Insurable Interest Canadian Insurance Blog

Martha Porado | May 20, 2020 With some jurisdictions gently reducing coronavirus-imposed restrictions, institutional investors are beginning to lay out possible scenarios for economic recovery. The terms V- and U-shaped recovery, along with arguments over which is more likely, have swirled throughout the past few months as economies around the world shut down huge swathes of their normal activities. Alessio de Longis, senior portfolio manager on Invesco’s investment solutions team, isn’t thinking in terms of shapes, but if he were, his firm’s base case scenario would look more like a ‘W.’ “It’s reasonable in our minds to accept phases of, let’s say, a three to six month period where it will look like a recovery and then you get another setback, whether driven by market sentiment or driven by actual developments in the economy, such as renewed shutdowns, renewed quarantine,” he says. Read: Dividend opportunities for institutional investors amid coronavirus crisis Preferring to delineate scenarios as base, bull and bear, he notes that how markets fare will depend significantly on progress in the medical world — a very unpredictable situation investors aren’t used to analyzing. “We’re used to developing scenarios based on economic developments. In this case this is what the challenge is, because we’re...

As people’s demand for life and health insurance products has increased, agency-building companies aren’t letting the COVID-19 pandemic hamper their recruitment efforts, according to a new poll from LIMRA. The poll, which covers both U.S. and Canadian companies, included questions regarding agency recruitment efforts during the COVID-19 crisis, the challenges they’ve encountered, and the strategies they’ve adopted. According to Margaret Honan, assistant research director at LIMRA, companies on both sides of the border submitted nearly identical responses to all questions. “Both countries said that they’re recruiting as they’ve always done except in recent weeks it’s being done virtually,” Honan told Life and Health Professional. Most companies are engaging with candidates through virtual platforms such as Zoom in light of social-distancing guidelines. Training and sourcing of candidates, the poll revealed, is happening through both traditional methods, such as Zip Recruiter and LinkedIn, as well as new means including virtual conferencing, telephone interviews, and virtual classrooms. Frequent check-ins, virtual meetings, and phone calls have become part of an established process to keep candidates involved in lieu of face-to-face meetings, according to the poll. Many companies are also eyeing increased use of digital signatures for submissions of business. And while some states have...

Moody’s estimates that the COVID-19 pandemic could cause death benefit claims to rise significantly for U.S. life insurers, but not enough to materially impact their capital reserves. In a new industry report, the ratings agency said that while it does not expect a widespread coronavirus infection rate with relatively high mortality for the insured population, such a scenario would result in significant growth of death benefit claims for U.S. life insurers, particularly those that carry a large amount of mortality risk. In its industry analysis, the agency assumed three infection scenarios: a low-end base case of 2% infection rate within the insured population, a high-end base case of 10%, and a stress scenario with a 40% infection rate. Across all infection-rate cases, it assumed a 1% fatality rate. Assuming the total number of deaths remain within the base-case range of estimates, the agency said the resulting rise in death benefits should lead to a marginal decline in capital of less than 5% for most of the direct writers it rates. Bur if the ultimate number of deaths tops its current base-case projections and comes closer to the tail scenario, the overall impact will be below 20%, with some insurers seeing...

Staff | May 19, 2020 Even before the coronavirus began affecting capital markets, fixed income investors were becoming more risk averse, according to Invesco’s latest survey. Close to half (43 per cent) of investors surveyed in late 2019 said they felt the then economic cycle had a year or less left to run and were adapting their portfolios accordingly. In some cases, this change in positioning may have been a boon to investors hit with a sudden market crisis. “Concerns were focused on credit spreads and liquidity, areas that have been significantly tested across the market by the COVID-19 crisis,” said the report. “Widening spreads were the biggest macro concern, and this has come to the fore quickly, with sectors exposed to the pandemic such as consumer goods, autos and oil and gas experiencing widening spreads and steepening curves.” Read: Canadian DB plans return negative 7.1% in first quarter With the coronavirus pandemic compounding an already fairly gloomy mood, intentions for duration also reflected increased pessimism, with investors showing a bias towards lengthening. Indeed, 29 per cent said their expected change in duration over the next 12 months would be longer, up from 21 per cent in 2019’s report, while just 10 per cent said it would be shorter,...

Staff | May 19, 2020 The Home Depot Inc. has taken a number of steps to support its employees during the coronavirus pandemic. In its annual earnings report, the global home improvement retailer said it expanded paid time off for all hourly workers with additional hours to be used at their discretion, which will be paid out at year-end if not used. It also provided additional paid time off for associates aged 65 and older or deemed to be at higher risk. Hourly workers in its stores and distribution centres received weekly bonuses and double overtime pay. And it extended dependant care benefits and waived related co-pays on the benefits plan. Read: Amazon extending increased hourly pay through May As a result of the actions taken to support employees, the Home Depot incurred a total of about US$850 million of pre-tax expense, according to the report. “As the COVID-19 pandemic evolved, we anchored to the core values of our company by focusing on two key priorities: working to ensure the safety and well-being of our associates and customers and providing our customers and communities with essential products,” said Craig Menear, the company’s chairman, chief executive officer and president, in a press release. Read the full article at BenefitsCanada.com

