When I took on my new job in Quebec as a Sales Director, one of the first cases that required my attention and involvement was the replacement of a $50 million case and transfer of the cash values into new policies since the original policies were interest driven and about to implode. After many months of work with the clients, a solution had been found and the clients would be able to keep their coverage without facing a large premium increase. The advisor then called me because he was desperate. He had been told, it could not be done because there was no reinsurance capacity. I could not believe it myself. After all at Maritime Life, I had been in charge of a special unit who had put deals together involving more than $200 millions of reinsurance capacity. This was small potato for me.
So I reassured the advisor telling him not to worry and I would handle this. The first thing I did was to call the person who had been talking to the advisor and who was the senior underwriter in Quebec and this is what she told me: “I did not say that we could not do it. I said he would have to cancel the original policies and then when the capacity has been released and the reinsurer has confirmation of this, they can apply for the new coverage…”
“What do you mean confirmation? Are we talking hours, days…”I asked, not believing what I was hearing.
“I was told it could take as long to 6 months to a year…”
“Who told you that?”
“The reinsurance underwriter I am working with…”
“Do you understand what you are asking the advisor to do? You are asking him to advise the client to drop $50 million of coverage that is required and needed for up to a year and I guess that you are not even guaranteeing him that he will get the $50 million in 6 months or a year if health changes. Are you nuts?”
“Well this is what the reinsurance underwriter told me…”
I took a pause realizing something was off. “Why are you dealing with an underwriter on this? Anything outside treaty particularly capacity has to be dealt by the senior reinsurance actuary. Is he involved?
“I don’t know. I don’t see why?”
“Are any of our actuaries involved?”
“No. This is an underwriting decision…”
“No it’s not,” and I hung up not wanting to lose valuable time wandering what was going on here. The case required an actuarial assessment with a decision outside of treaty. Most people did not understand this but an underwriter even a Chief Underwriter must abide and follow treaty terms. If you want an exception to treaty then this becomes a pricing issue. So I got on the phone trying to find the actuary in charge which was more difficult than anticipated. It’s like everyone had forgotten about the basics. I finally found an actuary of the name of Greg Cerar and I literally had to force him to get involved.
First he offered me the usual crap. Since I had left Maritime Life to work in the field, reinsurance had changed and capacity was very much reduced because of a case of fraud south of the borders. We only had $50 million of reinsurance capacity and this meant to issue the new coverage, the old coverage needed to be cancelled with the reinsurer and retrocessionaires having confirmation of this which could take up to 6 months to a year.
My answer was this was crap. We don’t uninsured people. And I shared my experience with him. Don’t let a reinsurer tell you what is possible. You tell him what is possible and see how this changes the result. With this strategy I had been able to do what had been deemed to be impossible at Maritime Life in terms of products and capacity. You do not ask. You lead and do…
Then Cerar started to do his job and negotiated with the reinsurer. He would come back to me telling this was the offer and I would say no. “Me and the advisor won’t show this offer to the client where he will not be continuously insured for $50 million. No deal…”
It took about a few weeks but then finally I got the final offer. We would put the $50 million in place and then cancel the old $50 million subject to an endorsement stating that the new coverage was void if the old $50 million was not cancelled. But there was a problem with the wording of the endorsement. As written, the endorsement allowed the client to keep the old $50 million and I stated my reservations to Cerar who answered:
“This is what has been agreed with the reinsurer. We are not changing a word…”
I said ok then. I knew there were no chances that the clients would keep the old policies. The cash values were needed to fund the new policies but I felt strange in explaining to the advisor the meaning of the endorsement that allowed what we had tried to prevent from the beginning. But then nothing had made sense with this case. Another underwriting problem had surfaced and they were requiring an eye exam. The client refused stating that his vision had nothing to do with his insurability. When I asked the underwriter why they needed this eye exam, not surprisingly the underwriter stated they could not discuss because of confidentiality issues to which I answered: “How me and the advisor are supposed to reason then with the client. Gives us something that is justifiable…”
We received no help but then I received a call from the advisor: “I did it. I convince the client. He will take the bloody eye exam.”
“Perfect,” I said. I will call the underwriter. So I call the underwriter and this is what she told me: “That’s good but we reviewed the file and we’ve decided that we don’t need the test after all.”
“Damn you underwriters,” I almost shouted in the phone but I was drained of any energy and concocted instead an excuse to the advisor in order to justify why we did not need the test. Sometimes you do have to hide some truth from the advisor or he will believe we are a bunch of morons.
Well that was it and everything was settled. Now we just needed to get the endorsement out to the client and have him sign it but the endorsement was in English and the client was French. No problem, this is why we have a French translation department. So the underwriter sent the endorsement which was about a dozen lines and got a response that it would take a few weeks to get this translated and the underwriter just forwarded me the response washing their hands off their responsibilities. Do you think for a moment that I would let this jeopardize months of work? The client expected to sign the endorsement in French today. So I took the endorsement and even if I had to stand by a translator for him to do his job then this is what we were going to do and I did this. Half hour later I had my endorsement translated and the thing got signed as it was planned.
