Industry News

Product innovation is critical for the industry to maintain and grow market share

By Megan Harman |

As Canadians prepare to retire in significant numbers, the insurance industry has an unprecedented opportunity to provide these clients with insurance, investment and income products for their retirement years, according to industry experts.

At the Canadian Association of Independent Life Brokerage Agencies (CAILBA) Annual Conference in Toronto, speakers said demand for advice and wealth products is poised to surge in the coming years. 

"Five million Canadians are going to be heading into retirement in the next 10 years," said Parul Vora, head of wealth products at RBC Insurance. "There is certainly a need for income and savings solutions."

Although there are many different types financial services companies competing for the retirement market, insurance advisors and carriers are uniquely positioned to cater to this demographic, given the mix of products that the sector offers. 

"What's really good for providers of insurance products is that we do have products that are unique compared to what some of the other players bring to the table," said Judy Williams, associate vice president of savings and retirement at Equitable Life of Canada. "We have products that provide guaranteed income streams, products that provide guarantees in downside markets and they have beneficiary designations."

These features have widespread appeal among Canadians as they head into retirement and strive to establish a stream of income that will last the duration of their retirement, Williams said. She noted that the payout annuity market grew by 28% in the first quarter of the year.

Segregated funds are also growing in popularity as investors seek out investment options with less downside risk as they get closer to retirement, the speakers said. In order to continue fuelling growth in this product line, they said the insurance industry must focus on expanding its seg fund offerings to include a much broader range of investment options.

"For all of the manufacturers, what we need to do is to focus back on providing as good a fund lineup as any mutual fund company does. I think you'll start to see more development from all of the companies," said Doug Paul, vice president, business development in Ontario, Western and Atlantic Canada at SSQ Financial Group. "We'll have infrastructure funds, resource funds, all of the alternative distributions, all of the building blocks that a good advisor needs to build a proper diversified portfolio."

This kind of product innovation is critical for the insurance industry, according to Goshka Folda, senior managing director at Investor Economics. Unless the industry continues to introduce products with features that appeal to consumers, she said other industry players – such as the banks – will take market share by introducing their own innovative products.

Specifically, she said many companies are exploring opportunities in the guaranteed income product space, especially now that most insurance companies have dialed back their guaranteed minimum withdrawal benefit (GMWB) product offerings.

"We're going to see more and more product development," she said. "If insurance companies don't continue to innovate…and deliver some of these guaranteed income features, others will step in to deliver that."