Life insurance sales see strong growth

By Alain Thériault | May 06 2016 07:00AM

Individual life insurance sales in Canada grew vigorously in 2015: new premiums were 10% higher than in 2014.

The 2015 LIMRA report highlights gains in new individual life insurance premium sales for the three main product lines between 2014 and 2015. Sales advanced 13% for whole life, 8% for universal life and 7% for term.



Policy numbers grew more modestly in 2015, at 4% versus 2014. Yet this is a notable comeback compared with the 9% downturn in the number of policies sold in 2014 versus 2013. Growth for the three product types was 4%.

Research director Matthew Rubino notes that regarding new premiums in term products and whole life, “more than half of carriers reported growth. He adds that “term sales spiked in the fourth quarter, up 13%, leading to an increase of 7% for the year. Several carriers had updated products and/or pricing earlier in the year.” “Nearly half of UL carriers also reported growth,” he told The Insurance and Investment Journal in an interview.



Universal life maintained its renewed momentum. “Universal life products enjoyed their fifth quarter of positive growth, although the increase slowed slightly in the fourth quarter,” Rubino adds.

This sales strength occurred despite two factors that typically hamper product growth: price hikes driven by low interest rates and market volatility. Rubino claimed that universal life prices stabilized in 2015. “We didn’t hear much about pricing changes, with the exception of a few mentions of pricing decreases. UL is just rebounding from the negative impact of the price increases in prior years,” he continues.

Whole life is the growth engine

All the same, whole life remains the growth engine, fuelled by the continuing success of participating products. “With sustained gains well into double digits, WL has been the dominating driver of new premium growth for several years. The WL market share only continues to increase,” he says. Only one life insurer did not report sales growth in 2015.

Whole life premium growth faltered in Q4 2015. “There was no consistent reason among carriers. For some, nonpar and T100 product sales have been slowing for several quarters. Some carriers did mention pricing changes in their T100 products, which may be having an impact. WL sales were still up 9%, which is still good growth,” Rubino explains. T100 products include level cost UL insurance.

Regardless of the product, many carriers claim that sales incentives strongly boosted their overall results in individual life insurance sales in 2015, Rubino says.

Asked by The Insurance and Investment Journal whether he believes that the end of sales contests, would affect sales in 2016 (See article, pages 14 to 16), Rubino replied, “We cannot divulge any information we may have received from carriers on incentives.”

Changes to federal laws

Changes to federal laws governing the taxation of life insurance policies, slated to take effect on Jan. 1, 2017, may also impact sales, Rubino points out. “Generally, when we see a regulation like this go into effect, there is a sales increase leading up to the implementation and a decline thereafter. As T100 and other life pay products will be impacted more, there may be more of an impact on their sales in 2016 leading up to the change.” 

Rubino also saw growth in the size of policies sold in 2015 according to two averages: insurance amount purchased per policy and annual premium paid per policy. Both indicators are up 6%, whereas the average insurance amount was $348,507 per policy in 2015, and the average premium was $1,896 per policy. “Several new products, as well as repricings intended to bring existing products into a more competitive position, drove these gains,” he explains.

Independent advisors shine

The independent network was the star distribution channel for individual life. Between 2014 and 2015, new individual life insurance premiums in this network grew by 12%, versus 6% for premiums from affiliated networks (including career agencies).

In retail, all networks reported growth. Independent advisors, who trade directly with suppliers, bypassing a managing general agencies, saw sales advance by 16% in terms of new premiums between 2014 and 2015. The securities broker network, also called national accounts, remains a vigorous growth driver, stoking sales growth of 15% during this period. Sales via managing general agencies rose by 10% and those of career agents were up 7%.

Twenty companies participated in the survey. They account for 94% of annualized premiums in the Canadian market. The largest include Manulife, Sun Life Financial, Great-West Life and its subsidiaries Canada Life and London Life, iA Financial Group, Desjardins Insurance, SSQ Assurance, La Capitale, Empire Life, RBC Insurance and BMO Life Assurance.