Episode 16 with Rino D’Onofrio, President and CEO RBC Life Insurance Company – How a Top 10 Carrier Stays at the Top

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

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Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

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Kevin: Today, we’re talking with Rino D’Onofrio, President and CEO, RBC Life Insurance Company, about the trends and challenges and opportunities he sees in the insurance industry. Rino, can you tell us a little bit about yourself and how you got into the insurance industry?

Rino: Sure, Kevin, thanks so much. So, I’ve been with RBC Insurance for about 17 years now and I was with another global insurer prior to that. My responsibilities at RBC Insurance encompass really our whole insurance business globally. So, in Canada, that’s our life and health business, our home and auto business, travel insurance as well as wealth insurance solutions for individuals as well as group clients. Internationally, we’re a reinsurer based in Cayman and Barbados and our focus is primarily on longevity and mortality businesses in various countries. I do like to give back to the industry so I’m fortunate to sit on the board of the Canadian Life and Health Insurance Association now and I was very privileged to have been on the board of LIMRA and LOMA. In fact, I was the chair of that board as well at one time a few years ago and I would expect that those on your podcast will be familiar with LIMRA and LOMA. In terms of getting into the industry. I mean, I’m an actuary by training so, you know, when I came out of school, I wanted to pursue that designation and that kind of naturally brought me into the insurance industry so that’s kinda how I got into the industry and a little bit about myself, Kevin.

Sandy: Rino, all sectors face challenges, but for the insurance and financial services industry, the list seems especially long. Many carriers seem to be struggling to stay relevant but others are embracing new technology, reimagining product design, and developing strategic partnerships. From your experience, how can insurance carriers embrace innovation and transformation to improve performance and drive long-term growth?

Rino: Yeah, thanks, Sandy. So, I mean, look, the first thing I’d say is that companies need to understand that embracing change and fostering an innovation mindset isn’t an optional thing. It’s critical to your company’s long-term viability so it isn’t a side-of-the-desk job, it’s a main part of the core business and you need to make that part of your DNA. And I think one of the reasons for that is because the attitudes and expectations of our consumers are really changing and they’re changing rapidly. For me, I like to look at other sectors and other industries to give me insight around consumer expectations. And I’d say, one in particular that I like to look at is the retail space. So, you know, how we shop for things, how we buy goods, food, clothing, whatnot, how we buy things every day, and I look to that as insight around consumer expectations and when you think about that and, look, everybody who’s obviously listening to this podcast is a consumer of something. Just think about how the tremendous revolution that’s occurred in retail, in areas like simplicity and choice and convenience and how you receive advice. I mean, we don’t buy anything in my home that, you know, we don’t normally find or we don’t go online and get advice around and get, you know, recommendations and so on so that’s the fundamental change in the retail industry and that’s what consumers expect. So, those experiences are shaping what consumers are looking for from all of the companies they do business with. And, of course, that includes insurance. So, to me, you know, in order to serve an insurance client’s needs and really be there for clients the way they want us to be there, we need to change and we need to innovate. And the ones who do that well and make it a core competency, they’re gonna be the successful ones in the long run. I am fully convinced of that.

Sandy: How does RBC change their product or investment strategy based on the current low interest rate environment?

Rino: So, yeah, low interest rates, you know, a couple of things, I guess a couple of perspectives here. So, it’s funny, we always refer to the current low interest rate environment but, you know, interest rates have been low, below historical norms, for at least the last decade so it’s not necessarily a new issue, but it is one that’s had significant impacts, I’d say, in a few perspectives. You mentioned products. You know, look, those products that are more interest rate sensitive or basically have embedded guaranteed interest rates in their pricing, those have come under increased price pressure and we’ve seen companies take action there and raise their premium rates and so on. At the same time, products like participating whole life insurance, those have become significantly more popular in the market, in Canada anyway, and I think one of the reasons for that is that product is a portfolio return product, which means a client who buys a participating insurance policy basically gets a rate of return on their money that’s derived from a portfolio that’s been built up over many, many years. And, you know, you contrast that with a universal life product that, you know, you get new money rights every time you put your money in there. So, of course, portfolio return products are gonna give a higher yield to clients when interest rates are declining versus new money so that’s another thing we’ve certainly seen in the marketplace is much more of an emphasis on participating whole life products and less so around UL. I think from an investments perspective, so, and I’ll speak from the perspective of an insurance company investing its own assets, we typically, at RBC Insurance, we wouldn’t change our investment strategy when interest rates change. That said, I would say in the marketplace, generally, this persistent low yield curve, you know, it limits investment choices and so you’re gonna see companies and we have seen companies take on, you know, investments in what would not necessarily have been traditional asset segments for them in the past. So insurers traditionally are in the fixed income bond market primarily is where they invest but, you know, you see more and more insurers investing in commercial real estate, in infrastructure, infrastructure equity. These are areas where insurers are investing these days and that’s part of the reason is because rates are so low. I think the other thing it does, in conclusion, I would say, is it forces a company to be more dynamic and responsive and to seek out kind of relative value trades across the yield curve so, you know, you’re sort of liquidating assets, you might have durations where yields are low and putting monies and assets in durations where yields are high that matches your cash flow so I think you just gotta be a lot more dynamic in your post investments as well so — and we’re certainly seeing that across the industry as well.

