Two players could reignite the group CI insurance market

By Alain Thériault | March 03 2015 09:00AM

The usually stagnant group critical illness (CI) insurance market had an eventful start to the year. Assumption Life has launched a group CI insurance product for the first time, and SSQ Life has introduced a new version of its product in a bid to outdo its competitors.Assumption Life launched its group critical illness insurance product in January. The product covers 26 conditions, with an additional six illnesses for children. The mutual insurer from Moncton, New Brunswick, made its initial foray into the critical illness insurance market in 2014 with an individual product.

The individual launch was a success and the new group product is a response to client demand. “Our groups have shown interest,” said Paul LeBlanc, vice president of administration and customer experience at Assumption Life, during an interview with The Insurance and Investment Journal.

“Advances in medicine have resulted in a significant increase in cure rates for many serious illnesses,” explains LeBlanc. “Many families that have seen a loved one affected by a serious illness find the financial burden to be a very heavy one.” Assumption Life is offering guaranteed coverage for each job class.

Employees can purchase base coverage in amounts from $5,000 to $250,000 for themselves, and from $5,000 to $ 50,000 for spouses, with the possibility of buying optional coverage for their spouses of up to $250,000. For children, coverage maximums range from $2,500 and $50,000. The plan covers groups of three employees or more. Children are eligible from the time they are 30 days old, and the maximum age is 65 years.

Forty illnesses

As for SSQ Financial Group, the company is looking to set itself apart in this market with a new version of its group CI product Critical Choice Care. The product is being enhanced with two features that go further than what is commonly available in the industry: it covers 40 illnesses – 11 more than under the old plan. The new product also reduces the survival period requirement from 30 to 14 days. This new version of the product will be launched officially on March 15. The older version product, offered in previous years, will no longer be available to new customers.

The new Critical Choice Care will also cover up to 18 conditions for children. Among the 11 new illnesses covered for insured parties and their insured spouses, six are for the full amount of coverage chosen: dilated cardiomyopathy, muscular dystrophy, fulminating viral hepatitis, primary pulmonary hypertension, liver failure at an advanced stage, and progressive systemic sclerosis.

In addition to this, five conditions are covered for 10% of the chosen insurance amount, up to a maximum of $10,000: Crohn’s disease that requires surgery, severe rheumatoid arthritis, systemic lupus erythematosus, hip replacement surgery, and knee replacement surgery.

SSQ notes that coverage is divided into three new distinct segments, namely essential (6 conditions), balanced (24 conditions), and complete (40 conditions). This new group CI product comes with several other enhancements; the minimum size for insured groups is going down from 10 to 5 employees, and the age limit for eligibility has been extended from 69 to 75 years. The maximum amount of insurance is also being increased from $400,000 ($300,000 for spouses) to $600,000.

SSQ had to make changes to its product if it wanted to retain its position in the national group critical illness insurance market. “In Canada, SSQ holds 20% of the critical illness insurance market for group plans,” says Carl Laflamme, senior vice president of group insurance at SSQ.

In an interview with The Insurance and Investment Journal, Laflamme said SSQ’s overall group insurance business is a source of growth and represents 60% of the insurer’s total revenues. He also notes that SSQ has significantly increased its cross-country presence in recent years. “We have 150 employees in Toronto. In 2014, 55% of our new group insurance sales were made ​​outside of Quebec,” he says.

Competitors caught up

For its revamped group CI product the move to 40 diseases is expected to help SSQ keep its edge in this market. “In 2000, we were the first to launch a group critical illness insurance product that covered 29 conditions,” says Laflamme. “Our competitors have since caught up, and in some cases they have surpassed us.”

Reducing the survival period for a critical illness to 14 days may seem like a risky bet, but it is one that Laflamme is prepared to take.

“We are here to take risks. If our product is more risky for us, but it is being improved, that is one more reason to buy it. Covering more illnesses and providing a survival period of 14 days, those are already two good reasons,” he says. “A shorter waiting period, that’s what people want. If an insured patient dies after 25 days and no benefits were paid to him, this leaves a poor impression. We are here to provide financial security to our customers.”

Benchmark definitions

With the new version of its product, SSQ confirmed that it will adopt the industry’s benchmark critical illness definitions established by the Canadian Life and Health Insurance Association (CLHIA) in 2013. Players including Assumption Life, RBC Insurance, Great West Life (group), Manulife Financial and Sun Life Financial (group) have already implemented the changes for certain products.

“The industry has rallied behind a mutual agreement to simplify critical illness insurance products,” says Laflamme. “We know that advisors do not want to pore over the small print for definitions every time they look at a product.”

The new industry standards now include two more conditions – aplastic anemia and bacterial meningitis. The industry first established benchmark definitions in 2007.