Insurable Interest Canadian Insurance Blog

This was a very busy year, chock full of new developments in insurance. As the Intersection blog begins to wind down for the holiday season, we are taking stock of 2019 with the added clarity of hindsight and thinking back over some of the major topics we have touched on, including … Climate Change Especially through the second half of 2019, I heard increasingly about climate change. At first, the discussions looked to capture multiple impacts, with changing contacts and remediation. I began to realize that this was a set of unique insurance groups and took time to get more information. Scanning discussions on climate change, I found that the coverages and the size of claims are spread wide: some are straightforward; others are longer and more complex. I posted about some of the basics in Climate Change and Impacts on Insurance. I believe that – with help, over time – we will come to a deeper understanding of the issue and how to mitigate its effects. InsurTech: The Driver In the past, small and mid-size brokers had the bare minimum of technology to support policies, claims, clients, etc. Some still carry on, using ancient technologies. However, the last few...

Aite Group’s new report finds that the market for core systems platforms is healthy, with carriers in need of systems that do more Boston, MA (Dec. 3, 2019) – While underwriting and actuarial expertise are critical for property and casualty insurance carriers, without core systems platforms, executing a carrier’s operations would be extremely cumbersome, and it is imperative for carriers to have a platform that can help them execute core business functions. Aite Group’s latest report, 2019 U.S. P&C Core Systems Evaluation: Moving Beyond the Basics, explores some of the key trends within the core systems market for P&C carriers and discusses the ways in which technology is evolving to address new market needs and challenges. “When it comes to key functionality, a set of minimum requirements must be met in order to sustain the basic needs of the clients, and these minimum requirements are typically the same across the different regions and are found in nearly all vendors in the market,” explains Jay Sarzen, senior analyst at Aite Group. “In order to increase overall adoption and capture additional market share, vendors are focused on developing functionality that presents competitive differentiators,” he adds. Leveraging the Aite Matrix, a proprietary Aite...

Staff | December 4, 2019 Despite continued strong markets, global institutional investors are apprehensive about what 2020 has in store, with more than half of survey respondents saying they think the next global financial crisis will hit within one to three years, according to a new survey by Natixis Investment Managers. The survey, which polled 500 institutional investors, including 145 corporate pension plans and 103 public or government plans, found volatility is the top concern, with many investors expecting bond and currency volatility to rise. “Institutional investors have been steadily fortifying their portfolios in anticipation of inevitable changes in the market cycle that could make 2020 a bumpy ride for unprepared investors,” said David Giunta, chief executive officer for the U.S. at Natixis, in a press release. Read: Are investor portfolios structured to withstand a market correction? Nearly three-quarters (73 per cent) of institutional investors said they expect trade disputes to hurt investment performance next year, while 67 per cent said they expect pain from slowing global growth and 59 per cent said they think a hard Brexit will hamper performance next year. On a similarly pessimistic note, 76 per cent of respondents said they believe low rates have led to asset bubbles...

Staff | December 4, 2019 A majority of Canadian employees who are expecting to receive a holiday bonus this year want to put it towards their financial well-being, according to a new survey by Robert Half International. More than a quarter (27 per cent) of the 500 surveyed employees said they’re expecting a bonus this year. Nearly half (47 per cent) said they want to use it to pay off debt, while almost the same number (44 per cent) said they plan to put it towards long-term savings. A quarter (26 per cent) said they’ll spend it on a vacation in 2020 and 18 per cent on holiday shopping. Read: Mental and emotional health spilling over to financial stress: study “While offering robust benefits and perks remains important, workers also value rewards that give them the financial flexibility to do what matters most to them,” said David King, senior district president for Robert Half, in a press release. “Year-end bonuses are an opportunity for companies to recognize employee accomplishments throughout the year, while demonstrating they care about their worker’s individual needs and priorities.” In surveying 600 senior managers, Robert Half also found nearly two-thirds (64 per cent) said their company offers year-end bonuses. Among those respondents, a third...

Staff | December 4, 2019 The Public Sector Pension Investment Board is buying 89,085 megalitres of permanent water rights from Olam Orchards Australia Pty Ltd. for a total of A$490 million. “Our agreement with Olam Orchards Australia is consistent with our strategy to partner with best-in-class operators who take the long-term view and to invest in high-quality agricultural assets globally,” said Marc Drouin, managing director and head of natural resources at PSP, in a press release. “It is also quite complementary to our existing permanent crop investments around the world and represents a unique avenue to add scale, particularly in Australia.” Read: PSP acquiring Australian agriculture firm for A$854 million In a separate transaction in Australia, PSP is buying about 12,000 hectares of almond orchards and related assets, which were previously leased to Olam Orchards. Olam Orchards will continue to operate the almond orchards and associated water rights. PSP and Olam Orchards are also entering into a tiered, revenue-sharing arrangement for the orchards, related assets and water rights for an initial period of 25 years, with an option to renew for an additional 25 years. The transaction is expected to be complete in December 2019, subject to conditions. Read: A look at the role...

