Critical illness insurance sales ended 2023 on a high note, according to data prepared for the Insurance Portal by LIMRA, based on its Canadian Individual Critical Illness Insurance Sales surveys from 2010 to 2023.
According to LIMRA’s data, growth in sales measured by annualized premiums reached 12% in 2023 compared to 2022 (see the chart on critical illness insurance sales growth from 2010 to 2023). Over this comparison period, premiums grew from $134.4 million to $150.7 million.
This premium growth marks the strongest performance since 2012 when premium sales rose by 16% over 2011.
The growth in policy count was more modest, with a 4% increase in 2023 compared to 2022. However, this rise marks the end of an almost unbroken negative trend since 2018. From 2022 to 2023, the number of policies sold annually rose from 110,611 to 114,861.
Term policies take the lead
The strong performance of critical illness insurance sales in terms of premiums in 2023 is largely due to the growth of term products, according to LIMRA’s data. Premiums for this product category grew by 13% in 2023 compared to 2022. "The rise in premium sales for the renewable product is due to one of our participants gaining the business of a new sponsor," LIMRA Associate Research Analyst, Products Research, Matty Arigoni told Insurance Portal.
Renewable product sales by policy count also saw a 6% increase in 2023, the highest growth among the three products tracked by LIMRA.
Arigoni noted that critical illness sales during the second half of 2023 were significantly high compared to 2022 due to the transfer of business mentioned above. situation described previously. “Out of fourteen participants in the survey, eleven reported increases in premiums. We cannot surmise that this trend will carry over throughout 2024, however we are seeing a leveling off of premium sales for quarter one and quarter two,” he added.
As for the sponsor that drove the increase in sales in 2023, a confidential source indicated it was the Ontario Medical Association (OMA), which selected Manulife as its new insurer following a 2023 request for proposals.
The OMA represents more than 43,000 physicians, including medical students. A press release from the association stated that it chose to change insurers when Sun Life sold its association and affinity group insurance portfolio to Securian Canada (formerly Canada Premier).
Manulife’s Mathieu Charest confirmed to Insurance Portal that this new group is what is making the difference in sales. “The growth comes from the OMA. Critical illness sales in 2023 were very close to those of 2022. There was little growth when the OMA was excluded,” revealed Manulife’s Head of Product and Pricing, Individual Insurance Canada.
Charest explained that the OMA portfolio consists of term (renewable) critical illness insurance in the affinity group niche. “We transferred an active OMA group from another insurer to us. This is new business for us. With this transfer, there has been a significant increase in our in-force critical illness insurance business,” he said.
Charest added that this is a one-time transfer. He anticipates that from 2024 onward, new critical illness insurance sales from the OMA will be “much lower.”
Momentum continues into 2024
According to LIMRA’s most recent survey available, which covers the second quarter of 2024, growth in critical illness insurance sales continues across the industry. Sales are up by 4% in terms of annualized premiums compared to the second quarter of 2023, while the number of policies sold increased by 8% over the same period.
The following insurers participated in the second quarter 2024 survey: Beneva, BMO Insurance, Canada Life, Combined Insurance, Co-operators Life, Desjardins Financial Security, Empire Life, Equitable, Foresters Financial, iA Financial Group, ivari, Manulife, RBC Insurance, Sun Life, and Wawanesa Life.
