Category: Articles

Prologue

Great West Life was magnanimous in renting out Glenn Chudley to help RGA Life Reinsurance Company assess the claims processes and procedures of one of Australia’s largest financial institutions. Getting Glenn to say yes to 3 weeks in the sun and fun of Australia was easy. Getting Great West to say yes was slightly harder but they saw the inherent benefit in Glenn learning the intricacies of a mature critical illness market and a claims market not unlike Canada. It was going to be a win for all parties to have Glenn on the team since he is recognized as one of the best at his trade in North America.

I was to understand later that he should adhere to claims since driving for a living is not a viable option.

The Tale

Left I Say, Left!

The first week of the assignment went exceedingly well as Glenn’s depth and scope of claims expertise was more than we had imagined (we did have limited imaginations). The team quickly delved into the intricacies of a very large organization and uncovered many an aspect that could be changed or at least amended. Glenn worked diligently at the task putting in long hours and avoiding the attractions of nearby Bondi Beach. We made sure he was too exhausted at days end to want to attend the midnight Fringe Festival which featured nude surf boarders.

At the end of week one, in recognition of his days of toil and suffering through sunny 32 Degrees Celsius we decided he could have Saturday off and Ross would take Glenn and his dear wife Carol off to see the Hinter Valley and it’s hundreds of vineyards. Renting a car was the logical choice at the time although on hindsight a bus ride may have been more relaxing. If only Ross had not conceded to let Glenn drive! You could sense an excitement in Glenn as he spoke more passionately about driving in a country that has right hand steering and uses the left side of the road. We picked up the car and without much investigation or prescreening allowed Glenn to take the wheel out of the parking lot.

Glenn’s immediate right turn into the right lane (wrong lane) was a precursor of things to come. For the first 3 kilometers through city streets with turns and stops Glenn practiced corrective measure after corrective measure as he perpetually was recovering from right turns into right lanes (wrong) or left turns into right lanes (wrong again). Glenn would get better I assured myself sitting immobile and strapped in the front passenger seat. I later realized why Carol preferred the safety and the oblivion of the rear passenger seat. What you cannot see cannot hurt you mentally.

Next we were on the rather major city street with its four lanes — two of which I assured Glenn were for cars coming in the other direction. Was it I or was Glenn really able to drive that close to cars on his left without losing his left side mirror. Wow I thought, Glenn is a great driver since he can come as close as a millimeter without harm to either car. Yes I checked and seat belt was done up and I was sitting ready for any eventuality.

Fifteen kilometers of Glenn playing chicken with cars on our left going in the same direction was about all I could stand and thus I was thankful to see the freeway entrance. Surely Glenn will drive differently at 110 Kms per hour there than his left leanings on city streets.

Wrong! I have never been on a freeway for 70 minutes where the driver could for 90% of the time drive on the corrugated warning strip and not move the car back into the center of the lane. I guess I should be thankful that he at least chose the left lane of the two and spared scrapping cars. We were so far from cars on the right we created new tracks on the soft shoulder. Did Glenn not feel the clicking of the warning corrugation or the pot holes that occasionally sprang out of nowhere in the dirt? Carol, bless her, remained silent in the rear of the vehicle probably deep in prayer. The M4 freeway running out from Sydney now has a third lane thanks to Glenn’s driving.

Off the freeway and into a parking lot where I grabbed as politically and diplomatically as possible the car keys. It was my turn to take the wheel. While we visited the tourist information office not a word was said other than “Gee Glenn you drive a little too far left.” Uneventful visits to a couple of vineyards and I continued to drive in a proper fashion but I have done this before many times. The question was would Glenn ask to drive again?

It happened sooner than expected. Like a kid in a candy store Glenn wanted the adrenalin rush of being behind the wheel again. Thankfully Carol spoke up in her soft manner and said “Glenn do you realize how much you drive too far to the left?” This was my cue to reinforce the remark by adding “Glenn you are really driving dangerously close to the side of the road and didn’t the clicking of the corrugation or the pot holes tell you anything?” Glenn acknowledged our concerns, said he would correct his error and got behind the wheel.

No more than 2 kms late the adventuresome Glenn was at it again. I swear he hit every pot hole possible on the soft shoulder (left side) and oh we came so close to wiping out the poor cyclist that I can still see the look of sheer terror in her eyes at a car so close! DO I say something or wait for Carol to break the silence once more? Into the laneway and a chance to relax from the tension of being Glenn’s passenger. The serenity lasted mere seconds as Glenn decided to trim the tree that was well over on the left side of the laneway with the rental car. I rarely drink but it was getting close to finding a distillery and a tall glass for nerve soothing.

Okay he can have one more turn behind the wheel but I will drive the majority of the afternoon. After all Carol and I can outvote Glenn 2 to 1. His last session behind the wheel and he still struggled with getting out of the parking lot after consuming an Australian hamburger (lots of pickled beats please). Stay left Glenn but not the soft shoulder please. Paved roads over pleasant countryside with little or no traffic to scare out of their minds. If anything happened I was going to revoke Glenn’s Canadian citizenship. For about 10 kms Glenn actually steered the car correctly about 50% of the time. He was improving I foolishly thought to myself.

