There's life yet in Irish insurance market, says eternally upbeat boss
Allianz.ie
By Laura Noonan
Thursday July 02 2009
THE life insurance industry has seen new business sales collapse by close to 40pc this year and is about to take another hit at the hands of a new levy, yet Canada Life boss Tom Barry is the epitome of calm as he sits in his Blackrock, Co Dublin office. "If you run a shop and if you don't sell something this week you don't make any money," he says. "Life insurance companies aren't like that. We have a big store of old business, we have millions of assets under management, so our starting position is not zero. "New business is required, but not required in the very short term." Excited As for the levy, labelled by the Irish Insurance Federation (IIF) as a threat to "thousands" of life insurance jobs, getting Barry similarly excited proves a challenge. "Applying the levy to us and not to other companies offering financial products creates an uneven playing field and we'd like to see that sorted out," he says, referring to the IIF's ongoing talks with the Department of Finance. But he insists that even if investment products from insurance companies are subject to the 1pc levy and those offered by stockbrokers and banks aren't, insurance companies won't pull out of the investment markets. "It's a 1pc levy -- the return from an investment could be much higher than that so you have to see it in that context," says Barry. "There'll still be a market there, it'll just be tougher". Barry is also unconvinced by the IIF's recent contention that the outlook for insurers is now "so bleak" that their "very futures" are "at stake". "Tax changes and pension legislation changes can have short-term effects, but the long- term effect is that we have an ageing population and more pensions are required," he says. "The growth will come." Barry's views are strikingly different to those expressed by your typical insurance executive, but then Barry isn't your typical insurance executive. This is a man who, sitting in traffic last year, made a split-second decision to ring Joe Duffy when he felt 'Liveline' callers were giving Canada Life an unfair crack of the whip on the sensitive issue of serious illness cover. This is a multi-qualified 25-year insurance industry veteran who recently decided to sit the exams to become a Qualified Financial Adviser (QFA), a title he didn't need and could have been "grandfathered" with. "A lot of people at work wondered what I was at, but the QFA board and the financial regulator respected it," he says. "Most of all, it was about showing empathy with the 200 people working with us who have to do them." His extra-curricular activities are similarly atypical -- Barry took up tennis in his mid-20s, went on to represent Ireland at over-35s and recently became All-Ireland champion in the men's over-50s game. When it comes to the day job, Barry's enduring faith in the market is demonstrated by Canada Life's drive to sign up 100 new financial advisers over the coming months, as the company looks to benefit from the growing pool of financial professionals in the jobs market. Listening to Barry's confident, assured tones, it almost seems like Ireland's insurance crisis has passed his company by just as the financial crisis passed by Canada Life's blissfully secure home market. "That's not it. I'm not denying that there are massive challenges," he counters. "The point is even when we have massive challenges we're a long-term business and we will deal with them." Response Canada Life has responded to the fall in new business by shedding about 30 people from its sales force, targeting the consultants who interact with brokers. Other costs are also being watched closely and some staff that have left other areas of the business this year haven't been replaced. The best-selling product in Canada Life these days is cash funds, where the company has cut charges from .75pc to 0.25pc to attract investment. "Most people investing there see it as a holding position until they're ready to get back into the market," says Barry. Barry is also planning to ramp up product developments to ensure Canada Life is "fast- moving to maximise our position" once changes to pension tax emerge. Plans to add the aforementioned 100 financial advisers to Canada Life are another part of the gentle repositioning. These professionals will work as "tied agents", selling Canada Life's products directly. "When you're at 5pc there's lots of potential to grow and win market share," Barry says. He insists, however, that Canada Life will not be going down the route of "buying" market-share. "Other people are certainly doing that and it's a problem, because we're not getting the market share we feel we should be," he says. "For us, it's very important that the business we do is profitable to the company so we turn down business that is not. "Our term insurance is a little bit more expensive than other companies, but it's at the right price to ensure the company remains strong and is out there in 20, 50 years to pay people's benefits." Barry says Canada Life also turned down "about half" the property schemes that came its way in the boom times, and carefully watches its book to make sure it's never too exposed to one type of risk. Pushing The energetic approach to risk management is attributed to Canada Life's roots in the Canadian financial system, a system that's become the envy of the world for managing to avoid the global financial crisis that has felled so many. Canada Life's parent company, Great West Life Co, has earned the much-coveted AA rating for its risk management efforts, giving Canada Life the only AA rating in the Irish life insurance market. "That's something we're pushing hard with brokers," says Barry. "A lot more people on the street know what AA is now than they did a year ago. "We're the strongest financial company in Ireland and that's why people should give us business." - Laura Noonan |