Canadian life insurers risk creating a new generation of “orphan policyholders” as electronic delivery becomes the default for life and living benefits contracts, without any corresponding standard for advice or stewardship, warns veteran consultant Rhona Konnelly (pictured).
Konnelly, who previously raised alarms about decades‑old “orphan” policies with no servicing advisor, said the industry is now sowing similar problems much earlier in the life of a contract.
“As an industry, we may be unintentionally creating the conditions for future orphan policyholders upstream, where it’s starting at the point of policy delivery itself,” she told Insurance Business.
Konnelly said insurers have focused on making policy delivery faster and more efficient, without putting equivalent emphasis on making sure clients actually understand what they are receiving or how it will be supported over time. The move to e‑delivery, which accelerated during COVID‑19 so advisors could complete life, accident and sickness and living benefits sales remotely, solved the logistical problem, she noted, but did not address that advisory gap – even though she is not opposed to the technology itself.
“This is not anti‑technology,” she said. “Efficiency and digital access absolutely matter… but the issue is that stewardship standards have not evolved alongside delivery technology.”
Before e‑delivery, she said, policy hand‑off created a natural point for explanation.
“I could explain how the policy actually works in the client’s life. I can clarify any obligations on their part, such as payment of premiums, I can answer questions, and I can establish expectations for long‑term ongoing servicing.”
“E‑delivery risks compressing or bypassing that moment entirely,” she added.
Konnelly warned that the fallout from thin delivery and weak follow‑up often only becomes apparent years later. Advisors may leave the business, beneficiary designations can become outdated, clients can disengage or misinterpret what they bought, and life changes can leave the contract badly aligned with their needs. Over time, she said, that is how today’s policies turn into tomorrow’s effectively unserved accounts.
Konnelly said the problem is rooted less in bad intentions than in how the industry structures its processes and incentives, with a heavy emphasis on ticking compliance boxes and getting policies issued, but far less clarity around what a full delivery and servicing experience should entail.
In practice, she argued, that has turned delivery into a box‑ticking exercise rather than the start of an advisory relationship. “The stewardship part is missing,” she said. “Too often, delivery has become an administrative closure rather than the beginning of a stewardship relationship.”
Konnelly framed this as a question of trust, saying many customers reasonably expect that when a policy is handed over, a real advisory relationship comes with it and that someone will help them navigate changes over time.
"A policyholder may believe they are protected simply because a policy was issued and delivered – without ever fully understanding how that contract is meant to function when life changes occur."
She acknowledged that some advisors do a strong job of explaining contracts and setting clear expectations for future servicing, but said that remains inconsistent across the industry. “It just became the replacement for delivery,” she said.
Konnelly said that several core contractual protections and conditions are now often left unspoken when policies are delivered.
Clients are rarely walked through the fact that, by signing the delivery receipt, they are confirming there has been no change in their health status since the application was made – a requirement that can affect whether the contract is valid.
Many are also unaware they typically have a short “cooling‑off” or rescission period – often around 10 days – during which they can cancel the policy and get their money back if they decide it isn’t appropriate.
On top of that, she noted, early‑period clauses such as suicide exclusions and incontestability provisions can materially affect whether and how a claim is paid, yet most policyholders have never had those explained to them in plain language. “We’re missing important steps,” she said.
Konnelly stressed that she does not see e‑delivery itself as the villain, but rather the lack of a defined standard around it.
“It’s not a bad process, but it’s about how the system needs to evolve because the standards are not there for stewardship,” she said. “The bigger question is whether the industry now needs to define what a complete policy delivery standard actually looks like in a digital environment. And I don’t know that the industry has defined that.”
Konnelly said having a policy formally delivered doesn’t mean the client truly understands it. Moving to e‑delivery hasn’t reduced the need for advice, she argued; instead, it has stripped out one of the few guaranteed points in the process where meaningful guidance used to be provided.
“We know our industry, the consumer doesn’t,” Konnelly said. “They do need that ongoing help. And they do need to know who to call – not to sign into a client portal on a website that might not offer them the advice that they would need to get from an advisor.”
