Assuris has recently increased several levels of policyholder protection in case of insurer bankruptcy. The organization says it made this decision in partnership with its member life and health insurance companies. In fact, Assuris hiked the levels significantly, depending on the insurance amount.
Assuris believes that better policyholder protection will strengthen public confidence in the industry. Founded in 1990, Assuris is an independent, not-for-profit, industry-funded compensation organization. Every life and health insurance company authorized to transact insurance business in Canada must become a member of Assuris, under the Insurance Companies Act of Canada.
Assuris plays the same role in life and health insurance as the Canada Deposit Insurance Corporation (CDIC) does for banks. CDIC protects insurable deposits up to $100,000. These include deposits and guaranteed investment certificates (GICs).
Assuris protection applies to all individual and group insurance products. These include whole life, universal and term insurance, travel health insurance and supplementary medical insurance. Annuities, retirement income products and wealth management products are also covered.
Levels multiplied
The personal insurance indemnity organization spelled out the highest levels of protection, according to product guarantees:
- Death benefit: up to $1,000,000 or 90 per cent of the death benefit, whichever is higher
- Medical expenses: up to $250,000 or 90 per cent of medical expenses, whichever is higher
- Monthly income: up to $5,000/month or 90 per cent of monthly income, whichever is higher
- Investments/Savings, including cash value, accumulated value, and segregated fund guarantee: up to $100,000 or 90 per cent of the guaranteed amount, whichever is higher.
Among the most striking changes, the level of death benefit protection for life insurance has been increased fivefold, and the level of protection for medical expenses is now more than four times the previous level. The guaranteed amount of an insured annuity has ballooned from $2,000 to $5,000. The following table compares coverage levels before and after the change.
21 product types evaluated
Paul Petrelli, President and CEO of Assuris, explained to The Insurance Portal that the compensation company is required to review the coverage offered to Canadian policyholders every three years.
Petrelli traced the journey that led to this first major change to coverage in the last 20 years. “We have been working in close consultation with the industry for the last 18 months. In 2021, we surveyed our members to assess protection levels across 21 types of products,” he said.
The assessment was informative. “The findings indicated that protection levels for several products did not meet the objective of fully protecting at least 90 per cent of Canadian policyholders due to the growth in the use of these products by Canadians,” the Assuris CEO notes.
First major change since 2003
In 2022, Assuris consulted its life and health insurer members, as well as regulators across the country, about proposed increases in policyholder protection levels. “After the member companies voted at the Annual General meeting, the changes come into effect May 25, 2023,” Petrelli says.
Asked why protection levels have not all increased to the same extent, Paul Petrelli replies that Canadians are well protected, regardless of whether they place their money with banks or insurers. “In the case of Assuris, we set out to protect 90 per cent of Canadians – and offer proportional protection, so the amount protected grows as the policy grows. The last significant changes to our policyholder protection were in 2003,” the Assuris CEO points out.
As for the level of protection on accumulation values and segregated fund guarantees, which remains at $100,000 in the new version, Paul Petrelli feels that this level is appropriate to achieve the objective of protecting 90 per cent of Canadians. “However, the proportional protection of 90 per cent was added to the protection on accumulated values,” he adds.
