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Agenda Disability Marketplace Introduction to the Fundamental Series

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2 Agenda Disability Marketplace Introduction to the Fundamental Series
Claims Overview Q&A Welcome and thank you for taking the time out of your schedules to be here today This is a very exciting time for RBC Insurance, and today feels like a milestone Over the next 2 hours you will hear from a variety of people from RBC Insurance as we launch our latest DI product The Fundamental Series With me today is… Mark Hardy Joceyln Tardiff As well as your local RBC Sales Consultants and Inside Wholesaler team

3 Disability Insurance Market Overview
Mark Hardy I’d now like to turn the next portion of the presentation over to Mark Hardy Mark has been at RBC Insurance for 12 years in a variety of roles Currently Mark is the Senior Manager, Life & Living Benefits at RBC Insurance, and was instrumental in the development of the Fundamental Series Today he is going to share some interesting data and insights not only on RBC Insurance’s DI market share but also on the employment trends in Canada

4 RBC’s Leadership Position – Market Share
2011 vs New Business Market Share (Annualized Premium) New business premium for RBCI Disability Income Insurance grew 27% year over year compared to a 2% decline for the rest of the industry from 2011 to RBCI accounted for approximately 42% of total industry new business premium settled in 2012 and held the #1 ranking amongst its competitors We are both the largest Disability insurer and fastest growing, we are focused on continuing to demonstrate that leadership and today is a large part of that. You know that when you partner with RBC Insurance you are partnering with experience and expertise. Source: LIMRA Canadian Individual Income Insurance Survey Q4/2012, Q4/2011

5 RBC’s Leadership Position – Market Share
RBC New Business Annualized Premium and Industry Rank by Year ) New business premium for RBCI Disability Income Insurance grew 28% from 2006 to RBCI accounted for approximately 41% of total industry new business premium settled in 2006 and 42% in 2012 and has consistently held the #1 rank in New Business premium settled. As you can see we are a long term leader in disability, this is core to our business and our expertise. We are constantly looking for opportunities to extend our ability to protect the incomes of Canadian workers from the risks of disability Over our history we have introduced a number of innovations to get at this very notion through concepts like Guarantee Standard Issue; protecting more incomes of higher earners; and the reason we are here today, extending innovation to the “blue/grey” collar market There is a big future in simplified process; our experience across our business has taught us first hand how important this is to Canadians. Source: LIMRA Canadian Individual Income Insurance Survey Q4/

6 RBC’s Leadership Position – Market Share
Inforce Market Share, 2012 (Annualized Premium) ) Current RBC in-force market share as at 2012 year end stands at 37% for Individual Disability Income. This allows us to make investments in our claims operations to bring on more expertise focused on helping your clients, to process claims with greater efficiency, and more importantly, greater effectiveness. This allows us to have experienced adjudicators who know the individual disability products and processes. This ensures your client is handled professionally and appropriately at their greatest time of need. They bring the promises you make, by recommending RBC, and we make to life. Jocelyn is going to spend some more time later today talking about our Claims operations. Source: LIMRA Canadian Individual Income Insurance Survey Q4/2012

7 RBC’s Leadership Position Underwriting
31 Living Benefit Underwriters trained in Disability Insurance and/or Critical Illness 24 of the 31 are Devoted to Underwriting Disability Insurance Combined 100’s of Years of Underwriting Experience 2 Financial Underwriting Consultants A team of Part-time and Full-time physicians to consult on complex medical issues Further to our extensive claims team, we also have a team of experienced underwriters here to support you. This group has seen more disability cases than any other carrier (as noted by our market leadership). We’ve likely seen every scenario, and more importantly we know how to deal with interesting or odd situations because we’ve seen so many. This is also the team that will be looking at any fully underwritten application (for example, Professional Series) that we might not be able to place and will be making an alternate offer in the appropriate situations using our new product, which Mike will talk more about. We want to be in a position to be able to offer your clients an option for disability coverage, and this goes a long way to achieving that goal.

