# From Irish Times, "Life Market only for Big and Strong&



## Liam D Ferguson (23 Nov 2001)

*From Irish Times, "Life Market only for Big and Strong&*

In todays business section in the Irish Times there is a smal piece called "Life Market only for Big and Strong"

Chief exec. of Friends First Adrian Hegarty claims there is no future in the life assurance market for small players saying, 

" There has been a dramatic change in the international economic and political environment this year. The life assurance industry has not and will not escape the effects of these changes." 

"The top five companies in the life and pensions market currently accont for 80% of gross premium income."

"This is a game for the big and the strong. Only companies which have got their cost base and competitive positioning right will prosper in the new environment."

I assume by small companies he is referring to the likes of Acorn Life and Quinn Direct.

How many other small life assurance companies are out there who share the other 20% of the market?

Is this just industry guff or is it a serious point he makes?.


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## Liam D Ferguson (23 Nov 2001)

*Re: From today's Irish Times*

Hi Jim, 

In the overall scheme of things, I'm just a minnow flogging a few life & pensions products and not that well-placed to be an "industry commentator", but I tend to take these "only the large will survive" comments with a pinch of salt.  (Especially when the source is CEO of one of the large players with a well-known expansionary leaning).  

Some of the small players are doing quite nicely thank you very much in their own niches - Caledonian Life with low term assurance rates and a with-profit bond, Quinn Life with low charging, index-tracking investment & pension products, Acorn Life with...well I'll skip that one.  

As long as these players keep competitive in their own niches and don't get any ideas bigger than themselves, I don't see why they can't continue to do well.  

Regards, 

Liam D Ferguson
www.ferga.com


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## Brendan Burgess (23 Nov 2001)

*From today's Irish Times*

<!--EZCODE BOLD START-->*  "There has been a dramatic change in the international economic and political environment this year. The life assurance industry has not and will not escape the effects of these changes."*<!--EZCODE BOLD END-->

This sounds like yet another "welcome to the new-new (i.e. old) economy" post dot-com knee jerk reaction. Or worse still - another reference to September 11 as the day that supposedly changed the world. Terrible and all as the events of that day were, I think it's untrue to make this assertion.

<!--EZCODE BOLD START-->*  "This is a game for the big and the strong. Only companies which have got their cost base and competitive positioning right will prosper in the new environment."*<!--EZCODE BOLD END-->

In my view (and this goes for many other industries too) "big and strong" and "low cost/competitive" are not always synonymous!

My verdict? Guff!


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## Bundy (23 Nov 2001)

*from todays irish times*

CM - everyone that spends half their working life in the employ of a bank ends up talking like that   >D


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## Brendan Burgess (24 Nov 2001)

*Re: from todays irish times*

What struck me most about the story when I read it first was the headline. <!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> Life market only for the big and strong<hr></blockquote><!--EZCODE QUOTE END-->

I thought that Friends First were adopting new underwriting criteria and only issuing life insurance to big, strong, healthy people. ( Not that I wouldn't agree with that strategy).

If the market gets down to 5 players, then new entrants will enter the market.

Lifetime entered the market only about 15 years ago and they have done very well. Ark Life is only about 7 years on the go and I think that they are doing even better. 

Likewise any European company could enter the Irish market quite easily and teach Friends First a lesson in administration if nothing else. 

Just like Northern Rock did to the deposit market and Bank of Scotland did to the home loans market. 

Brendan


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## Mithrandir (25 Nov 2001)

*Threat to Status Quo*

The real threat may not come from life companies at all,. but from process innovation that disintermediates life offices in the investment sector.


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## Henbit (25 Nov 2001)

*Life company employees have families*

<!--EZCODE ITALIC START-->_ Mithrandir_<!--EZCODE ITALIC END-->, if what you say comes true the implication is massive redundancy in the conventional life industry.

We know you are deeply upset about the social implications of redundancies in the <!--EZCODE ITALIC START-->_ Irish Times_<!--EZCODE ITALIC END-->.

Somehow (correct me if I'm wrong) if the same thing happened to the conventional life assurance industry, you might be gloatingly saying "I told you so".  

Don't you think that people in the life industry have families as well as the journos.?:mad


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## wallace carruthers (25 Nov 2001)

*Lifetime + Ark doing well*

would this have anything to do with the extensive client base and knowledge of clients financial affairs that aib and boi had? what simpleton would argue that the banking & life assurance companies of both, operate at arms length of each other?
their sales techniques are mind blowing
you need mortage protection? Cost £50(you can actually get it for about £10)
you need a car loan? Here's a £200 per month pension to go with it(client thinks he must do it otherwise no car loan)
you have £100,000 in a current account? Invest it in a bond(we are not making much on it where it is sitting at the moment) 
whats this new direct debit for abc life ?( we can do that for you so you should cancel the abc one)
"70% of ssia's done through this branch are equity based".

the list goes on. ask any ex employee?


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## Henbit (25 Nov 2001)

*WC*

There is none so bitter as a woman spurned <!--EZCODE ITALIC START-->_ <!--EZCODE BOLD START-->* except*<!--EZCODE BOLD END-->_<!--EZCODE ITALIC END--> an ex-employee. :rolleyes


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## wallace carruthers (27 Nov 2001)

*spurned*

i thought that the rebuttals would flow. wonder why not?


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## Mithrandir (27 Nov 2001)

*Disintermediation*

Life Offices will respond sucessfully to shrinking margin pressure by taking strategic stakes in intermediary firms. Watch this space.

