Insurable Interest Canadian Insurance Blog

Gavin Benjamin | October 27, 2020 In January 2020, the Canadian Institute of Actuaries released final changes to the actuarial standards of practice for calculating commuted values, with the changes scheduled to come into effect on Dec. 1, 2020. The changes will affect the lump-sum amounts paid from many Canadian defined benefit pension plans in situations such as: the termination of employment of a plan member; the retirement of a member where the plan permits portability at retirement; the pre-retirement death of a member; and in the case of a plan windup. For traditional DB plans, the most significant changes to the commuted-value standards of practice are the modifications to the following assumptions used to calculate commuted values: the interest rate assumption and the pension commencement age assumption. Read: Changes coming for pension plan commuted-value standards This article focuses on the modifications to the interest rate assumption. Note that the changes to the commuted-values standards for certain multi-employer and target pension plans differ from those described above and aren’t addressed here. Also, the changes to the commuted-values standards don’t affect amounts paid from defined contribution pension plans. Current standards of practice A commuted value represents the lump sum present value of the estimated monthly lifetime pension payments a former plan...

Business Wire Company also announces common stock dividend Company Highlights Third quarter 2020 net income attributable to Principal Financial Group®, Inc. (PFG) of $236.0 million, or $0.85 per diluted share Third quarter 2020 non-GAAP operating earnings1 of $234.5 million, or $0.85 per diluted share Annual actuarial assumption review reduced net income by $118.2 million, or $0.43 per diluted share, and non-GAAP operating earnings by $113.1 million, or $0.41 per diluted share Assets under management (AUM) of $731.3 billion Company declares fourth quarter 2020 common stock dividend of $0.56 per share DES MOINES, Iowa–(BUSINESS WIRE)– Principal Financial Group® (Nasdaq: PFG) announced results for third quarter 2020. Third quarter 2020 financial results Net income attributable to PFG for third quarter 2020 of $236.0 million, compared to $277.1 million for third quarter 2019. Net income per diluted share of $0.85 for third quarter 2020 compared to $0.98 in the prior year quarter. As noted in Exhibit 1, third quarter 2020 net income reflected the results of the significant variances1, including the annual actuarial assumption review, which decreased net income by $187.3 million, or $0.68 per diluted share. As a reminder, third quarter 2019 net income decreased $37.9 million, or $0.13 per diluted share,...

Peter S. Zaffino will take over AIG in March. American International Group will separate its life and retirement business from AIG. The company’s executive management team, with assistance from independent financial and legal advisors and oversight from the AIG Board of Directors, “conducted a comprehensive review of the company’s current composite structure, including strategic, operational, capital and tax implications,” the company said in a news release. As a result of this review, the board has decided to pursue a separation of the Life & Retirement business from AIG. A “simplified corporate structure will unlock significant value for shareholders and other stakeholders,” the release said. AIG provided no details on what form the new life and retirement company would take. The company also announced that Peter Zaffino will become CEO on March 1, 2021, and remain president of AIG. CEO Brian Duperreault will become executive chairman at that time. One of the largest U.S. insurers, AIG reported a $9.7 billion net loss for the second quarter off $9.4 billion in revenue. Its life and retirement business was a big bright spot overall, reporting $650 million in adjusted pre-tax income on $4.5 billion in revenue. Advertisement AIG is scheduled to release third-quarter...

Staff | October 26, 2020 In its 2020 budget submission to the Ontario government, the Canadian Life and Health Insurance Association is highlighting a lack of access to affordable prescription drugs and inflexible pension plans. With respect to prescription drugs, the CLHIA noted it supports the federal Patented Medicine Prices Review Board reforms, which were introduced on Friday. “It is crucial that the federal government move ahead with these reforms to achieve affordability for consumers.” Read: PMPRB publishes new guidelines on drug pricing in Canada It also said any reform of the prescription drug system should include protecting and enhancing existing benefits plans. “Ontarians value their benefits plans that provide them with access to a wide variety of health services, including prescription medicines, vision care, dental care and mental-health supports. “These services both treat illness and contribute to overall wellness for the residents of Ontario. With COVID-19, employers have faced increasing pressure and life and health insurers have stepped up to help them maintain — and, in some cases, augment — their health benefits programs through premium reductions and deferrals. “Working together with all levels of government, we will continue to help maintain benefits for workers in Ontario and across the country. Workplace plans have shown remarkable...

