A growth trend is continuing in the critical illness insurance market after some challenging years. Permanent products saw an increase of 25 per cent in premiums and 21 per cent in the number of policies in the fourth quarter of 2016, compared to the same period one year prior, says the latest report by LIMRA on critical illness insurance sales in Canada.
The popularity of critical illness (CI) insurance is undeniable. Starting from nothing in the late 90s, premiums are slowly nearing $1 billion. In-force premiums reached $880 million at the end of 2016, up by 8% from the year before. The number of policies reached 810,974, an increase of 9% over the year before.
In 2016, total CI insurance sales, in terms of annualized premiums, grew by 9% over 2015 to reach $130.7 million. The total number of policies sold went up 8% to reach 123,631.
Growth was seen across all three different product categories. The permanent CI sales category grew 15% in 2016 to reach $42.6 million in annualized premiums. A total of 21,533 permanent CI policies were sold, for an increase of 12%.
Limited Period Level (LPL) products continue to be the most popular, with annualized premiums reaching $62 million in 2016. It is also the CI product category with the largest share of in force premiums at $401 million as of Dec. 31, 2017.
The renewable product category had the highest number of policy sales, reaching 53,336.
“Critical illness sales in 2016 fully recovered from declines in 2013 and 2014,” says LIMRA analyst Matthew Rubino. “Nine of 15 carriers reported premium increases over 2015, resulting in a 9 per cent increase in premium following an 8 per cent increase in 2015.”
59% of CI sales were made through the independent distribution channel in 2016, in terms of annualized new premium. This channel saw its sales increase by 10% relative to 2015.
“Permanent products were the strongest growing section of both affiliated and independent channels throughout 2016, with 9 per cent and 19 per cent growth respectively over the previous year,” Rubino says.