RBC Insurance plans management overhaul

RBC Insurance has undertaken a major overhaul of its executive suite, designed to integrate executive functions, and design and delivery strategies across the insurance product spectrum.

An internal memo obtained this morning by Advisor.ca, issued on behalf of RBC Insurance president and CEO Neil Skelding, lists detailed changes in structure and executive responsibilities with a focus on the client relationship. It seemingly places less emphasis on broker and agent relationships, stating that “While our various distribution partners are important to our success, we defined the client as the person who ultimately pays the bill.”

However, when contacted by Advisor.ca, Skelding said the changes were designed to accommodate existing agent and broker relationships as well as direct client relationships. The management changes would not affect existing client relationships.

“With respect to brokers and MGA’s (managing general agents) and so on, in those situations the client belongs specifically to the broker. It is not our client, other than we will provide services to that client on behalf of the broker, but that relationship does not belong to us,” he said.

Taken together, the changes include concentrating responsibilities for all product lines including life and health, creditor protection, home and auto and travel insurance under a single executive and suggest a greater aggressiveness by the company across product lines in both Canadian and American markets.

The memo also suggests a stronger focus on cross-selling strategies, as it says that one of the goals of the management realignment is to “build on our capabilities by collaborating across product lines, distribution channels and client services.”

The memo also suggests that RBC views its brand name and product roster as crucial to its strategy for building market share “both amongst the insurance arms of Canadian banks and within the insurance industry as a whole.”

Perhaps suggesting an increased battle for insurance market share amongst Canadian banks, the RBC changes follow the recent announcements of product and retail initiatives by Scotiabank. While conceding that bank competition for the insurance market has increased, Skelding maintained that RBC had planned the changes “for some time.”

“My observation would be that the banks are stepping up their insurance activity,” he said.

The changes include creation of a new role — the head of Canadian insurance business — and the appointment of Cathy Honor, formerly head of global cards and payments. Her dossier will include product strategy and development, price and client strategy for all RBC Insurance product lines, including life and health insurance, home and auto insurance, travel insurance and creditor products.

The sales and distribution group becomes responsible for sales, sales strategy and support for third party distribution channels. The company’s insurance operations group now has responsibility for claims and underwriting of all product lines. This reflects the company’s attempt to formulate what the memo terms an “end-to-end” client experience.

Meanwhile, John Young, until now president and chief executive officer at RBC Life Insurance will take over all of RBC Insurance’s global investment activities. The memo also outlines the creation of a new head of the company’s United States travel operations and the appointment of Stan Seggie, who currently heads the travel operation. This appears to reflect a strategic decision to grow those product lines in the American market.

The memo also hints at future growth through acquisitions, noting that Paul Greb, currently head of insurance distribution strategy moves to become head of business strategy and strategic operations, and that his dossier will include strategic operations, mergers and acquisitions.

Left unclear is the intention behind some of the appointments, since the transfer of John Young, a longtime insurance executive, to the investment operation reduces the amount of career insurance experience in day-to-day decision-making in the executive suite.

RBC Insurance plans to phase in the changes by October 31st, the end of its current fiscal year.

Al Emid, a Toronto-based financial journalist, covers insurance, investing and banking.

(08/28/09)