Staff | October 26, 2020 The McGill University pension plan is appointing Sun Life Financial to provide administration services in collaboration with consultancy Normandin Beaudry. This is the second of the university’s plans to join Sun Life following its service employees union plan in 1996. In addition, with about 10,000 members, the plan is the largest in the province for which the insurer provides administration services. Read: Yes, Canadian pension plans actually do outperform their global peers: study “We are satisfied with the support of the Sun Life team and the rapid transition to a new platform to which our members now have access,” said Sophie Leblanc, chief investment officer and treasurer at the McGill pension plan, in a statement to Benefits Canada. Read the full article at BenefitsCanada.com

Analysis of policies and data from both candidates suggests that a victory for either could pose risks for Canada’s economy Canada’s increasing economic dependence on the U.S. also a large factor in any potential headwinds COVID-19: Canadian economic growth expected to be gradual, with economy projected to contract 5.5 per cent in 2020, followed by a 6 per cent expansion in 2021 Consumer sector has been pivotal to Canada’s economic recovery process to date, while labour and manufacturing are still in shock Toronto, ON (Oct. 23, 2020) – RSM Canada, the leading global provider of audit, tax and consulting services focused on middle market businesses, is pleased to announce the launch of its third 2020 issue of “The Real Economy: Canada,” a quarterly report that provides Canadian businesses with economic analysis and insights into factors driving growth, or economic headwinds, in Canada’s middle market. With the U.S. presidential election taking place in just a matter of weeks, and Canada looking to navigate a second wave of the COVID-19 pandemic, the latest Real Economy: Canada report shines a light on how the election outcome, combined with Canada’s reliance on the U.S. economy, might alter Canada’s recovery and longer-term outlook. This report...

New research by The Geneva Association finds that life and health risks for pandemics similar to COVID-19 are insurable: they are generally non-systemic and modellable. Property & casualty (P&C) insurers, on the other hand, would have to collect business interruption policy premiums for 150 years to make up for projected global output losses in 2020 related to COVID-19. Insurers have an important role to play in protecting businesses and supporting economies, but it must be through participation in government-led initiatives. A Geneva Association report on ‘pandemic risk solutions’ is forthcoming later in 2020. Zurich, Switzerland (Oct. 26, 2020) – Amid widespread public discussion on how to address the deep financial implications of COVID-19, The Geneva Association, in collaboration with the University of St. Gallen, has issued a new evidence-based study on the risk-taking capacities of insurers related to pandemics. “When COVID-19 hit, insurers moved quickly to provide relief to their customers – for example, through reduced premiums – safeguard their employees, and engage with governments,” said Jad Ariss, The Geneva Association’s Managing Director. “They are promptly paying all legitimate claims where pandemic risk is covered. But, as our research shows, the pandemic exposed a massive protection gap in the area...

Montreal, QC (Oct. 21, 2016) – No surprise here: since 2015, women aged 75 or over represent the largest share increase in the number of insured vehicles, according to the most recent stats published by Groupement des assureurs automobiles (GAA). In fact, GAA’s yearly update reveals an astonishing progression: over the past five years, the number of vehicles insured by women aged 75 or over has risen 31%. For men of the same age, it rose 23%. Thus, among seniors aged over 75, the number of vehicles insured between 2015 and 2019 increased from 102,631 to 134,771 for women, and from 176,097 to 216,727 for men. For drivers as a whole, the number of vehicles insured rose 5% during the past five years. Among younger drivers, it fell 8% and 7%, respectively, for women and men under 25 years of age. “As the population ages, we note that seniors want to drive longer. On the flip side, the number of younger insured vehicle owners is down. Opposing trends among younger and older drivers!” noted Anne Morin, Supervisor Public Affairs. Who has the most accidents? Up to the age of 29, men have the highest loss frequency, but the trend reverses...

London, UK (Oct. 23, 2020) – The InsurTech market is set to grow by USD 21.72 billion accelerating at a CAGR of over 36%, during the period spanning over 2020-2024. One of the key factors driving growth is the need to improve business efficiency. The adoption of innovative financial technologies has enabled companies to optimize costs, deliver better services, and boost revenues. The influence of digitization is a significant trend that will further stimulate market growth. The increasing number of devices has created a need for effective management, monitoring, and maintenance of data across organizations. Parent Market Analysis Technavio categorizes the global InsurTech market as a part of the global IT spending market, which covers IT consulting firms in several areas such as defense systems, social security, benefits administration, and maintaining information systems of state-run agencies, including educational institutions. Growth in the parent global IT spending market will be driven by increasing government investments in IT infrastructure. InsurTech Market: Geographic segmentation The report segments the market by geography: North America, Europe, APAC, MEA, and South America. About 46% of the market’s growth will originate from Europe during the forecast period. The high concentration of financial services companies and major vendors...

By Stephen Applebaum and Vincent Romans — The Personal and Commercial Property claims process has traditionally lagged well  behind other segments of P&C insurance in the adoption of technology and innovation. That officially ended in 2020, ironically aided in part by the effects of a global pandemic that changed virtually everything about life and business as we knew it. Understanding the factors behind the historical lack of innovation in property claims provides good insights into why and how this segment is suddenly undergoing such rapid transformation. Auto vs. Property Claims Process Transformation Change is relative and, when compared to the recent impressive rate of change in Auto claims, property claims appeared to be a more of a laggard than it really was – but a laggard nonetheless. To put this in perspective, U.S. Auto insurance policies, premiums and claims in 2019 were approximately four times larger than  property. Further, auto claims are generally more visible, higher profile and more consequential to the public than property claims.  And the auto claims process was so “broken” until about 1990 with the emergence of Direct Repair Programs enabled by internet and database technologies that its transformation has been that much more visible and...