Kevin: Rino, do you see carriers moving to only manufacturing products or maybe in some situations only on the distribution side of the industry?

Rino: Yeah, I mean, this is actually quite an interesting question and it’s — there’s been a tremendous amount of M&A activity. And I think it comes down to what’s your strategy and what are your scale expectations as an insurer or a distributor. So, in Canada, we’ve seen a lot of horizontal M& activity, we’ve seen vertical M&A activity, so we’ve seen insurers merging with other insurers, we’ve seen MGAs of distribution companies merging with each other. And we’ve seen insurers acquire MGAs, so sort of vertical acquisition, and there’s synergies and value to be derived from all of those, but they’re all very different strategies. I mean, for us, we invest significantly in our proprietary distribution channels and we’re also very focused on our robust relationships with our independent distribution partners. As far as manufacturing goes, like the actual risk, you know, design development and product development, we have an expression around here and we say, you know, we’ll manufacture what we do best and we partner for the rest. And so we have certain product lines where we take the risk and we are the manufacturer, and then there are other product lines where we will partner with someone else to take on the risk and we’ll be just the distributor for them so it really just depends, as I say, on, you know, what’s your strategy, what’s your scale expectations, and those are gonna vary across the industry.

Kevin: What is RBC doing to stay relevant in the current insurance landscape?

Rino: Yeah, so a few things. You know, what I’d say is, when I think about RBC Insurance’s competitive strengths, first and foremost will be our brand. I mean, RBC is a huge brand in Canada. In fact, it’s the most valuable brand in Canada. So that’s one. I’d say our financial strength is a huge competitive advantage. RBC is a top 10 bank globally so it’s a very, very large organization with access to lots and lots of resources. I’d say other competitive strengths we have are really around the breadth of our product offerings. I mean, we offer solutions across a wide range of product lines and critically importantly, we put the client at the center of everything and we give consumers a choice of the channels they wanna deal with them and they wanna purchase through, they wanna get service through. So, you know, that can be online, that can be through our own proprietary distribution channels, or it can be through third-party advisors. So, we’ll deal with the client wherever they wanna be dealt with. And so given that it’s a robust business model, so some of the things we focus on then are, you know, let’s make sure we’re giving the best advice, giving holistic advice, and making multi-product solutions available to clients so really differentiate on advice and have great solutions to back up that advice. That’d be one. I’d say, we’ve been very focused on digitizing our business model to really make it easier for clients or agents or partners, anybody, to do business with us. We made it just a lot easier to do that. And I’d say the third area that we focused on has been around really value beyond just pure insurance. So, we offer, for example, industry-leading health and wellness offerings to the marketplace that are a natural complement to insurance and are really a win-win for our clients, it helps them to stay well and stay healthy, and, obviously, of course, that has a positive impact on our insurance business as well. So those are some of the areas that we focus on that we think are relevant and meaningful for consumers so that we can stay top of mind for them as they’re thinking about their insurance needs.

Kevin: What is your opinion about the future of insurance regulation and compliance in Canada as we know it today?

