Industry Update - Summer 2013
By Jason Watt, CD, CLU, RHU
The second quarter of 2013 has seen less change from within the insurance industry than we have seen in recent times, but much activity from external sources. There have been no major entrances or exits from the market by insurers, but there have been several high profile mergers and acquisitions among Managing General Agencies. Some new product developments have seen the re-introduction of variable premium permanent insurance, as well as moves towards non-guaranteed premium life insurance. Premiums for level cost of insurance permanent products have increased again, but industry experts generally indicate that this should be the last round of pricing increases.
On the regulatory side, there is a push to some sort of revision of the advisor role. The Canadian Securities Administrators produced a consultation paper late in 2012 that seems to indicate a move towards a fiduciary standard for financial advisors. While this may not happen, it is most likely that some change will come about in the next 2-3 years affecting the role of the financial advisor. Consultations around this are taking place through the summer of 2013.
The Canadian Insurance Services Regulatory Organizations (CISRO) is working towards the new Harmonized Life License Qualification Program (LLQP). The Harmonized LLQP will introduce the LLQP into Quebec, and create a national level of oversight of the LLQP program. It will also break the provincial LLQP down into Modules, which should make both studying and passing easier. These changes are expected to be implemented in the fall of 2015.
Budget 2013 saw many changes of great significance for personal financial planning. Two aggressive life insurance tax planning concepts, the 10/8 leverage and leveraged insured annuities (the ‘triple’) are likely going to be lost as a result of this budget. Business owners gained with the plan to increase and then index the Lifetime Capital Gains Exemption, while they lost with the plan to increase the effective tax rates on ineligible dividend income.
There are several other changes of interest, and we encourage you to read up on them.