Disability: guaranteed renewable booming

By Alain Thériault | August 19 2011 08:08PM

Guaranteed renewable disability insurance was the growth driver in disability insurance. This product, designed for self-employed and blue-collar workers, propelled premiums and policies upward in the first quarter, countering the lacklustre performance of other products.

Traditional noncancellable policies favoured by professionals continued to dominate in force, yet growth stagnated. The more creative guaranteed policy market saw several new innovations in 2011.

This insurance niche has great potential. In a survey linked to the launching of the new hybrid product offering disability coverage (Synergy), Manulife Financial found that only 21% of Canadians have disability insurance. With Synergy, which includes life and critical illness protection, is targeting the middle class and youth markets.

In a revamped product called Pillar Series, Penncorp is aiming at the blue-collar and grey-collar (technicians and salespeople) segments. The insurer is even willing to cover students, retirees and homemakers. Both products surfaced in the second quarter.

The LIMRA report on disability insurance in Canada finds that new annualized premiums were up 6% in the first quarter of 2011 compared with the same quarter of 2010. Q1 premiums totalled $16.3 million. Sales of guaranteed renewable products climbed 21% during this period, while noncancellable products slipped by 3%.

Since BMO life insurance vacated the market, the noncancellable product has shrunk to a minute portion of total DI sales. In the first quarter, they plunged by 28% compared with the corresponding quarter in 2010.



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