Rino: Yeah, I mean, look, this is a very timely topic as well. Regulations plays a fundamental and active role in our future and, really, in all aspects of our business from beginning to end, from marketing and distribution through to claims and everything in between, back office operations, everything. Certainly a key focus of our regulators in Canada has been around fair treatment of customers, and while that is a focus for them, it’s also driven a bunch of other areas for greater oversight by our regulators and so that includes things like advisor compensation practices, accountabilities for oversight of distribution and licensing and so on. So those are some of the areas they’re focused on. I would say that it’s evolving as well, like some of the expectations of our regulators are very clearly defined, like around things like privacy, it’s very clear, or around licensing requirements, those are very clear requirements. And then there’s other areas like around technology or on data, around, say, use of artificial intelligence in underwriting or something. Those are areas where I’d say insurance companies are progressing ahead of specific regulations or guiding principles from the regulators. So I think what that does is it gives the companies in the industry an opportunity to work with the regulators, you know, in an effort to kind of drive a meaningful set of rules that for sure protect consumers, I mean, they have to be treated fairly, of course, while also allowing for innovation and, you know, within products and companies to meet customer needs. I’d say, as well, maybe the hands-on regulation. You know, in Canada, and, really, in most places around the world, no discussion around compliance is complete without mentioning IFRS 17 which is a huge change in the accounting regime globally and a significant focus on many, many insurers globally. The story is not written on that yet, it doesn’t come alive for about a couple of years now but I would say the implications of it could be quite far reaching. It could have significant impacts on the products and services that companies offer today. So those are some thoughts around regulation and compliance, Kevin.

Kevin: What type of strategic partnerships do you see working the best for carriers?

Rino: Yeah, I think that really depends on what a carrier sees as their core competencies, their core capabilities, and their competitive strategy. For us at RBC Insurance, we focus on what we do best and we partner for the rest, we like to say that, so when I think about some of the partnerships that we’ve participated in, we certainly partner with health and wellness companies to provide unique offerings and we’ll partner with leaders in that space. We’ll partner with companies that provide back office administration-type services that we don’t necessarily see as competitive differentiators, really to tap into that partner’s scale and their digital investments and so on. We’ll partner with brokers, independent agents, and so on really, again, to access some scale to the broader market. And we partner routinely with fintechs really to help foster innovation and provide support to our business. So, I think it really depends on what companies see as their core capabilities and what they see as something that maybe somebody else does more effectively and, you know, maybe they wanna go ahead and partner with them in a manner that’s beneficial for both parties. That’s certainly a strategy that we pursue and I certainly see that happening more and more frequently in the marketplace with companies, again, kind of doing what they do best and partner for the rest.

Sandy: How does RBC feel about the build, buy, or partner when it comes to that new technology? Are you looking at more of building out yourself, partnering with technology, or buying the solution from somebody who, you know, has already got the experience and does it best? Where does RBC kind of fall into that?

Rino: Are you referring to technology solutions primarily or…

Sandy: Yes.

Rino: Yeah? Okay. 

Sandy: Yes.

Rino: I think it’s a little bit of all of the above. I mean, one of the things that we’re blessed with in RBC Insurance is we’re part of this huge organization, RBC. As I said, it’s a top 10 global bank. Big bank, with lots of partnerships and lots of investments that’s made around technology. And so, for us, I could probably rattle off examples, Sandy, of places where we’ve built things ourselves but I would say the broader investments are in typically partnering with other firms who bring a specialty to the market, so things like, you know, I think about our — the tools we use in our underwriting shop to process and so on, that’s something we partner with third parties for. Our administrative systems, we partner with third party. We buy licenses and develop and so on. Whereas there’s other things like our e-application that’s pretty well fully homegrown, although there’s components of it that we would take off the shelf from somewhere else, you know, to embed into ours. So, as I say, it really just depends on the application but we really have our finger at every one of those pies, depending on the need and where we see our competencies and I’d say what’s available in the market. I mean, if there’s best in class out there, why would we reinvent the wheel, right?

Sandy: What do you see is the biggest opportunity for insurance industry over the next three to five years?