Staff | May 19, 2020 The Alberta Investment Management Corp.’s board of directors has released a statement outlining its response to the poor performance of its volatility trading strategy. In the wake of the coronavirus crisis, the strategy resulted in a loss of $2.1 billion or about two per cent of the AIMCo’s portfolio. “Oversight of AIMCo’s investment strategies and risk management is the responsibility of the board of directors,” said the statement. “We deeply regret this result and are determined that the lessons from this experience will improve the corporation’s management processes and prevent any similar occurrences.” Read: AIMCo calls reports of losses on volatility strategy ‘dramatically’ overstated The board said its first priority is limiting the damage from the volatility trading strategy. It also confirmed that no other investment strategies it uses could “. . . generate substantial losses in very unusual circumstances.” The board is also undertaking a comprehensive third-party review of the volatility trading strategy to identify what lessons can be learned and how those lessons can be leveraged to enhance the AIMCo’s investment and risk management processes. The organization has tasked KPMG’s financial risk management team to perform an independent review and is calling on the expertise of Barbara Zvan, former chief risk and strategy...

Consumer behavior is shifting in favor of BigTech insurance providers as customers feel empowered to forego agents and brokers and work directly with new entrants Paris (May 14, 2020) – The Capgemini Efma World Insurance Report 2020 reveals that consumers of all ages are adopting a ‘millennial mindset’, and increasingly trusting their own research through various channels to source information and purchase insurance products themselves. Consumers are turning to non-traditional players including BigTechs (large, multinational technology firms such as Google, Amazon, Facebook, Apple, Alibaba, etc.) and product manufacturers for innovative, personalized offerings with enhanced customer experience (CX) and are increasingly relying on digital channels in the face of the COVID-19 pandemic. To remain relevant, cites the report, incumbent insurers must take action, by re-evaluating their portfolios and harnessing partnerships to become ‘Inventive Insurers’. This involves shaping existing products to meet fast-evolving customer needs and preferences. The millennial mindset has transcended age Digital adoption is no longer a function of age; for those with access to the web and social media, researching and directly procuring insurance online has become mainstream across all generations. Capgemini’s report shows that the number of Gen X and older customers (born in 1980 or earlier) making...

Courtesy of LIMRA LIMRA reached out to U.S. and Canadian agency-building companies regarding their recruiting efforts during the COVID-19 pandemic crisis and the challenges and strategies around it. All of the companies surveyed are still recruiting agents. Despite the challenges with getting newer agents licensed, 65% of companies are not focusing on more experienced agents. To compensate for social distancing guidelines, most companies are using virtual platforms such as Zoom to engage with candidates. Companies are training and sourcing candidates in both new and traditional ways. They’re currently using more virtual conferencing, telephone interviews, and virtual classrooms, while also continuing to use traditional methods like Zip Recruiter, LinkedIn, and Indeed. In some cases, companies have had to delay the start dates for inexperienced agents who still needed to pass exams in order to sell insurance. Most companies, however, have continued to onboard new recruits. Advertisement “Some states have allowed for temporary licenses and companies are taking advantage of this,” says Margaret Honan, assistant research director, LIMRA. “Others are continuing to have non-licensed candidates focus on studying in order to be ready to test once it’s possible.” When it comes to keeping business and recruiting going, many companies are looking at...

PR Newswire Today, The Guardian Life Insurance Company of America® (Guardian Life) unveiled a new feature of its Guardian Level Term life insurance, a built-in charitable benefit rider1. The term insurance product offers level pricing for the duration of the policy that helps create protection for families and the ability to create a charitable giving legacy. Nearly two-thirds of Americans have donated to charity over the last year2. Yet, being able to bequeath a donation to a charity is often perceived as reserved for the wealthy. Guardian Life’s Level Term with the built-in Charitable Benefit allows those who are charitable-minded to support their charity of choice upon their death. Term life provides a tax free payout for beneficiaries, while the charitable benefit feature provides a donation, 1% of the policy face amount (subject to a $100,000 maximum charitable donation), to the policy owner’s charity at no additional cost. There are three methods that are commonly suggested for charitable giving through insurance: naming the charity as a beneficiary, transferring dividends to a charity or donating an existing policy to a charity. Guardian Life’s Level Term life insurance introduces a new option – utilizing the built-in charitable giving feature to make a charitable...

The potential claims impact of increased death benefits from the COVID-19 pandemic on life insurers will be relatively small, Moody’s Investors Service reports. Recent first-quarter earnings calls of U.S. life insurers show there remains significant uncertainty around the amount of difference there will be between insured mortality and general mortality, Moody’s said. However, life insurers’ estimates are consistent with Moody’s view that death benefits paid out as a result of COVID-19 will be relatively small. Companies mainly downplayed the impact of a longevity risk offset, which was consistent with Moody’s  analysis that the benefits of longevity risk offset would be generally small. The following are comments that Moody’s compiled from life insurers’ first-quarter earnings calls. Advertisement Read the original article at insurancenewsnet.com