8 Wage Growth 1997-2011 Wage Index – Base 1997
This is a view of nominal wage growth over the period of 1997 through 2011 We look at nominal wages (the “dollars” earned) instead of “real” wages (the amount a dollar can buy) as this is what your clients need to protect; As you can see there has been consistent wage growth over the period for “All occupations” in the Canadian market, but in particular you will note that wage growth for contractors and supervisors has been growing faster than average since about 2006 to the tune of at 17.5% increase in earnings. This means these folks have an even greater need to ensure their wages are protected. If you have a client like this you should be having a discussion to see if the coverage they have in place is still adequate given their earnings growth. Source: Statistics Canada Labour Force Survey,

9 Full Time Employment Index – Base 1997
Another important element to look at when assessing market potential is with full time employment growth. Its important to react to growing occupations as the market expands and a greater number of clients have a potential need for income protection. As you can see, over the past decade and a half both Contractors/Supervisors and Construction employment has boomed in Canada, consistent with what we would expect. Taking these two elements (wage growth and employment growth) into account essentially means we have more people earning more money in this critical part of the marketplace. Source: Statistics Canada Labour Force Survey,

10 Disability Opportunity 2010 - 2020
Estimated Market – Using historical Labour Force survey data and information from Human Resources Development Canada, if the current trends continue with respect to wage growth and occupational projections from HRDC come to life in conjunction with “stagnating” Group disability benefits, we predict the market opportunity for individual disability to grow by almost twofold (~90%) over the decade Within trades and transport occupations we expect this growth to exceed 95% in the same period. This is a tremendous opportunity today and based on where HRDC and we see the market going, it is only going to be a larger opportunity. Source: Statistics Canada Labour Force Survey, ; HRSDC COPS

11 Trades & Transport $1,000,000,000 There are 8 main categories of occupations within the trades and transport category; we touched on a few earlier when reviewing the wage and employment figures. They are Contractors & Supervisors; Mechanics; Stationary Engineers & Electrical Occs; Transportation; Construction Trades; Machinists; Heavy Equipment operators; Trade helpers; and “Other trades”. We will exclude helpers and “other” for the rest of the discussion Contractors and supervisors continue to represent the largest premium opportunity projected to be north of 225MM by 2020; of the 6 meaningful groupings through this segment will grow the most slowly… only 68% projected increase by 2020 Mechanics will represent the second most significant opportunity at more than 175MM; nearly doubling over the time period. Stationary Engineers & Electrical occupations will likewise grow to almost 170MM; nearly doubling Construction trades will 129MM; 61% Trucking 93MM; 58% Machinists 74MM >300% Heavy Equipment 60MM >125% We see this market as significant and growing and are making investments today to ensure we continue our leadership in disability insurance partnered with advisors who are dedicated to protecting their clients. When you put your client with RBC Insurance you know your client is protected by a trusted partner. To speak more about how we earn that trust every day, I have the pleasure of introducing Jocelyn Tardif from our disability claims operation. Source: Statistics Canada Labour Force Survey, ; HRSDC COPS

12 Introduction to Fundamental Series
Michael Thompson Mark has been at RBC Insurance for 12 years in a variety of roles Currently Mark is the Senior Manager, Life & Living Benefits at RBC Insurance, and was instrumental in the development of the Fundamental Series Today he is going to share some interesting data and insights not only on RBC Insurance’s DI market share but also on the employment trends in Canada

13 Introducing the Fundamental Series
Knowing the Market and RBC Insurance’s Dominance what do we have to offer? Simplicity At the Time of Application At the Time of Underwriting At the Time of Claim Loss of Income and Business Overhead Expense Knowing that the self employed marketplace is growing the question remains is it something we want to focus on? The simple answer is yes. Within the self employed market there is an abundance of insurance opportunities. Each and every self employed person will need many different types of insurance including but not limited to Life, DI, BOE, Investments, not to mention Group opportunities for their employees. I recognize that many of you are already selling to Self Employed Individuals, but would wager that most of what is being sold is Life Insurance. If we can develop an insurance solution that can be a foot in the door to ultimately put you in a position to sell life insurance would that be of interest? We have developed a solution which will help you address the needs of the self employed in such away that it will open doors and separate you from the competition. One of the main issues as sales people we have when trying to approach self employed clients is their time is very valuable. In designing our new product we have tried to maintain simplicity while providing the best possible protection for the client. We have streamlined the application process, our underwriting department has made it simpler issue the coverage, and of course when it matters most our claims department has (as you have heard) made the claims process simple by streamlining the requirements. We have created a loss of income plan as well as a Business Overhead Expense plan that you can use and have the confidence that it will not only be issued in a timely manner but also that it is a valuable piece of insurance that will work when it is need the most.