Rino: Yeah, so a few areas here, I think. So leveraging data differently, to do things like, you know, provide better advice to clients, underwrite clients faster and more efficiently, provide better value by predicting client’s needs, next best offers, and so on, and just a whole host of opportunities that emerge from companies sort of taking control of the data they have and seeking insights from it. So that’s a huge area of investment for us and across the industry. I think another area is our product innovation. You know, making sure our products are designed and priced in a way that’s relevant to clients, relevant to consumers. Are we providing solutions that clients need in a manner that they wanna purchase in, that they want to learn more about it? I’d say a third area is around advice and distribution innovation. So, really, around — it’s like what I was talking about earlier with retail, really innovation around making it easier for clients to learn about what their needs are, learn about the solutions that are available to them, on their own terms, at their own convenience, whenever they want. And I’m sure probably a fourth area would be around optimization so making business models and back offices more agile and efficient. I mean, for sure, that’s good for the bottom line but, typically, it makes things faster and better for clients. So I think the common denominator in all those things, be it data innovation or product or advice or optimization is clients, better insight, better relevance, offering solutions to clients on their terms and advice on their terms, making it easier for clients to work with us so that’s really the core around those areas and, again, I dare say that would be pretty consistent across the industry, I would think.

Sandy: What is the best decision that you made that had a positive impact on your career?

Rino: Yeah, that’s a good one. As I said earlier, I started off as an actuary and probably the best move I made was when I went outside my comfort zone to take on accountabilities that weren’t, you know, typically actuarial in nature. So, when I think back on my career, I took on accountabilities in operations roles and client services roles and strategy and marketing and these are areas that are not traditionally ones that an actuary would lead. And I must say, for me, when I did those things in my career, it really felt uncomfortable, right? It just felt a bit foreign to me, it felt very uncomfortable, but, you know, when I think back, those are the times that I grew the most and those experiences made me, I think, a better and more well-rounded leader. So, for me, I think it was really about taking a chance and going outside my comfort zone to do things that were not necessarily the traditional path. And that’s kind of what made probably the biggest difference for me.

Sandy: And what advice would you give to somebody looking to get into the financial services or insurance industry?

Rino: Yeah, so a few things. I mean, first of all, I’d say to people, and I get asked this from time to time, I’d say pursue something that you’re intrinsically motivated by, or in other words, you wanna do something that’s gonna get you out of bed in the morning, as they say, right? Not necessarily just, you know, driven by other things, but rather what actually motivates you. And so, you know, when I think about myself and the insurance industry, I mean, what the industry is really about is it’s making promises to clients and the promise is that we’re gonna be there when clients need us most, maybe at a time when they’re going through the most challenging times of their lives, and our promise is that we’re gonna be there to do our part to try to just make it a little bit better for clients during those times, and, to me, that mission is so vitally important. I’m motivated by it today as much as I was, you know, when I started in this industry a number of years ago. So first thing, pursue those things that get you out of bed in the morning. What are you motivated by? The second thing I’d say is, if you were to look at, say, the insurance industry, you know, I think people think that it’s a relatively narrow skill set that’s required. People might think it’s only insurance agents or, you know, actuaries or underwriters or maybe claims adjudicators and, of course, we need all of those skills, but the insurance industry is really robust and needs a variety of different skills, from learning professionals, communications, agile development, data scientists, operations specialists, procurement, the list goes on and on of the type of diverse kind of skills that we’re looking for that we need. So, if you’re looking at the industry, you know, don’t take a narrow focus on it, take a broad focus, because that’s really what the industry needs. And I would say our industry is one that is also rapidly evolving so we need people who kind of think differently, that are diverse in their thinking, that really can positively impact the strategy. The last thing I’d say is, if someone were really interested in the insurance industry or any industry, is really reach out to people who are in that field to find out more, and I know it can be a little daunting perhaps to do that, but most times, people are gonna be quite flattered that you’ll reach out to them and ask them for advice and so, you know, do that. And at a minimum, it will expand your network, but you’re probably gonna get some good advice and maybe some doors open to you as well by doing that. So, you know, I’d say one is make sure that you’re pursuing things that you’re motivated by, two, think broadly, and, three, as I said, reach out to people, you know, book those coffee chats, whatever it is, learn more. And when you do that, you’re gonna find, at least our industry, the insurance industry is a very robust one that has a need for all kinds of people. So, anyway, that’s the advice that I’d give folks, for sure.

Kevin: Rino, thank you for your time today. It’s been great to hear your insights on how carriers can stay relevant and the opportunities you see for the industry over the next two years.

Rino: Yeah, my pleasure, Kevin and Sandy. Thanks so much, guys. Enjoy the rest of your day.

Sandy: Thank you.

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