A publication by LIMRA entitled Canada’s Changing Consumer Landscape has unveiled the findings from the U.S. Life Insurance Barometer Study 2023 and its Canadian counterpart, focusing on the insurance gap within North American populations. The initial observation is that this gap is significant on both sides of the border.
The study, conducted by LIMRA and Life Happens, a U.S.-based non-profit organization committed to educating Americans about life insurance, represents an annual effort since 2011 to explore American life insurance trends.
Canadian market: smaller, yet stronger
"Since both organizations have a substantial Canadian membership base, the most recent Barometer survey included 2,000 Canadian adults," explains Stephen Wood, Research Director, Consumer Markets at LIMRA and LOMA.
Wood notes that in many ways, the results from the Canadian Barometer depict a stronger market in Canada than in the United States for 2023:
- 56 per cent of Canadians self-reported owning life insurance
- 21 per cent of Canadian adults are uninsured but say they need life insurance.
- 10 per cent of Canadian adults are insured but say they need more insurance.
"The latter two statistics equate to a 31 percent self-reported life insurance need gap in Canada — or about 10 million adults," summarizes Wood.
However, he adds that the gap stands at about 41 per cent of the adult population in the United States, or approximately 100 million adults. "On the one hand, the market opportunity is larger in the U.S."
Yet, nearly a quarter of the Canadian population has expressed a need for life insurance. " And that number will surely increase, no matter the trajectory of life insurance sales in Canada,” Wood predicts.
He notes that the Canadian population has significantly grown in recent years, rising from 30.7 million individuals in 2020 to over 40 million in 2023. "This population growth is projected to continue for decades to come and is projected to reach 48 million by 2043,” he notes.
Different markets
Wood underlines other differences between the two countries, besides the fact that the U.S. market is larger:
- A major part of the Canadian population lives in just a few large cities (competition for clientele is heavily concentrated in Toronto, Montreal, and Vancouver).
- Over 60 per cent of the country's population resides in Ontario or Quebec.
- The average monthly life insurance premium in the United States is double that of Canada: $26 versus $13.
Accessibility is key
Mike Stocks, Vice President and Chief Marketing Officer, Retail, at Empire Life recently stated that offering simplified issue life insurance directly online can reduce the problem of underinsured Canadians. (Read more on this subject in the upcoming April 2024 edition of Insurance Journal).
“There is a significant life insurance protection gap in North America,” observes Stocks. The challenge is how to make it easy for customers to fill that need, he says. “Many advisors and carriers focus on the higher net worth customers, yet middle-market Canadians typically are those with a larger protection gap,” he adds.
Digital to the rescue
Stocks says that Empire Life has focused on the middle market by offering tools like the Fast & Full digital application. " We have seen significant growth in digital app submissions since the pandemic,” he said, revealing that 91 per cent of applications were completed this way in 2023. "Yet we continue to support both digital and paper to provide advisors flexibility, he underlined.
Direct distribution is also on the radar of the LIMRA and Life Happens study.
“We can see that nearly 64 percent of all Canadians say they would ultimately purchase their policy in person. According to Barometer data, only 53 percent of U.S. consumers say they would complete the purchase in person, suggesting that U.S. consumers are increasingly comfortable shopping online and making online purchases,” observes Stephen Wood.