That is a bend in the road up there I said to myself. A slow easy bend to the left over a modest bridge spanning a small gorge was all Glenn had to face. Sitting in the front left passenger seat gave me a first hand picture of the curb that also accompanied the bridgework. “Glenn surely sees the curb”, I thought. “He must see it now!” kept entering my thoughts as we sped towards collision with an immovable object. The only remaining question was would he mound the sidewalk or hit the abatement straight on?

With a thunderous clatter hubcaps went flying, tire exploded and steering became even more erratic than Glenn’s usual driving. As we coasted to a stop some 100 metres along Glenn’s favorite place, the soft shoulder, I asked Glenn if he saw the curb or did it jump out of nowhere. Friend or no friend Glenn you drive too far to the left. I left most of the superlatives to Carol who said she had never thought hubcaps could fly so far.

It was 2:05 PM on a Saturday outside of Wilton Australia where all we had to turn to for help was a church (to late to pray) and a variety store turned movie rental shop. No there was no service station near by to fix the two tires. No there was no near by rental agency and all rental shops close at noon. To make a long story shorter Glenn put the spare tire on and basked in the 35-degree temperatures. When help was impossible we agreed to chance the drive back to Sydney on the spare plus the other tire whose rim was distorted but tire held air. I drove.

It was a slow drive back as every kilometer was full of the expectation our other tire would explode. Silence ruled after all the “Didn’t you see the curb Glenn?” statements by Carol and I. It was an adventure not to be forgotten. For the rest of the period in Australia Glenn was banned by all from driving, sitting in the drivers seat even for practice, or talking about the curb that attacked him in the Hunter Valley. The rental agency was glad to see us back and they immediately revoked Glenn’s

preferred status and took sufficient cash to pay for two rims, two tires and a major front-end alignment.

Epilogue

Glenn remains a friend but I will not ever lend him my car. Glenn still has my appreciation for his claims leadership but I do not want to be in a car in Winnipeg when he is on the road. Glenn contributed greatly to the review and benchmarking of the major financial institution but I will never refer to his driving as being the benchmark for anyone to achieve. Glenn is fortunate to have an understanding wife for mine would have clobbered me for such a harrowing experience.

In the end I have another story for my book. Without the fun and excitement created by Glenn it would have been a ho hum day. The remaining question is “Does Glenn vote left as well?”

I started when I was 20, 30, 40 or some other age.

I was educated in business, nursing, philosophy, abstract mathematics or every thing else imaginable.

I am not an actuary, accountant, or agent and I do not want to be.

I am an underwriter, but honestly, I do not know how I ended up in this occupation.

I use the best judgement to insure I differentiate risk in a fair and equitable fashion.

Underwriters do not get their “jollies” by declining risk, but rather by saying yes to policy issue.

My tools are not witchcraft, chicanery or obstinacy.

My tools are the best available sources of information from medicine, actuarial science, legal and regulatory.

My task is to wear Joseph’s multi coloured coat of experience and extrapolation to make a decision.

I know the answer is a mix of science and common sense, with art only in the delivery.

I know the science must be current and accurate.

The art must be more of the pot I blend the information in than any main ingredient.

Underwriters are neither “fish nor fowl” and have struggled with their identity for decades.

I know the great commercial underwriters worry little about their moniker and lots about the quality of their decision.

I live with the reality that every life I underwrite will eventually get sick, have an accident, have a critical illness, need long term care and then die.

I just do not know when each will occur and never pretend I do.

I read the saddest of medical files and take their secrets to my grave or at least my dementia.

I am not a mind reader, clairvoyant, prognosticator, or perfect predictor of anything beyond the averages.

I have empathy with many and sympathy for most.

I am computer literate but lack modern software or processes to maximize my talents.

I know the age of expert systems is here and is the way of the future, but no one said the future is always for tomorrow.

I am fearful for the jobs of my peers but positive enough to know I and the other best of breed will more than survive.

I and others will succeed; no, excel, in the new regimes ahead.

Now and in the future I can acknowledge the work I do is “professional” and rewarding.

Underwriters now and ever more play a significant role in risk management.

I am an underwriter, plain and simple yet complex and ever morphing.

By Ross A. Morton

Reflecting as he flies from here to there or was it there to here?

2004

“It sure is a boring summer with nothing exciting happening in our business”, said the old timer who likes to feel the vibes of change. He of course was talking about the sleepy life insurance industry. He also has become so accustomed to rapid and exaggerated change plus unwelcome headlines that he no longer labels the now routine noteworthy.

Lets start with the KPMG Ethics Survey 2000 that I have read snippets of but since I am too frugal with my time I have not read every word. For those interested in the survey it is available at www.kpmg.ca .It is full of all the great statistics of how ethics are not being nurtured and few companies give this a priority. My first reaction was to resurrect the “semper ubi, sub ubi” article from MO’s archives. Then I said to myself that that windmill has already been challenged. On questioning a friend of mine who is close to the MBA circuit and continuing education for executives I learn that ethics courses are in such great demand people are being turned away. I thought the ethics of an organization were instilled in new employees by the old guard and the leader. Has this become so specialized that it is now outsourced?

