorp’s return on equity has ranged between 15 and 20% since December 2006, "and this is the rate of growth we are targeting for the coming years," he adds.
According to Mr. Ross, Penncorp already sits among Canada’s top five disability insurance providers and leads the market in guaranteed renewable products based on in-force premiums. "This is our target market," continues Mr. Ross. "This product, which is less costly than high end disability insurance, is the preferred choice of blue collar workers. We are paying $2 million in benefits per month."
Yet, despite the company’s enviable position, Mr. Ross acknowledges that the insurer remains little known in Canada. "Penncorp’s current situation somewhat resembles that of La Capitale five years ago," he explains.
And, he states, the company has no intention of accepting the status quo. "We are aiming to double our sales within five years, as we did at La Capitale," he says.
Penncorp will launch a Canadian offensive in various media from August to December of this year. Mr. Ross sees the initiative as a way to raise the profile of Penncorp’s added value: products for independent workers in high-risk professions. "We want to demonstrate our commitment to market segments that other insurers shy away from," he stresses.
Mr. Ross has a favourite anecdote to illustrate this commitment. "During a recent Penncorp conference at a hotel, the musician who provided the evening’s entertainment came to thank us in person. Twelve years prior, we had been the only company willing to insure him."
Penncorp does not want to limit itself to disability insurance. "In the fall, we plan to launch long-term care insurance priced below the competitors’ products," he explains. "Benefits will be paid daily, both for in-home and institutional care. It will also be a simplified issue product. The advisor will know if his or her client has been approved after asking about a dozen questions."
Mr. Ross is adamant about one of the product’s features: a benefit will be paid even if the insured is incapable of performing just one recognized daily activity. Normally in the industry, a policyholder must be incapable of performing two activities to qualify for long-term care benefits.
"It’s not just due to their pricing that long-term care products are not selling," he continues. "This is a complicated product whose selection process is long and involved, which can be an irritant for advisors. Our product will take off, because it combines simplicity, speed and accessibility."
The three-year plan that will be adopted this fall targets growth, both for La Capitale and Penncorp, says Mr. Ross. "Once again, we are aiming for a higher rate of growth than the industry average," he states.
The two insurers also intend to focus on their client approach. The president of Penncorp wants to spread the word that advisors will not have to call ten departments for ten different business lines, as can be the case with the larger companies.
Above all, the two companies are setting their sights on the middle class market. There will be no universal life product designed exclusively for high net worth clients maintains Mr. Ross, but rather products with accessible pricing for middle class clientele.
Penncorp and La Capitale plan on merging their back-office systems. "We will be changing all of our IT systems between now and 2010, at a cost of $10 to $15 million, to increase efficiency," he explains. "Both companies will use the same system."
Based in the Quebec City region, Mr. Ross travels to Mississauga once a week to follow the growth of Penncorp and participate in the development of new specialized distribution networks for self-employed workers.
Down to earth
To compete with the major players in disability insurance and dominate the blue-collar market, Penncorp is drawing on its grass roots strength. This approach is reflected in its choice of regional directors, explains Mr. Ross.
Wes Bazowsky, for example, was recently named Penncorp’s regional director for the Maritime Provinces in the company’s Halifax office. Formerly with Combined, Mr. Bazowsky has forged a solid bond with farmers, fishers and other blue-collar workers during his career. "This experience is a real asset for Penncorp, which is active in this market," affirms Mr. Ross. "Penncorp products sell particularly well in rural areas."
Penncorp’s blue-collar product, Guardian Income Protector, is a good example, he adds. One of the insurer’s top sellers, it is guaranteed renewable disability insurance for blue-collar workers. Mr. Ross explains that the product offers selection at the time it is issued and not when a claim is made, which accelerates the process in case of disability. In addition, the product’s benefits are non-integrated, regardless of the type of benefits that may be paid from other sources.
Another important advantage in this type of market is that the product has no restrictions or exclusions with respect to back or ligament problems, unless there is a pre-existing condition. The reimbursement of premiums is also popular, with one client in three opting for this clause, concludes Mr. Ross.