Non-cancellable products rebound in 2011, individual disability insurance

By Alain Thériault | April 17 2012 08:34PM

After a two-year slide, policy sales in the Canadian disability insurance industry rose by 12% and premiums grew by 4% in 2011 compared with 2010.
Disability sales experienced their first annual growth in four years, the LIMRA report confirms. The industry undoubtedly owes its success to the solid growth of non-cancellable products, which had been in a lingering tailspin. This high-end product aimed at professionals saw both its premiums and the number of policies rise from 2010 to 2011 (see table).

The LIMRA report also points to exceptional growth in the number of disability insurance policies in Canada, fuelled mainly by the guaranteed renewable policy. Although product premiums slid in 2011 compared with 2010, the number of policies exploded during this period.

Cheaper non-cancellable policies are mainly aimed at the blue-collar and self-employed clientele. The industry sells more but garners less premiums than with non-cancellable products.

LIMRA product research director Karen Terry says that market concentration also influenced these results. “The DI market is so concentrated that one company drove that trend, with its guaranteed renewable product sales,” she told The Insurance and Investment Journal.

New premiums rise
The report mentions that five out of eight suppliers saw new premiums rise in 2011 compared with 2010. Half of the suppliers had policy sales growth during this period. The non-cancellable product continues to be the strongest driver of Canadian sales in terms of premiums. Cancellable products dominate regarding the number of policies.

In fact, the cancellable insurance market has steadily declined for years. “A big player in that market, RBC dropped its cancellable product several years ago. There are few companies remaining in the market. It’s a restrictive product from a consumer standpoint,” Ms. Terry says.

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