If one (the proverbial employee of nondescript features) has not learnt enviable ethics before entering the workforce can one ever learn? If one has not learnt ethical values from one’s first leaders can one ever learn? If the actions and verbal utterances of one’s current leader are not reflective and definitive of true ethical behavior can one ever learn?

Can a daylong course on ethics and a certificate hung on the wall equate to an insurers integrity being of high ethical standards? Something like two thirds of companies said they are implementing practices but there is some concern for the amount of time to fulfill those practices. Of the responding companies some 42% have a senior level manager that has the ethics conundrum under their list of to do’s. Training in ethics is provided by about 39% of the companies in KPMG’s survey. I am sure no company is spending more time than the Royal Bank conglomerate who just had the bad fortune of being at the very public end of intense scrutiny over in my opinion ethical behavior! Just imagine what has not been uncovered in our financial services industry. I take heart in the KPMG survey that included about 1.5% life insurers and I will imagine they are all on the higher ground.

Before the ink had dried on the above paragraphs I am stunned by the news my industry has taken a body blow to the kidneys with the Transamerica immediate and complete disclosure of their problems with a few staff. Could anything have been done in the midst of the burdensome acquisition of one company by another that would have at all costs maintained the sanctity of Transamerica’s reputation? Possibly not. The compliment goes to the leadership who immediately went public, took remedial action, avoided the pitfalls of mendacity and limited damage as best they could in the circumstances.

Dull summer? Not a chance. Our financial services industry has had a wake up call and the onus is on all participants to elevate ethical behavior to a priority. Training courses may keep the issue alive and actually instill the no nonsense importance of ethical conduct but if you have in your midst someone(s) whose ethical instructions in early life training leave a lot to be desired “you gotta problem mista”. Finding the rotten apple in a barrel of red Delicious only happens when you hand wash each apple.

In sharp contradictory contrast to the ethics survey is the Queen’s University School of Business survey of participating CEOs in Ontario. Of the top 12 challenges facing CEOs on the Queen’s list the only one that can be stretched to include ethics is the challenge of finding staff that possess the right personal qualities in addition to their technical skill.

This study would have warranted days if not weeks of public and private scrutiny had it been in the “old days”. Today it is just another study of our accepted practices that lean heavily on performance judged by numbers here and now, versus long-term implications of ethical versus unethical behavior. This should not be taken as ho hum! Rudimentary ethics emerges like zymurgy. Over decades and even centuries our “norm” has been forged like the fermentation of wine. Is being forthright always the same as never telling a lie? Is exaggeration in the same leak as abuse of information? Is a conflict of interest always a conflict of interest or does it depend on the consequences? I remain a student of the ethics debacle and hope that in time any doubt about the definition ebbs, which would mean I have found the holy grail (or at least someone let me glance it while there was still time). With age and an ever increasing scope of acquaintances I learn that the definition is now more elusive than ever since there remains no one definition of business ethical behavior. If there were would there be any employees in the tobacco business?

The prize awaits the person who can guarantee a test to weed out the ethical behavior that is not in compliance with the leaders which one hopes is in harmony with the Board and its traditions. The problem is whose ethical behavior is the model since it is on may occasions so subjective. We certainly do not want to leave it to the press to decide.

Next we have the more mundane within the insurance vill. The merger first here in our Canadian community of CU and NU (sort a sounds like canoe), which then transformed into parents saying sell the whole thing. Add to that the potential but soon stop of the sale of C.N.A. life operations globally, ING continuing to acquire NA companies especially Aetna’s financial services side and you have lots of excitement. Talk heats up that Canada and Clarica will be devoured by the likes of any number of large European mega companies in less than 30 months. Banks can come into the US life market. Royal Bank buys into the US life industry. Underwriters are being given signing bonuses of considerable sums plus salaries that finally distinguish them from senior clerks. Pricing actuaries who can make a product price plummet and a reinsurer pay dearly for the privilege of acquiring the risk are in demand that exceeds the demand for a Stanley Cup team in Toronto. Reinsurers are happy that so much risk is being transferred to them since it is their specialty.

News has come out that some of the insurance Web site sites are still not making money. Enormous losses abound but optimism runs rampant. The expectations are that everybody will be enthusiastically searching out sites to buy life insurance. The summer is full of growing e-commerce optimism for the public consumption but finally from under the terrible income statements comes the first glimmer of concern that life insurance is sold not bought.

A small string of words in The Poisonwood Bible on page 309 sort of sums up our life industry as we head towards the end of summer. In fact not even I could have written and been edited into such a distinctive combination of words.

“I am telling you what I’m telling you. Don’t try to make life a mathematics problem with yourself in the centre and everything coming out equal. When you are good, bad things can still happen. And if you are bad, you can still be lucky.”

We certainly have become numb to change and so blasé that even the pundits are bored. Guess we need to make some greater bad happen.