Life insurance sales: independents start year in high gear

By Alain Thériault | August 19 2011 03:30PM

Independent advisors posted strong growth in individual life insurance sales in the first quarter. New individual life insurance premiums in the network rose by 13% in Q1 2011 compared with the same quarter in 2010, a strong rebound for managing general agents.For all networks combined, individual life insurance premiums were up 9% in the first quarter of 2011, compared with the same period in 2010. Also in terms of premiums, whole life insurance sales advanced 19% compared with 18% for universal life for the same comparison periods. In contrast, term premiums fell by 10%.

The managing general agent (MGA) network was particularly vigorous in the first quarter, says LIMRA, which gave The Insurance and Investment Journal the Canadian sales figures for Q1 2011. Whole life sales in the independent advisor network soared by 35% between the first quarters of 2010 and 2011. Sales of universal life rose by 21% during this period. The independent network also increased the number of policies sold and the size of the policies. “Independent agents continue to come back after experiencing difficulty in 2009,” Karen Terry, research director, life insurance products at LIMRA, wrote in a recent report.

Independents’ growth was magnified by the outstanding performance of the securities broker network (national accounts). They hiked sales by 34% in Q1 2011 compared with the same quarter in 2010.

In contrast, the career network eked out a mere 2% more in sales during the same comparison period. The career network is mainly centered on whole life, while independents tend to focus on universal life.

Fixed annuities in freefall

Despite uncertain financial markets, advisors and their clients prefer segregated funds. Fixed annuities are paying the price. According to the latest LIMRA report, annuity sales plummeted by 22% in the first quarter of 2010 to the first quarter of 2011.

With sales of $792 million in the first quarter, fixed annuities are in freefall compared with Q1 2010. Segregated fund sales were up 3%, reaching $2.9 billion during this period. Total annuity assets in Canada edged upward by 2%, surpassing $119.6 billion at the end of Q1.

A study conducted by Sally A. Bryck, associate director at LIMRA Retirement Research, concludes that 55% of segregated fund premiums sold in the first quarter were in the form of RRSPs. Non-RRSP fund premiums accounted for 29%, registered retirement income funds (RRIF) 8%, lifetime annuity fund 5% and tax-free saving accounts (TFSA) 3%.

Critical illness: affiliated agents clobber independents

The career network far outdid the independents, racking up a 16% increase in critical illness insurance sales in first quarter 2011 compared with the same quarter in 2010. Growth in the independent network paled at 2% during this period.

In terms of new annualized premiums, the individual critical illness market saw a 7% rise in sales in Q1 2011 compared with the same quarter a year earlier. The number of policies climbed 3% during this period. LIMRA published these figures in its latest report on critical illness insurance sales in Canada.

The product had barely 12,000 policies in force in the late 1990s. The number of critical illness policies in force has topped 500,000 in the first quarter of 2011, with premiums of $536 million. This represents growth of in force of 10% compared with the same quarter in 2010, for policies and premiums alike.

The strongest growth in the first quarter was posted for permanent product, 17% compared with Q1 2010. Sales of limited-period level (LPL) advanced by 5% during this period, as sales of renewable policies slipped by 4%.

“Sales by affiliated agents experienced strong growth driven by permanent and LPL sales,” Karen Terry, project director, says in the LIMRA report. However, the independent network generated the bulk of the Q1 sales, at 61% versus 39% for affiliated agents.