With a new year approaching, we asked The Insurance & Investment Journal’s journalists to share their insight and observations on the challenges facing the industry in the coming months.
Humans increasingly vulnerable!
by Serge Therrien, president and publisher, The Insurance and Investment Journal
Never in human history have we seen the planet Earth in such a disturbed condition. Climate change will redefine this planet's future and consequently that of the people who live here.
In this kind of situation, everyone is vulnerable.
From the perspective of the insurance industry, these changes at first seemed to be an issue of particular concern to the property and casualty insurance sector. But they must now be perceived as a challenge for life and health insurers as well.
Besides the physical damage that climate change will cause, we can now expect it to have repercussions on people themselves, costing them their health and even their lives. Disasters and the effect they have on individuals will increase. Pollution, extreme heat, drought, and floods will result in respiratory diseases, higher morbidity, more chronic illnesses, and the spread of viruses.
This is also an area where the insurance industry will again prove its value and find opportunities for growth. In the same way that insurers were able to manage risk for people who found themselves in vulnerable circumstances, they now have to design coverage to deal with these new and future risks.
by Donna Glasgow, editor-in-chief, The Insurance and Investment Journal
Whether it’s internet sales, compensation issues, new disclosure rules or robo-advisors, the discussion around the role and value of advice has taken centre stage in the financial services industry.
As we enter a new year, more and more research is indicating that Canadians benefit from financial advice, including the Millennial generation of young adults. Experts quoted in an article featured in the November/December issue of The Insurance and Investment Journal said that while Millennials are comfortable on the technology front, they still want and need advice, particularly holistic advice that gives them a big picture view of their financial situation. Read more
Meanwhile, recently released international research confirms consumers’ desire to work with an advisor when buying insurance products. After surveying 8,000 consumers in 14 countries, ReMark International, found that nearly all insurance buyers want to receive some level of advice. Only a marginal number of consumers purchase insurance products completely on their own. The January 2016 issue of The Insurance and Investment Journal will feature an article on these findings. A summary of the findings is also available here.
In 2016, the discussion on the value of advice will continue. However, with a recent CIBC survey revealing that 82% of Millennials admit that they lack sufficient financial knowledge, the need for quality financial advice appears to have a strong future.
Life insurance sales in the year ahead
by Alain Thériault, director, life insurance, taxation and investment
The coming year should be an exciting one, and it should also offer some good business opportunities. The US Federal Reserve raised its prime rate to 0.25% on Dec. 16, and it will now range between 0.25% to 0.50%.
The first increase in nine years, this hike will eventually have an effect on long-term interest rates. Insurers will be able to breathe easier and earn better returns on their products.
In Canada, the most recent data from LIMRA show that individual life insurance sales grew by 11% in the third quarter of 2015 compared to the same period in the previous year. New products entering the market have stimulated this growth and there is no indication that the trend will reverse in the New Year.
In addition, the MIB Group is optimistic about life insurance sales for the first half of 2016. However, it notes that the customer profile is changing. In the United States, 2015 was the first year in which there were more insurance applications from Generations X and Y consumers than from Baby Boomers.
Insurers are getting better at wooing this segment of the population, but there is still much work to be done. Young people buy products differently and having an online presence is becoming essential. Advisors will need to leverage the Internet to reach this demographic. Several studies from LIMRA show that consumers use the web to gather information before later buying from an advisor.