Life and health insurers paid a record $128 billion in benefits in 2023, according to the 2024 edition of Canadian Life & Health Insurance Facts, a report published by the Canadian Life and Health Insurance Association (CLHIA).
The benefits paid amount is a 13 per cent increase compared to the nearly $114 billion paid out in 2022 (see unrounded figures in the charts below). In 2021, the industry paid out a total of just over $113 billion in benefits. The total amount of benefits represents over $350 million paid daily by insurers in 2023.
Life and health insurers paid benefits for life and health insurance, as well as for insurance-based retirement products, such as annuities and segregated funds. The CLHIA report is based on sectoral and publicly available data.
The growth in benefits in 2023 contrasts with the previous three years, marked by the COVID-19 pandemic. According to the historical data provided to Insurance Portal by CLHIA, the amount of benefits paid out decreased by nearly 7 per cent in 2020 compared to 2019. After reaching $103.5 billion in 2019, the amount of benefits dropped to $97.1 billion in 2020.
Canadian Life & Health Insurance Facts also reveals that benefits paid by CLHIA member companies "provided coverage for nearly 30 million – or 75 per cent of Canadians." CLHIA says its members hold 99 per cent of the life and health insurance business in force in Canada.
"The amount insurers paid-out last year to Canadians is greater than what the federal government provided in old age benefits, child benefits and employment insurance combined," stated Stephen Frank, CLHIA’s President and CEO, when the report was released Sept. 24, 2024.
Among other things, insurers paid a record $36.6 billion in health, drug, and dental claims, which is 13 per cent more than in 2022, stated the CLHIA report. The report also reveals that insurers paid nearly $10 billion in disability benefits to 12 million Canadians.
In 2023, life and health insurers also paid nearly $63 billion in retirement benefits in the form of annuities, more than $48 billion in health insurance benefits, and $17 billion in life insurance benefits.
In his introduction to the CLHIA report, Stephen Frank pointed out that many insured individuals are covered by more than one product. Of the 30 million people covered, 27 million are covered by health insurance, 20 million by life insurance, and 10 million have retirement annuities.
Segregated funds fuel growth
CLHIA members collected $157 billion in premiums in 2023, compared to $145 billion in 2022, an increase of 8.3 per cent over 2022. The report attributes this growth primarily to annuities, including segregated funds, which grew by 9.1 per cent in 2023 compared to 2022. Health insurance premiums grew by 8.7 per cent during this comparison period, while life insurance premiums increased by 6.4 per cent.
Of the total life and health insurance products sold in Canada in 2023, 67 per cent were group-based, and 33 per cent were individual.
Of the $28.7 billion in life insurance premiums collected in 2023, 83 per cent came from individual policies and 17 per cent from group policies.
Of the $60.8 billion in health insurance premiums collected in 2023, 91 per cent came from group plans and 9 per cent from individual policies.
Of the $67.9 billion in annuity premiums collected in 2023, 67 per cent of contributions went to group plans, and 33 per cent to individual policies.
According to the CLHIA report, individual life insurance coverage has been steadily increasing and "now equals 65 per cent of the value of total policies in-force," compared to 58 per cent in 2013. The report attributes this growth primarily to term life insurance.
The CLHIA also notes the growth in insurers' assets, particularly in retirement products. It observes that over the past 10 years, the growth in retirement assets held by insurers has been driven by accumulation-phase annuities. These have shown an average annual growth rate of 5 per cent since 2013, states the report.
Increase in psychological care claims
At $15.3 billion, prescription drug costs continued to represent the largest share of health insurance benefits paid by insurers. The CLHIA adds that these benefits accounted for more than 35 per cent of prescription drug spending in Canada. Drug claims with insurers increased by 7.1 per cent in 2023 compared to 2022.
Claims for paramedical services, such as massage therapy and physiotherapy, drove the increase in health benefit claims in 2023, reveals the CLHIA report.
Meanwhile, benefits related to claims for mental health consultations reached $730 million in 2023, more than double the amount paid out four years earlier. The CLHIA attributes this increase to the continued trend among Canadian employers towards greater awareness and increased support for mental health.
