Saying it has listened to the views of group benefits and group retirement services advisors, the Canadian Life and Health Insurance Association (CLHIA) has made some changes to its controversial G-19 guidelines. But some advisors aren’t so convinced.
“Overall, I think the thing is still ill-conceived. We’ve still got a long way to go,” said Dave Patriarche, owner of Mainstay Insurance and founder of Canadian Group Insurance Brokers Inc. (CGIB).
“It’s not good,” added Robert Taylor, managing director at TRG Benefits and Pensions Inc. in Vancouver and spokesman for the National Coalition of Benefits Advisors. “It’s creating anxiety.”
G19 caused a major stir among advisors when the CLHIA released the guideline in January. At subsequent town halls across the country, advisors voiced their anger that under the original guideline it was insurers – and not the advisors themselves – who would be responsible for disclosing to plan sponsors anticipated direct compensation for new sales for group benefits and group retirement services advisors beginning Jan. 1, 2019. All compensation, including bonuses and sales trips, would be tracked starting the beginning of January 2019 and disclosure would be made beginning January 1, 2020.
In a news release at the end of May, the CLHIA made a number of changes, including agreeing that it should indeed be advisors who deliver compensation disclosure documents to the client, given the already established relationship between the two.
Extended the timeline
The CLHIA also extended the timeline for group benefits advisors to disclose new contracts to January 1, 2020, but held fast on the group retirement disclosures of new contracts at January 1, 2019.
Patriarche said he was pleased the CLHIA now agrees advisors should be in charge of delivering costs. But he said G19 is a consumer concern and the industry association should be concentrating on more important issues for consumers than disclosure. He particularly noted the recent report by the Parliamentary Budget Office that estimated the federal fiscal impact of including the value of employer-paid health plans in the taxable income of employees.
“Why are we wasting time on disclosure when there are issues like this?” said Patriarche.
He said that issues raised by G19 are not the purview of the CLHIA. “My understanding is that it’s not even on regulators’ radar. Consumer protection is the regulators’ primary goal, not business-to-business transactions.”
In its news release, the CLHIA said it was pleased so many advisors had taken a “keen interest” in G19.
“I am confident that the insurers and advisors can continue to partner together in the best interest of consumers,” said CLHIA president and CEO Stephen Frank. “Our ultimate goal is to ensure fair outcomes for all stakeholders.”
Back in January, the CLHIA said it developed the guideline as a response to international and Canadian regulations that focus on managing conflict of interest risk, providing disclosure to customers and treating customers fairly.
But Taylor said consumers, especially those on the low-end of the market, will be hurt the most by the CLHIA’s decision to keep group retirement disclosures of new contracts to Jan. 1, 2019.
Taylor said the premise of disclosure is good, but the industry needs time to transition to the new disclosure world. “The little advisor, who may not have a strong value proposition or may not be as confident about how he gets paid, needs time to ease into the new world. But the CLHIA is racing down this path. There’s going to be carnage along the way. A lot of little advisors are going to be hurt and out of the business. And then who gets hurt? Ultimately, it’s the consumer.”
He said that other jurisdictions around the world have shown that when there’s little access to independent advice, costs go up and some advisors leave the industry.
“The consumer should not be harmed by this [guideline],” said Taylor.
The CLHIA held a number of roadshows across the country earlier this year to outline G19 and to listen to advisors’ views on the proposal.
Erica Hiemstra, assistant vice president, distribution, at the CLHIA told a May CGIB meeting that there is still more that needs to be done.
“We did get a lot of useful feedback…so much so that it is going to take us some time to take stock of all of that feedback. I fully appreciate that time is of the essence…but we need to take the time to get it right.”
Advisors at the CGIB meeting also questioned why they have to make disclosures of their compensation when the insurance companies don’t say how well they profit.
Very strong points
“I would say that when it comes to insurers’ disclosures — that’s certainly not what G19 was developed for,” Hiemstra said. “That said, there were very strong points made during the course of the roadshow and I think we better understand those now.”
But when asked outright whether insurers needed to disclose pooled claims, Hiemstra said she was not in a position to comment.
The CLHIA has put together an advisory group that now consists of about 80-100 people.Its first meeting is expected to be held in June.
“We are looking forward to working very closely with advisors in this next phase to ensure that advisors’ concerns are taken into account and the process for compensation disclosure to plan sponsors works well for all stakeholders,” said Frank.