14 RBC Insurance Living Benefit Portfolio
Individual Disability Insurance The Professional Series The Foundation Series The Bridge Series The Fundamental Series Retirement Protector Business Disability Protection Business Overhead Expense Key Person Protector Business Loan Protector Disability Buy Sell Critical Illness Protection Non Cancellable T65 and T75 Guaranteed Renewable T65 and T75 Term 10 Simplified CI Taking a step back for a moment, lets look at the full suite of RBC Insurance Living Benefit Solutions to see where this new product fits As you can see RBC Insurance has a solution for every client you will encounter. Starting with DI we have solutions for you High Income white collar professional clients, the middle income market and now our own solution for the blue/grey collar self employed market place. Many of our competitors who don’t have the broad product offering are forced to be very productcentric in their approach. We have the opportunity to be very clientcentric, meaning we can suggest and offer solutions that will fit the client need rather than trying to have a client fit the product. We don’t stop at personal DI. We also have a range of innovative business products, that can be used to obtain and protect business owner clients. We also have one of the most competitive CI offerings in the marketplace Add on top of all of this unique solutions such as GSI, a newly revised group offering which is launching later this year which will include H&D, a stable segregated fund offering that has great guarantees and track record of funds managed by RBC Global Asset Management, and great term rates which include full conversion options and it becomes clear that RBC Insurance is truly a one stop shop for all your clients insurance needs

15 The Fundamental Series – Loss of Income Features
Guaranteed Renewable Contract Injury Only or Injury and Illness Coverage 24 Hour or Non-Occupational Coverage Benefits based on either Gross or Net Earned Income Benefits issued in $100 Increments Partial Disability Benefits Included No Pre Existing Condition Exclusion Over the next few slides we examine the design and features of the fundamental series GR Contract – Important to start with a contract definition that offered both guarantees but also reasonable cost, we have a proven history of not increasing our rates on our GR Contracts Injury/Illness– Injury is offered on a instant issue basis, after satisfying a couple qualifying questions, the illness coverage will go through a simplified underwriting process 24Hr/Non-Occupational – 24 hr is important in this marketplace where there are no benefits currently, while non-occ can be used to wrap around any workplace coverage in force Gross or Net Income – We’ll dive more into this, however in the market it’s designed for we have the ability to look at income a variety of ways to provide the highest amount of insurance for either self employed or employee clients Partial – this will be included in the base contract, it will pay out 50% of the benefit for up to 6 months

16 The Fundamental Series – Loss of Income Features
$10,000 Accident Medical Expense Reimbursement Benefit Included Best Doctor’s Provided when Illness is Purchased Illness Underwritten in 30 Days Injury Policy Issued in 5 Days Accident Medical Expense Reimbursement Benefit – designed to pay for expenses incurred that are not necessarily covered by provincial health care Best Dr’s – We’ll get into more detail around this a little later in the presentation, however we are very excited to be the only DI carrier to have this service available to policy holders Our commitment is to have as efficient an underwriting process as possible. The underwriting process will take on average no longer than 30 days for the illness, with the injury being issued on the spot. The policy will be mailed directly to the client in 5 to 10 business days.

17 First 36 Months Regular Occupation Definition
The Fundamental Series – Loss of Income Features Total Disability Definition First 36 Months Regular Occupation Definition After 36 Months Reasonable Occupation Definition Any DI Plan is only as good as it’s definition of disability As you can see here our definition begins with a 36 month regular occupation definition which then changes to a reasonable occupation definition Reasonable occupation means any occupation in which You could reasonably expect to earn an annual income equal to or greater than the Reasonable Occupation Income shown in the same row of the Benefit Determination Chart in Part 2 that shows your Maximum Eligible Monthly Benefit The similar income can be found in the benefit determination chart, which we’ll review in a couple of slides So how do we determine the Maximum Eligible Monthly Benefit Amount?...