Disclosure and rising consumerism was always going to effect the manufacturing and service processes before the advisory, given the continued demand for one to one advice. 

The whole thrust of the largely unstudied, and misunderstood attack under competition law on the IIF cartel, was based on the distortion of cost competition that prevaded the life sector for nigh on 20 years. What your seeing, on the back of technology-led developments, and greater consumer awareness, is merely the unwrapping of an artificial market.

(My point about the IT, was simply to give them a break over minor errors, that's all. No need to distort it by bending it into unrelated issues)


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## Henbit (27 Nov 2001)

*Reply to WC (not that he deserves one)*

"you need mortage protection? Cost £50(you can actually get it for about £10)" <!--EZCODE BOLD START-->* Actually one of the bancassurers is well known as having the cheapest Mortgage Protection in town, source <!--EZCODE ITALIC START--> LABrokers<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END-->
"you need a car loan? Here's a £200 per month pension to go with it(client thinks he must do it otherwise no car loan)" <!--EZCODE BOLD START-->* Totally reject the implied blackmail, but in any case, again bancassurers have the most competitive pension offerings around, and can anybody argue that saving for a pension is a good thing?*<!--EZCODE BOLD END-->
"you have £100,000 in a current account? Invest it in a bond(we are not making much on it where it is sitting at the moment)"  <!--EZCODE BOLD START-->* Actually non interest bearing credit balance current accounts are the most profitable product possible to a bank*<!--EZCODE BOLD END--> 
"whats this new direct debit for abc life ?( we can do that for you so you should cancel the abc one)" <!--EZCODE BOLD START-->* This is actually a slander and I am surprised that a Moderator has not removed it.  "Cuckoo" syndrome is an absolute no-no in bancassurance, banned by the Central Bank,  and even an ex-employee should know that.<!--EZCODE BOLD START--> :mad 

"70% of ssia's done through this branch are equity based". <!--EZCODE BOLD START--> The average ratio is about 30%.  Unlike the broker market where the average advice, I presume, is over 90% towards the equity based <!--EZCODE BOLD END--><!--EZCODE BOLD END-->*<!--EZCODE BOLD END-->


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## CM (27 Nov 2001)

*Reply to WC (not that he deserves one)*

<!--EZCODE BOLD START-->* Totally reject the implied blackmail, but in any case, again bancassurers have the most competitive pension offerings around, and can anybody argue that saving for a pension is a good thing?*<!--EZCODE BOLD END-->

Am I missing something here!? Bancassurers offering the best value pensions? Who exactly? Last time I went looking the charges being asked by bancassurers were extortionate compared to those charged by the Life companies and others such as EL (ahem!) and QL. I'd also say that many people would argue that saving for a pension <!--EZCODE ITALIC START-->_ is_<!--EZCODE ITALIC END--> a "good thing" although I generally agree with Brendan's assertion that it's better to take care of certain other financial issues (e.g. buying a house, general savings) first. On the other hand, maybe you left out a "not" there?


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## Freddie Kruger (28 Nov 2001)

*Re: Reply to WC (not that he deserves one)*

Jeeez!! <!--EZCODE BOLD START-->*   Cuckoo Syndrome*<!--EZCODE BOLD END--> . That's a new one on me.

Why did the Central Bank go to the bother of specifically banning it if it never happened? Who gave it the catchy name? :rollin  

CM , I think you answer might lie in the fact that no matter what life company,bancassurer or direct insurer an individual works for, they all think that their product is <!--EZCODE BOLD START-->*  the best*<!--EZCODE BOLD END-->.


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## Riddler (28 Nov 2001)

*Disintermediation*

Oh the Big boys song...the larger companies have struggled for scale and scope for over 20 years. The Hegarty cant is old hat and one could be forgiven for calling him Canute. As an ex-bank man he should be acutely aware of the inability thus far of the real big boys in realising scale and scope efficiencies. 
The life insurance industry will go through classic disintermediation where in the case of Ireland the only strategic response will be distribution access. 


R


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## wallace carruthers (29 Nov 2001)

*henbits reply*

re mortgage protection --- these rates change on a weekly basis
implied blackmail --- categorically deny that it never on does not happen and answer CM? 
£100,000 in current account --- your answer makes sense. why would a bank ADVISE someone to put this money elsewhere?  
direct debits --- answer freddie
ssias ---  that was a quote from a bank manager --- it is convenient to be able to blame brokers for your ills.


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## Dynamo (30 Nov 2001)

*Riddler's Point re Scale & Scope*

Not sure your point makes much sense Riddler. The big boys <!--EZCODE BOLD START-->* already have*<!--EZCODE BOLD END--> scale and scope. The big three (Irish Life, Lifetime, Ark) account for a very large chunk of most areas of the market, and already have access to lots of distribution via bancassurance.

Add in a couple of the bigger smaller players (if you know what I mean) and you have a pretty concentrated market. And there's been lots of consolidation in recent years - ain't many independent small guys left at this stage.

Most likely scenario to me seems to be more consolidation - remaining smaller outfits will get taken over by bigger ones or from overseas.


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## Freddie Kruger (30 Nov 2001)

*Re: Riddler's Point re Scale & Scope*

Hi Dynamo,

<!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> ain't many independent small guys left at this stage<hr></blockquote><!--EZCODE QUOTE END-->

A fate, no doubt, for the advisor market also?


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## Riddler (30 Nov 2001)

*scale and scope*

Dynamo: I wasn't referring to AIB, BOI or Irish Life when I wrote of big boys ....

Riddler


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