The Top Life Insurers: Is Bigger Better Or Best?

I love to freak out salespeople. They ask me if they can help me, and I say, "Have you got anything I'd like?" Then they ask me what size I need, and I say, "Extra medium." --- Stephen Wright

Can you imagine 20,000 employees in a head office? That's what we had at Metropolitan Life in New York City the late 1980s --- then the second largest life insurer in North America. Later at National Life, we had less than 400 employees across Canada.

Does biggest mean best? Does bigger mean better?

When Bigger Meant Best

If size did matter, the dinosaurs would still be alive.
--- Wendelin Wiedeking

Years ago, size mattered. The largest organizations were seen as prestigious, desirable, and the places with the best job security. That was then. Now big means compromise. Big means boring. Wal-Mart dwarfs every company in the Fortune Global 500 for the second year. Now size becomes a hurdle because speed matters more than the brakes of legacy. GM dwarfs BMW, yet nimble BMW ranks as Fortune's most admired car company.  

The Exception: Financial Services

For financial services, scale can benefit you because of the hefty outlays for a sound and thriving operations. Here are the main advantages of size for life insurance

• greater financial strength (to meet promises, grow and weather economic typhoons)
  
• lower unit costs (major investments in costly technology spread over more volume)
  
• more security mechanisms (privacy, record keeping, redundancy, disaster recovery)
  

Because regulations and tax rules vary by country, ownership by a super-sized foreign parent doesn't mean much. The Canadian operations are typically subsidiaries that can easily be discarded with minimal impact on the parent. As protection, regulators require that insurers (both foreign and domestic) keep enough assets in Canada to meet the promises made to you.

The Top Five Insurers

The Financial Post 500 ranks the top insurers in Canada each year. Here are the results for 2007, published in June 2008. Here are the top five by revenue

1. Manulife
2. Great-West Life
3. Sun Life
4. Industrial Alliance
5. Desjardins

Here is the top 20 (click to enlarge).

You may be surprised at how small some of the big names are. While biggest doesn't mean best for you, bigger often means better. And more peace of mind.

Links

• Oblivion: What Happens If My Life Insurance Company Dies?
  
• Financial Post 500 
• Top Life Insurers in 2007 (Financial Post 500, page 144)
• Fortune Global 500
• Top 20 Most Admired Companies (Fortune)
• Corporate Governance Rankings 2007 (Globe & Mail)