The launch of the Scotialife Financial brand name in early February marks the beginning of the Toronto-based life insurer’s push to increase sales, launch more products and expand distribution channels, says Mark Cummings, ScotiaLife’s senior vice president and head of insurance in Canada at Bank of Nova Scotia.

Already, ScotiaLife (legally known as Scotia Life Insurance Co. ) has quietly built a No. 2 position for selling directly to clients among the bank-owned life insurance companies, trailing TD Life Insurance Co. , also of Toronto. The success started about two years ago, when the bank sized up the competition among the bank-owned insurers and decided to fight for market share, says the Oakville, Ont., resident.

“Now, it’s become a core platform of growth for us,” says Cummings, noting that at the time, “we needed to beef up, in terms of our image in the marketplace.”

Although the new brand name and development of ScotiaLife’s new website at www.scotialifefinancial.com are mostly cosmetic, the firm also launched a Term 1 insurance product last month that offers coverage of up to $1 million, which pushes the policy size boundary for bank-owned manufacturers further than before. “That’s significant for us,” he says. “That product is something we’ll count on for generating our revenue.”

More life and health insurance product announcements are scheduled for the autumn — and still more may come in 2010, Cummings adds. ScotiaLife will maintain its core distribution of telephone and Internet sales, and distribution with Scotiabank brokerage arm ScotiaMcLeod Inc. is also a possibility. There has been interest, and “it’s something we’re looking at,” he says.

Scotiabank doesn’t break out life insurance income in its earnings, but if it did, the line from its 2008 results would show another year of 20% growth in premium sales, Cummings says. He adds that the firm has gathered about 700,000 clients over the years. (First-quarter 2009 results were due March 3.)

ScotiaLife has built its position slowly, selling Term 10 policies up to $250,000. It also sells guaranteed issue life, hospital cash insurance and accidental death insurance.

The key to success is ScotiaLife’s cheap, efficient distribution with a focus on direct marketing through email, inserts, via the Internet and phone, Cummings says. Its new online platform has already seen a lot of action, he adds.

ScotiaLife plans to add more functionality to its website, including term product quotes and other products. Other banks and independents in the market offer insurance quotes online by asking some fundamental questions: “We think that consumers are underserved in Canada in terms of having advisors associated with [the product],” says Cummings.

All the big banks in Canada own life insurance companies that tend to sell policies that a typical insurance advisor doesn’t consider profitable. The bank’s subsidiaries skate around the Bank Act, which restricts them from selling insurance from their branches.

The banks could always sell creditor-type life and health insurance to protect mortgages and debt accounts, but once clients buy those products, they can be marketed any other products. The regulations also say they can offer products to all holders of credit or charge cards, to all clients and to the general public as long as no data mining is involved.

The life insurance manufacturers interpret things a little differently, but ScotiaLife’s take is that once it makes an offer through, for example, statement inserts, it will direct market other products.

Support from the parent bank for insurance products has been substantial — and not just domestically. Scotiabank owns a large portfolio of international business and branches that’s largely invisible to Canadians, including major operations in Jamaica, in which it has been selling universal life policies for more than a decade.

When Cummings took the helm of the domestic unit in July 2007, the bank also split off corporate insurance and international units — all resources to lean on from a strategic perspective, Cummings says.

In Canada, the return on investment is good, he adds, but he’s aiming higher. The challenge is to develop products that are comprehensive in their coverage, convenient enough to buy directly and affordable to clients who understand the product.

That appears to leave segregated funds out of the picture for now — including those with a guaranteed income — although ScotiaLife has certainly considered it, Cummings admits. Additionally, such a product is capital intensive and would be difficult to launch in today’s economic climate.

@page_break@More important, clients would need to understand the complicated product; and product information packages need to be distributed and received before a client buys the product, which, he says, is too onerous for the direct model: “It’s something we’re thinking about but there’s nothing imminent.”

Seen in that light, the potential for distribution through ScotiaMcLeod is intriguing. Bank distribution is impossible, but other distribution channels are a potential, without developing a career sales force.

Cummings has held various roles heading up operations in insurance, wealth management and human resources. He joined Scotiabank in 2006 from RBC Insurance, where he had worked for three years; however, he started and spent most of his career at Canada Life Assurance Co. — initially with New York Life Insurance Co. before Canada Life bought its Canadian operations.

Cummings says he’s pleased that clients are starting to understand investment risks and turning to life and health insurance products again, although it’s a shame it took the current economic environment to make it happen. “Insurance is a wonderful product,” he says. “Not just home, auto and mandatory insurance, but products to protect your loved ones and as part of an overall financial solution.”

In addition to insurance, Cummings has another focus in his life: his family, which includes his wife, a seven-month-old son and a five-year-old daughter. On the weekends, he watches his daughter ski down the slopes north of the city, if he can stand the cold. “She’s very good. Better than me.” IE