Critical illness insurance: cancer and heart attack dominate claims

According to a report on a study by the Canadian Institute of Actuaries (CIA) published in August 2024, cancer and heart disease continue to dominate critical illness insurance claims, in terms of prevalence.

Entitled Canadian Individual Critical Illness Insurance Morbidity Experience Study, this CIA study is the fifth of its kind. It covers policies with an anniversary between 2012 and 2020, based on the 2008 CANCI expected incidence rate tables (Canadian population rates). The 2008 CANCI are the 2008 Canadian Critical Illness Tables published by the Canadian Institute of Actuaries. 

The report comes from the Morbidity Risk Research Commission (MBRC) of the CIA Research Council. The reinsurer SCOR is a partner. Ben Miclette, Chair of the MBRC, and Josephine Robertson, project lead at SCOR led the project. 

Two big risks 

The CIA study reveals that cancer accounted for the largest proportion of claims and the highest actual-to-expected (A/E) outcomes, both based on lives insured and benefit amounts basis. Based on lives insured, cancer represents 67% of claims. Based on benefit amounts, it represents 70%. 

Cardiovascular claims accounted for the second highest number of claims, at 33% based on lives insured and a benefits amounts basis. 

CIA spokesperson Josée Gonthier explained to the Insurance Portal that the A/E results offer comparisons between the (actual) paid claims of the group of policies included in the study compared to those expected, in specifying that expected claims are based on the incidence rates of the general population (versus an insured population) common to all studies published to date.

Gonthier explains why the percentage based on insurance amounts can be higher than that based on lives insured (70% compared to 67% for cancer). In the case of insured lives, each insurance policy has the same weight (weighting) in the analysis regardless of the insurable amount. In the case of amounts, the weight of each policy is based on the insurable amount, “and therefore higher insured amounts have more weight in the analysis,” she says. 

Average benefit of nearly $90,000 

The total number of claims in the observed group of policies was 12,820. The average insurance benefit paid was $86,518. This average includes partial benefits. Partial benefits are paid for non-life-threatening medical conditions and can represent between 10% and 25% of the amount of insurance underwritten, depending on the condition or the insurer involved. 

With 8,994 and 1,310 claims respectively in terms of lives insured, life-threatening cancers and heart attacks come first, followed by stroke, which resulted in 592 claims. Coronary artery bypass surgery came fourth with 337 claims, and multiple sclerosis fifth with 327 claims.

In sixth place, benign brain tumors generated 194 claims. Benefits paid for this disease are on average the highest, at $105,504 per claim. Coronary artery bypass surgery was the second most costly claim for insurers, averaging $98,803, and stroke the third, with an average of $96,894.

75% of the market 

The following companies took part in the study: Assumption Life, Canada Life, Co-operators, Great-West Life, Humania Assurance, iA Financial Group, Manulife, RBC Insurance, Beneva (SSQ Financial Group), Sun Life and Wawanesa Insurance. 

The CIA report mentions that “potentially 20 insurers” were offering critical illness insurance products in Canada during the period under review. “There are 11 contributors to the study, which represents approximately three-quarters of the volume of business written based on sum insured,” it states. 

“Over the years, some contributors entered and exited the study. The reasons for this are varied,” explain the report's authors. These reasons include acquisitions, mergers and availability of resources.

Policyholders smoke less 

The data sample collected by the Canadian Institute of Actuaries represents a group of policyholders made up of 8% smokers and 92% non-smokers. Smoking is one of the major causes of cancer mentioned by the Canadian Cancer Society on its website. 

The insured population has a better profile than the general population. According to the 2019 results presented by Health Canada's Canadian Tobacco and Nicotine Survey (CTNS), 13% of Canadians aged 25 and over were smokers, or 3.3 million people. Since then, the situation has improved. According to the CTNS 2022 results, 11.7% of Canadian adults aged 25 and over were smokers.

According to the Canadian Cancer Society, smoking remains the leading cause of death in Canada.