18 The Fundamental Series – Loss of Income Features
Maximum Injury and Illness Coverage Issue Limits Class 1 and 2 $6000 Class 3, 4, 5 and 6 $5000 (Review Occ Classes) Classes 1 through 6 The max we can sell for class 1 & 2 = $6000 Classes 4, 5 & 6 = $5000 Each product is independent of the others, not a combined max

19 The Fundamental Series – Loss of Income Features
Accident Death & Dismemberment Issue Ages 18 to 64 Coverage To Age 70 Face Amount $100,000 to $500,000 Accidental Medical Expense Reimbursement Benefit Rider $100,000 As a rider AD&D is available It can be sold with the Accident Medical Expense Reimbursement Benefit included or not. It would provide an additional $100k on top of the $10k that is automatically included in the injury policy

20 The Fundamental Series – Loss of Income Features
Business Overhead Expense Benefit Period 12 Times the Monthly Benefit Elimination Period 30 Day Partial Disability Benefit 50% of Monthly Benefit for a Maximum of 3 Months (Review Features) We've also developed a BOE offer to help compliment the DI or be sold stand alone BOE is sold to Business owners and is designed to protect their business in the event the Business Owner becomes disabled

21 The Fundamental Series – Injury Application

22 The Fundamental Series – Injury Application
Pre-Qualifying Questions Are your bodily movements or daily activities currently limited or restricted by any injury or other condition? Are you currently working a minimum of 20 hours per week, 35 weeks per year? Are you a Canadian citizen or been granted Permanent Resident (landed immigrant) status by the Canadian government? There are 3 Questions we ask which will qualify or decline clients for injury coverage

23 The Fundamental Series – Illness Application

24 The Fundamental Series – Feature Summary

25 The Fundamental Series – Rate Guide
What’s Included All Premium Rates Occupational Classifications Issue Limits Benefit Determination Chart Underwriting Guidelines Height & Weight Chart

26 The Fundamental Series – Who do we Sell?
Name You’ve Written Down Self Employed Clients High Gross Income and Low Net Income Using BOE as “Foot in the Door” Medically Impaired Clients Blue Collar Workers WSIB Mentality “Non-Traditional” Groups Young Clients Injury policy and Graduate them to Fully Underwritten policies

27 The Fundamental Series – Alternate Offers
The Fundamental Series gives You the Opportunity to Insure Every Canadian! By adding Fundamental to our product portfolio we are able to offer the majority of our clients a piece of insurance. We’ll use this as an alternate offer, reducing our outright declines significantly What does that mean for you, very few outright declines from RBC Insurance on any of our DI policies. Money in your pocket because we are giving your clients a solution

28 Break – 10 Minutes

29 RBC Insurance Leadership Position Claims Practices and Philosophies
Jocelyn Tardif Jocelyn graduated from Champlain Regional College with a Pure & Applied Sciences Diploma. He also completed his Bachelor’s Degree in Business Administration with a Major in International Business at the University of Outaouais, with one year as part of an international exchange program at the California State University in Northridge. As a member of the RBC Insurance for almost 14 years, Jocelyn is responsible for being the point person for our large-case clients, assist in the overall customer satisfaction for disability claims, handles the dedicated claimservice broker line in the Life & Health Claims Department and visits his clients across Canada on a regular basis. Prior to his current role, Jocelyn was a an Associate, then Claims Specialist, and promoted to Senior Disability Claims Specialist while managing a block of disability claims for over five years at RBC Insurance. Finally, Jocelyn completed Industry courses and has the ALHC Designation and is working towards completing his FLHC designation.

30 Claims Philosophy Provide thorough, fair, objective claim evaluation
Pay approved claims promptly, with high level of service Assist clients, where appropriate, in their return to work efforts Coordinated handling for disability, life, critical illness, long term care and specialty claims Centralization provides access to in-house specialty resources Multi-disciplinary forums may include: Disability Specialists and Managers, Doctors, Clinical Specialists, Rehabilitation Specialists Commitment to service

31 Claims Payment Information
Annual cash benefits: $331 million Annual new claims: around 5,300 Open LTD and IDI claims: around 10,300

