In 1977, when Benefits Canada published its first group benefits providers report, the industry was much more crowded. The big companies on the scene today weren’t yet the massive entities that now dominate the market. More U.S. insurers had their hats in the ring. And the big players had yet to acquire some of the scrappy underdogs.

Leading that first list of insurers with more than $1 million in group health premium income was Great-West Life. Forty years later, Great-West Life still leads when it comes to group health insured premiums, while Sun Life tops the overall list of group insurance providers. And while Manulife and Desjardins also top the list of group life and health insurance providers in 2016, the silver medallist in 1977 was Confederation Life, which went out of business in 1994. Next were London Life and Excelsior Life, neither of which are still independent entities.

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“The markets were ready for some consolidation,” says Anthony Perlman, senior vice-president and national practice leader for health and benefits at Aon Hewitt in Toronto. He notes the acquisitions were inevitable as some of the smaller players didn’t have sufficient penetration in the Canadian market to take on their larger competitors.

Great-West Life eventually absorbed names such as London Life and Canada Life, says Perlman. Manulife took over Confederation Life, Maritime Life and, most recently, Standard Life. And as for Sun Life, its acquisitions have included Clarica Life.

What it means for employers

From a plan sponsor perspective, the consolidations, which occurred over several decades, have been significant, says Perlman. For employers with unique programs, there was no guarantee the acquiring company would continue offering plans tailored to each sponsor to the same degree that smaller insurers did. Even today, smaller insurers can be nimbler, he says, adding players such as Green Shield Canada, SSQ and the Blue Cross group have been “like dogs at the heels” of their larger competitors. “And clients like to have some selection.”

Perlman also notes today’s plan sponsors are much more comfortable with risk. The original 1977 report, for example, didn’t have a separate section for insurers working with administrative services-only plans, since they were simply less common. At the same time, the move towards administrative services-only plans means fees have become more transparent. “On an insured basis, the numbers tended to be all over the place,” says Perlman.

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“Clients didn’t necessarily have an idea of what their advisors were being paid,” he adds.

In the next few decades, Perlman predicts the current big players will remain dominant. But he notes disruptors beyond smaller, nimbler players are likely to emerge, such as technology companies like League, Collage and Zenefits. “That’s what clients want,” he says, noting plan sponsors are looking for choice.

Sara Tatelman is an associate editor at Benefits Canada.

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Copyright © 2021 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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