Canadian Life Insurance Premiums Expected to Increase by 4.1% in 2015

By Andrew Rickard | January 12 2015 08:39AM

Insurers can expect to see premiums grow modestly this year, but they may also see their investment returns deteriorate.

According to Swiss Re's latest economic report, global in-force life insurance premiums will increase by 3% in 2015; this is slightly less than the 4% forecast for 2014, but still significantly better than the 1.5% decline recorded in 2013. Much of this growth is thanks to business from emerging markets, where Swiss Re expects life premiums to grow by 10% in this year. In Canada, the report says that real growth of in-force life insurance premiums was about 3.8% in 2014, and forecasts 4.1% gains in both 2015 and 2016. This is better than the US life insurance industry, where the real growth of in-force life premiums is only expected to increase by 2.1% this year.

By focusing on new products, increased market penetration, improved distribution techniques, and cost-cutting, the report says that life insurers and reinsurers managed to earn higher profits last year, increasing their return on equity from 10% to about 12%. However, SwissRe warns that low interest rates will continue to pose a profitability challenge for life insurers.