32 Field-Based Rehabilitation
Our Claims Resources Field-based Employees Field-Based Rehabilitation Specialists Disability Managers Disability Specialists Doctors Rehabilitation Specialists 92 Claims Adjudicators, of which: 82 Disability Claims Adjudicators 10 Claims Adjudicators to assess Critical Illness, Long- Term Care, Life, AD&D and Specialty Products 100 Support Staff, including: 7 Physicians 8 Clinical Specialists 12 Rehab Specialists 1 Financial Consultant 3 Auditors 4 Appeal Specialists Financial Consultants Clinical Specialists

33 Our Medical Resources Orthopaedic Surgeons
Dr. Joseph Schatzker C.M., MD., B.Sc. (med.), F.R.C.S.(C ) Dr. John J. Murnaghan MD. MA. MSc. FRCSC. Psychiatrists Dr. Joan Tucker M.D. F.R.C.P.(C), ABPN Dr. Sarah VanderBurgh B.Sc. MD Neuropsychologist Dr. Ivan Kiss, B.Sc., M.A., Ph.D., C. Psych. Internal Medicine Dr. Estera Bekier, M.D., F.R.C.P. (C) Dr. Alice Dong, MD, FCBOM, ABPM We have 2 Orthopaedic Surgeons, Dr. Joseph Schatzker, Professor Emeritus of Surgery at the University of Toronto. He’s also an active staff at Sunnybrook Health Science Centre. Dr. Schatzker received the Queens Jubilee Medal in September 2012, which was awarded by the Lieutenant Governor of Ontario, the Honourable David C. Onley, for meritorious service. Dr. John J. Murnaghan, also an Orthopaedic Surgeon. He’s currently working for the Sunnybrook Health Sciences Centre, Holland Orthopaedic & Arthritic Centre and the Orthopaedic and Arthritic Institute. He also teaches as an Assistant Professor, Department of Surgery at the University of Toronto. We have 2 Psychiatrists on staff: Dr. Joan Tucker, fluently bilingual, specializes in Child and Adult Psychiatry. She has a practice since 1994 at the North York General Hospital. She has been awarded the Queen’s University Entrance Scholarship in 1982, and the James McGill Award in She also does lectures for the Department of Psychiatry at the University of Toronto. Dr. Sarah VanderBurgh B.Sc. MD Dr. VanderBurgh received her B.Sc and MD and did her residency training program in Psychiatry at the University of Toronto, with a clinical practice and teaching role specialized in the psychiatric care of the medially ill. In 2002 Dr. VanderBurgh accepted a full time employee position as Lead Medical Director for UnumProvident Canada and eventually RBC Insurance. Since leaving that position in 2006, she has resumed a part time consulting practice with both RBC and Sun Life. Academic Teaching Position University of Toronto – Assistant Professor, Faculty of Medicine (Psych) to the present. Dr. Ivan Kiss is our Neuropsychologist. He is Assistant Professor in the Department of Psychiatry at the University of Toronto since He’s also an Adjunct Professor at the Departments of Psychology, Neuroscience and Behaviour at McMaster University since He’s also a Clinical and Consulting Neuropsychologist. He’s also published in the Canadian Academy of Psychologists in Disability Assessment, 2011 – present, 2011 Definitions of Disability in Multiple Settings: Implications for Psychologists, Canadian Academy of Psychologists in Disability Assessment, on May 27th Also in the Canadian Academy of Psychologists in Disability Assessment, Chronic Pain Update, October 15th Finally, All You Need to Know About Catastrophic Impairment, Canadian Academy of Psychologists in Disability Assessment, Toronto, January 11th 2013. We have 2 Internal Medicine specialists. Dr. Estera Bekier, MD in Poland in She completed her residency in Internal medicine in Canada in 1988 and began her private practice as a Specialists in Internal Medicine in Canada since 1991, with a sub specialty in Cardiology – Stress test and 2D -echo. In addition to her private practice, she held the role of Medical Director for a major insurer before joining then UnumProvident in 2000 in the role of Consulting physician. And finally Dr. Alice Dong. She is an occupational medical physician who graduated from the University of Toronto and completed an intensive residency in occupational medicine at University of California, San Francisco.  She is Canadian and American board certified and is a fellow of the American College of Occupational and Environmental Medicine.  Dr. Dong has worked in both the public and private sectors in organizations where 70 per cent of the workforce is women.  She has expertise in disability management and is committed to rehabilitation and return to function.  Dr. Dong is currently a medical consultant at and St. Michaels’s Hospital. Dr. Dong is past chair of the Ontario Medical Association Committee on work and health and former chair of the Canadian Board of Occupation and Environmental Medicine.  In addition to joining the Women’s College Hospital Board of Directors, Dr. Dong is also a former vice chair of the governing council of the University of Toronto.

