Mississauga, Ont.-based RBC Insurance Co. is paring back its lineup of insurance products, dropping two life and five living benefit products from its shelf.
RBC Insurance, a subsidiary of Royal Bank of Canada, made the decision to suspend selling the products after a recent internal review of its insurance portfolio, pricing, operations, and distribution, a spokesperson indicated.
“Evolving client and shareholder expectations, as well as increased regulatory requirements and the economic environment,” were cited as factors contributing to significant change in the insurance industry, said the spokesperson in a statement.
As of June 23, RBC Insurance will no longer sell its Term 100 and RBC Universal Life through third-party channels.
Also on June 23, it will stop selling five living benefit products through all channels:
- Long Term Care
- Critical Illness Recovery Plan Level Premiums to age 100
- Critical Illness Recovery Plan Level Premiums to age 75 pay to age 65
- Critical Illness Recovery Plan Return of Premium on surrender/expiry riders
- Quantum (a disability product)
RBC Insurance says it will continue to offer a number of disability and critical illness products.
According to an internal newsletter to advisors, RBC Insurance will be increasing the rates on its level cost of insurance for its Term 100 and RBC Universal Life products already in the market. The insurer also will be reducing its first year commission rates paid on conversions to RBC Universal Life from 60% to 55%, and introducing revised advisor compensation and chargeback schedules.
Over recent months, a number of Canadian insurers have made significant changes to their product lineups and services. In January, Montreal-based Standard Life Assurance Co. of Canada decided to exit the individual life and health insurance business to concentrate on its wealth management business. Recently, Toronto-based Manulife Financial Corp. has raised rates on some of its life and critical illness products.
With equity markets still volatile and interest rates at historic lows, insurers are having a difficult time achieving the rates of growth needed to match long-term liabilities. Insurers are also being negatively affected by the changing global regulatory environment, with financial firms being asked to hold more capital or make changes to how they run their businesses.