Life insurance sales are stagnant, but profits are still being made. Total U.S. individual life insurance new annualized premium increased 2% in the third quarter, compared with prior year results, according to the LIMRA U.S. Retail Individual Life Insurance Sales Survey. Year-to-date total individual life insurance new annualized premium rose 1%, compared with results from the first nine months of 2018. The number of policies sold fell 3% in the third quarter and year to date. “Indexed universal life (IUL) continued to drive overall new premium growth. In fact, IUL has been the biggest contributor to individual life insurance premium sales growth for 9 of the last 10 quarters. IUL sales climbed 7% for the quarter and the year so far, with half of the companies reporting increases,” said Ashley Durham, associate research director, LIMRA Insurance Research. “IUL represented one quarter (25%) of the individual life insurance premium sold during the first nine months of 2019.” Universal life (UL) new annualized premium rose 2% in the third quarter, however, UL new premium remained flat in the first nine months of the year, compared to prior year. Total UL market share was 36% year to date, LIMRA reported. Fixed UL In...

Several states have legalized medical marijuana. Foresters Financial has updated its underwriting guidelines across its non-medical life insurance product portfolio for Americans who use cannabis. “As more States permit limited cannabis usage, particularly for medicinal purposes, we made the decision to modernize our products to stay in step with this evolving trend – a change that makes life insurance accessible to more people,” said Matt Berman, chief distribution officer, Foresters Financial. Marijuana is legal in 11 states for adults over the age of 21, and legal for medical use in 33 states. Foresters Financial insureds (members) receive a full suite of unique member benefits that furthers Foresters fraternal mission of enriching the well-being of hard-working families and their communities. Member benefits include opportunities for scholarships, community building grants, as well as financial counseling and access to complimentary or discounted legal advice. “Our approach to product innovation is driven by our history of providing life insurance with a larger purpose,” Berman said. “As another example, we recently introduced an industry-first suite of non-medical life insurance products that have modernized underwriting and competitive premiums for people living with type 2 diabetes. “We take a holistic approach to our members’ well-being to help...

PR Newswire US insurance revenues are forecast to advance 4.3% annually in nominal dollars through 2023, according to Insurance: United States, a report recently released by Freedonia Focus Reports. Population growth and continued expansion in economic activity are projected to drive insurance demand. In particular, reliance on healthcare insurance will increase as healthcare costs continue to rise, boosting revenues. Demand for property and casualty insurance is projected to rise as the building stock, number of motor vehicles in use, and business activity continue to expand. Life insurance revenues are expected to grow as younger population cohorts start families and drive a rebound in the number of births, an event which often prompts life insurance purchases. The ongoing aging of the population will also continue to support sales, as the older demographics plan for their final expenses. Faster growth will be limited by the relative ease of comparison shopping and switching between insurance companies by both businesses and households, particularly as more insurance policies are sold on the internet. These and other key insights are featured in Insurance: United States. This report forecasts to 2023 US insurance revenues in nominal and real (inflation-adjusted) US dollars. Total revenues in nominal terms are...

It’s no secret that drug coverage plans are under pressure: between rising costs of healthcare and changing customer expectations, the need to deliver unique and innovative solutions has never been greater. And that’s a reality that iA Financial Group is facing head-on with a new pilot project. “We do offer a group product as group insurance carriers,” said Andrée-Anne Bourgeois, Director for Products, Communications and Marketing, Group Benefits and Retirement Solutions at iA Financial Group. “Through our drug management programs, we want to improve outcomes, enhance plan values, and deliver a good member experience. That means finding ways to assist and improve the lives of plan members facing specific health issues.” One issue that the company has focused on is the well-known and well-documented prevalence of poor drug adherence. While many Canadians are able to get their prescriptions filled through workplace-administered group plans, 58% fail to take their medicines to treat their chronic conditions as necessary. That raises the risk of even worse health outcomes, particular for those who are prescribed multiple drugs. That’s why when iA Financial Group came across MedHelper, a company that promises better medication adherence through an effective and easy-to-use daily medication app, it instantly saw...

Global reinsurers are issuing fresh warnings to life insurer clients about the potential risks of vaping, increasing the pressure on underwriters to either exclude or impose higher insurance rates to certain vapers. Most insurers have long regarded smokers and vapers the same, charging them close to twice the premiums of non-smoking or non-vaping individuals, reported Reuters. But in the past three months, several major reinsurers have weighed in with updated advice and warnings focused on young vapers and vaping liquids containing the marijuana ingredient THC. Hannover RE, which has already encouraged life insurers to treat vapers like smokers, has urged particular caution on insuring individuals under 25 years old. Given the “epidemic” of lung injuries reported in the US, life insurers should ask whether the higher-risk group should be offered coverage, said Hannover RE’s US Medical Director Nico van Zyl. “French reinsurer SCOR said in a paper on Oct. 24 that e-cigarettes contain nicotine which may have toxic effects, including on brain development in teenagers and young adults,” Reuters said. While SCOR recommends that life insurers treat vaping like smoking, the firm also suggests that the use of vaping products containing THC, regarded by US authorities as a likely cause...