34 New Claim Dedicated Claims Contact
Easy to start the process through a general toll-free phone line Assistance with Filling out claim forms Hand-holding through the pre-claim process Very experienced with simplified Individual Disability Claims Over 10 years of claims-handling experience. We have requested for an additional employee who will be responsible for many of the administrative duties The Edge was performing before their claims reached us. This role will be responsible for; - following up information for outstanding information on incomplete claims - adjudicating the Simplified Disability Income claims - Screening potential claims (if the claim is for illness, non-occ, whether the coverage is available) - providing the insured with the proper initial claim forms and information We do not have a dedicated phone line or address. The plan is for the call centre to forward any calls regarding Fundamental or SDI claims to them to answer.

35 Definition of Disability & Other Provisions
Definitions of Disability Other Provisions… Return to Work Assistance Change of Definition at 36 Months Recurrent Disability (6 Months) Here’s what we look at when we are adjudicating claims. We will request medical and financial information for eligibility review. Depending on the medical condition, we will pay the claim based on either under the Total disability or Partial Disability the inability to perform the important duties of his Regular Occupation and is not engaged in any gainful occupation, and receiving physician’s care. (Partial Disability so not Totally Disabled, engaged in his Regular Occupation or any gainful occupation, but unable to perform either; one or more important duties of his Regular Occupation, or the important duties of his Regular Occupation at least half of the time normally required. Benefits are paid at 50% of Total Disability Benefits, up to 6 months) Once benefits are approved, the client will be entitled to waiver of premiums 30 days after benefits become payable. Return to work assistance; as discussed previously, we have dedicated vocational rehabilitation specialists in-house and on the field that are there to assist in returning our clients to work. I will discuss some of the activities to achieve this goal later in my presentation. If, after a claim has been closed, a client experiences a relapse in the same or related condition for which they were disabled in the prior claim, it may be considered a recurrence of disability. This means that they would not have to satisfy another elimination before qualifying for benefits. They can contact their previous claims specialist to verify whether this applies in their particular situation. No one else has the scale, resources and experience to do what we do.

36 Return to Work Assistance
Client, employer and attending physician interviews Clinical reviews Independent Medical Evaluations Vocational Rehabilitation / Return to work plans may also include: Work site modifications Job site analysis and work conditioning Transferable skills analysis Job search and resume-writing assistance

37 Senior Sales Consultant

38 The Fundamental Series – Compensation
Override to MGA +

39 The Fundamental Series – Compensation
Example… $1500 of Premium FYC 30% Compensation $450 MGA Override 150% Total Broker Compensation $1125 Annually Payable

40 Highlights Market Opportunity RBC Insurance’s Leadership Position
Simplicity Strong Definition of Disability Best Doctors No Pre Existing Condition Exclusion Increments of $100 Alternative Offers on all RBC Disability Insurance Compensation

41 Call to Action We want to Partner with you
What can our Sales Consultants offer Best in Class Insurance Products and Services In Field Support Advice for All your Clients Help you Build your Business At RBC Insurance we pride ourselves on the ability to offer advice for every client who you bring to us. We not only have products and services for the blue and grey collar market as we have spoken about today but also for all of you white collar, high income earners. Our advice is not based on using one product and trying to make it fit every need. Rather we are able to customize our advice to the client you bring to us. All of our SC’s are life licensed and are able to be in the field supporting you with your clients and offering advice to meet their needs. Our goal is to help you write and place policies, we’re not happy until you get paid. All that being said it all starts with the first client you allow us to quote on. As you were listening to the presentation today you probably thought of a few clients who this coverage would be appropriate for. Take a moment and write their names down on a piece of paper. When we follow up with you in the next couple of days these are the clients we would like to speak to you about. There is no better way to see what we can do to help you then with a client and a quote.

42 Thank You for Your Time

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