Ironically the manager of the translation department sent a beautiful email about us strong harming her translator. Well sometimes you can never win. That’s why I got paid the big box right? Right…
Why am I telling this story? With all the consolidation that has happened in the insurance industry, there has been a tremendous loss of knowledge and culture. Just in my sales unit, every change initiated out of Toronto was just an opportunity to get rid of people with more than 25 years of knowledge. At the end, where the average experience of my unit was 20 years, it dropped to less than 5 years. That was it for me when I was told that our technological support person was going to be the life wholesaler now. Before I was an insurance wholesaler, I put in 10 years of hard work and studies. I was a CLU, CFP, RHU, FLMI… And then I had put 10 years in the field in sales before becoming Director of Sales… and a techie was to transform himself overnight into a wholesaler and talk insurance like an expert telling advisors how to increase their sales…What morons imagine this sort of things? It was insulting. It was like the radio station I had been listening since I was in Montreal. Suddenly the radio hosts were fired and replaced by monkeys… It was insulting for the radio host but even more for the consumers telling them they could not make the difference between a monkey and a good radio host. This was the last time I listened to this station…
For the advisor, the actions of Head Office morons can have a tremendous impact. I always said that in an advisor career he would be faced with “the case of his career” that will define his career. And no advisor can make it happen without a strong sales team and sadly most advisors deal with the wrong people blowing the opportunity of their career.
One of our top advisors in Quebec knew this. He was at the end of his career and he had an amazing case involving more than $200 million of insurance in total. He had contacted many insurers and had been told it could not be done. He knew me from Maritime Life and when he learned that I was coming back to sale management. He knew I was the guy to make it happen. When I discussed the case with him, I did not see any problems with the case. I could sell this to Head Office and I would make sure they could sell it to the reinsurer. So everyone met and I drafted for the occasion the underwriting approach letter myself to be presented to the reinsurers and as expected, it could be done but it would be done my way…
This was part of the deal that I had made with the advisor. He was in charge of the relationship with the client. Anything technical I was responsible for with the Head Office and also with the client. This meant that for anything technical I did the presentation as an insurance specialist to the client. If we lost to an objection of the client, then I would be the one losing the objection. Because he was sitting on the same side of the table with his client, his job would be to empathize with his client and even if this meant stating that I was wrong and they were right. That dynamic created a barrier between the technical and the relationship which was extremely important allowing us to control the impact of any objections.
He also could not shop the case. Any additional applications would send shivers in the reinsurance market. Also since there was many insured involved and underwriting times would differ by insured, we would not put the policies in force as a group. Each time we had a standard offer, the policy would be put in force immediately. I would not have all this work unraveled because of a change in insurability. The client would pay YRT cost. The advisor and client agreed to my conditions.
With Head Office there were also problems. I had been successful at Maritime Life because there was only one captain on our large cases. So I was Captain here and yes I had to respect decisions made by other departments but I decided the speed and direction of where we were going. For example, I did not want the advisor to submit signed illustrations at the beginning. The client did not want to discuss product and premium payments until all insured had gone through underwriting. We had submitted all policies as YRT Universal Life and were issued one by one on this basis but in the end the client could have just decided to go with Term. The client who acted as trustee for his client did not want to have conservations with the owner of the trust about product until he had all info in hand. Every week, someone at Head Office would try to convince me that signed illustrations were required and I would state: “No, this will be done on delivery.” If we had done otherwise, the case would have fallen apart. Still I was not popular with the decisions I was making.
But the case was done my way. I made the last presentation to the client. My recommendation was that he takes a Universal Life guaranteed (run at minimum guaranteed interest rate of 2.5%) as a 20 pays. The client objected. They had their own portfolio manager. Why would they invest into a Universal Life at 2.5%. Hard question to answer if you don’t understand that life insurance is about long term results. But in the end the client agreed to my recommendation.
So that’s how this advisor was able to end his career with the greatest case of his career. He did his job well and he handled the relationship like a pro. The advisor forgot my rules once and did a technical presentation to the client which ended with: “What you just told me is that I should not get the insurance…” I ended the meeting and this was the last time, the advisor tried to act as the specialist. From then on, if something technical needed to be explained, I would do it or I was going to bring someone from Head Office to do it. We would never jeopardize the relationship again for a technical point of view. You can recover from any technical mishaps but not if it becomes also a relationship issue. Where there is still a relationship, a case is never dead. There is always hope. For me, this was worth protecting at all cost.
So you have are faced with the case of your career. First surround yourself with people who have experience. Second you will have to accept that you will have to give away control. So your role is to be on the same side of the table of your client. So you need to trust the people involved. Your sales team work for you but they are also employed by the insurer. It takes a very special sort of person to stand his ground and protect your interest when he thinks that Head Office is not right. I was told often by Head Office that I was intervening in areas outside of my control. That was not true. My role was to make certain the left hand knew what it was doing and that it knew what the right hand was doing. Dealing with the big picture is different than intervening in department decision. It means someone who can see the big picture and who is not afraid to take the phone to have a chat with the Chief Underwriter to say are you aware of this? Have you seen this or considered this? And often enough the answer was negative and this had an impact on the decision. It’s not easy and this is why he is paid the big bucks right? Right…
Finally to show you can’t win, at the end, when the case was done, the advisor was not happy with me. Between the first policy issued and the last policy issued there had been more than one year difference. And this meant that that the additional premium paid on 20 year basis did not get commissioned as first year premium but as renewal premium which is a lot lower. If the policies had been issued all at the same time, a little bit more commission would have been paid. But then we would never had succeeded and he would have never received commission at all…In facts, 2 years later the face amount were changed and my decision saved him quite a bit of chargeback…