In its report entitled Impact of COVID-19: Individual Life Sales, Product Changes, Electronic Processing and Other Administrative Changes (Canada) LIMRA projects a sharp drop in sales for the second quarter of the year.
Catherine Theroux, spokesperson for the research firm, points out that the lockdown measures were put in place in March. As a result, the impact of COVID-19 will be felt later.
“The only major increase in sales for the first quarter was unrelated to COVID-19, and with carriers reporting lower applications I think it’s safe to say Q2 may be lower compared to last year to some degree,” she told the Insurance Portal.
Heightened consumer interest
Theroux notes that despite slumping demand, some “companies perceive an increase in consumer interest in life insurance.” She adds that there is no sign that the same pattern will be seen in CI insurance.
“It is possible this is occurring for critical illness products as well, however we do not have any research that confirms this. Critical illness products cover specified diseases, not viral outbreaks, so if there is impact for those products it would be from a general increase in the awareness of the need for insurance ”, she continues.
One thing is for sure, COVID-19 has “adjusted the market’s expectations for underwriting requirements,” Catherine Theroux adds. “About half of the carriers we surveyed reported that they were considering keeping some or all of the relaxed underwriting requirements that have emerged due to the COVID-19 pandemic.”
Downturn in annuities anticipated
Regarding annuities, Todd Giesing, senior research director, Secure Retirement Institute at LIMRA, says that challenges lie ahead for the Canadian market in the coming months. In an email to the Insurance Portal, he echoed Theroux’s point that the pandemic and its consequences occurred at the end of the first quarter. He expects the impacts on annuities sales to be felt in Q2 2020.
“Economic factors have changed rapidly and not in favor for annuity products, yet this is just a portion of the challenges for insurers. Business disruptions as insurers, distributors and advisors entered a remote working environment will impact annuity sales moving forward in 2020,” Giesing explains.
