Insurable Interest Canadian Insurance Blog

Staff | November 22, 2019 Twelve of the 25 top global asset owners were pension funds as of year-end 2018, according a new report by Willis Towers Watson’s Thinking Ahead Institute. The report found, among the top 100 asset owners, pension funds held 59.1 per cent of the fund assets, down 1.7 per cent from 2017, primarily due to assets amassed by sovereign wealth funds. The Canada Pension Plan Investment Board ranked 18th globally in terms of size for all asset owners, while four other Canadian pension funds were among the top 100 — the Ontario Teachers’ Pension Plan (35), the Alberta Investment Management Corp. (67), the Public Service Pension Plan (69) and the Ontario Municipal Employees Retirement System (82). Read: Largest global pension funds’ AUM decreased in 2018 Looking specifically at the pension funds on the list, the CPPIB ranked eighth globally, the only Canadian plan in the top 10. Among these assets owners, sustainability is, and will continue to be, a major theme, the report said. “During 2018 there were a number of sustainability initiatives by universal owner funds that involved ‘doing good while doing well’,” said Roger Urwin, global head of content at the Thinking Ahead Institute, in a press release. “This marks the start of a movement...

Life and health insurance revenues were healthy in 2018, Tiburon Strategic Advisors reports. Insurers can expect “moderate growth” in the coming years on both the property & casualty and life/health sectors, a leading analyst says, but far greater opportunities exist for certain products. Specifically, long-term care insurance and longevity annuities, said Chip Roame, managing partner of Tiburon Strategic Advisors. Both products are desperately needed by baby boomers and near boomers, he said, but might not be evolved enough to be sold as heavily as they should be. LTC coverage is making a comeback, Roame noted, but it remains to be seen how much it sells. “Some (insurers) are coming back in, many with bundled products, with long-term care linked to a life insurance policy,” he said during a recent webinar. “It should be huge growth. As baby boomers are aging, many people need this product, but it might not be available at the right price.” The Tiburon webinar focused on the performance and future of insurance products, which generate about $1.5 trillion of revenues. About $1.2 trillion of that is premium, while the other $300 billion is interest, dividends and other investment income for those firms. From that, insurers net...

Staff | November 22, 2019 Both plan sponsors and plan members are more open to the use of medical cannabis than they were five years ago, according to a new survey by Spectrum Therapeutics, a Canopy Growth Corp. Co. The survey, produced by Benefits Canada‘s publisher Context Group Inc., polled more than 250 plan sponsors and 800 patients who use authorized medical cannabis. It found 78 per cent of plan sponsors are more open to their employees’ use of medical cannabis than they were five years ago, while 69 per cent of plan members said the same. Both groups are more open because they’re more convinced of its effectiveness (36 per cent of plan members, 36 per cent of plan sponsors), they feel it’s more accepted (35 per cent and 33 per cent, respectively) and because more information and research has become available (31 per cent and 28 per cent, respectively). Read: Employer obligations around medical pot, benefits plans In addition, 82 per cent of plan sponsors and 85 per cent of plan members agreed that medical cannabis products, if authorized by a physician or nurse practitioner, should be covered by group benefits plans. With that said, 72 per cent of plan sponsors said they’re concerned about...

Staff | November 22, 2019 Rayonier Advanced Materials is transferring a portion of its Canadian defined benefit plan obligations with a $293-million annuity buyout. Through the transaction, Sun Life will take over the responsibility for pension benefits owed to nearly 1,500 Ontario and Quebec pensioners and beneficiaries. The plan members include former employees of forestry company Tembec, which was acquired by the global manufacturer in 2017. Sun Life will begin administering pension benefits for these plan members in early 2020, with members’ pension benefits remaining unchanged. Read: Buy-ins and boomerangs: A look at the trends in Canada’s annuity market “With this transaction, we are proud to ensure the financial security of many former Tembec employees, while strengthening the balance sheet and solidifying RYAM’s ability to help support current and future retirees in their retirement,” said Jay Posze, the company’s senior vice-president of human resources, in a press release. Sun Life noted the transaction highlights a growing trend in Canada, as DB plan sponsors seek better risk management solutions so they can focus on their core business while ensuring the security of plan members’ pension benefits. “We are delighted to be working with RYAM and their consultant Mercer, to help right-size RYAM’s pension plans and meet their business objectives, while protecting their pensioners’ benefits,” said Brent Simmons, senior...

Yaelle Gang | November 22, 2019 Globally, negative yielding bonds are alarming investors. And while Canadian government bonds haven’t gone negative, movement in other countries is demonstrating to institutional investors that anything is possible. So if bond yields do go negative, what could this mean for Canadian pension plans’ funding statuses? Canadian defined benefit plans can be valued in three different ways, all of which rely on different interest rate assumptions: solvency, going concern and accounting. Read: A refresher on the purposes of pension plan funding “In general, when you’re calculating the liabilities for a pension plan, basically, what you’re doing is you’re projecting the expected future benefit payments from the pension plan . . . and then you’re discounting back those cash flows using an interest rate to the valuation date,” says Gavin Benjamin, senior director of retirement at Willis Towers Watson. “And the way the math works is, the higher the discount rate, the lower the liability; the lower the discount rate, the higher the liability.” Solvency funding A solvency funding calculation assumes some plan members will elect to take a commuted-value lump sum, while other members will elect to collect an ongoing pension benefit secured by an annuity paid by an insurance...

Jennifer Paterson | November 22, 2019 I think it’s fair to say that retirement security is top of mind for the majority of Canadians. And politicians are listening: it was constructive to see all the major parties coming up with measures to deal with the issue during the most recent election campaign. In my last editorial, I summarized the various election platforms and pressed the point that Canada’s workforces, and workplaces, are evolving. Federal and provincial governments must come to terms with this reality, and with how demographics and longevity are affecting when, and how, Canadians are retiring, alongside changes to employment standards and laws. Read: Editorial: Federal election promises must focus on Canada’s evolving workforce  In its annual comparison of 37 global retirement systems, Mercer recently ranked Canada in ninth place, one spot better than last year. But Mercer also noted certain common challenges facing all pension systems, whether in the Netherlands, which was top in this year’s ranking, or in Thailand, which ranked the lowest. As life expectancy improves — positive news, to be sure — so do the pressures on our public resources to support the health of older citizens. Throw in Canada’s declining access to workplace pension plans and...

Benefits Canada | November 22, 2019 Both absenteeism and presenteeism affect employers’ bottom lines and employee morale, but does one have more impact on the workplace? Julie Holden, principal at Holden & Associates Ltd. In many ways, employee absence is a major disruption to the workplace and it has become much more complex over the years. On one hand, there’s the employee who takes a day off after the big game or fails to show up for work Monday morning, but we’re also seeing a significant increase in absences related to mental health and other chronic illnesses. Without effective policies and practices in place, this affects both an employer’s bottom line and employee morale. Read: How to use data to address workplace absence The metrics used to measure absenteeism, although not always consistent, are readily identified and can therefore be tracked. Data that’s typically available relates to casual absences, short- and long-term disability statistics and workers’ compensation. We also look at things like turnover, drug costs and hiring contract employees, which are all measurable and provide valuable insights. For example, we know 70 per cent of the costs of all disabilities in Canada are related to mental health. Armed with this information, organizations...

Alethea Spiridon | November 22, 2019 Borden Ladner Gervais LLP is taking its employees’ mental health seriously. Four years ago, it implemented a strategy to focus on building awareness, reducing stigma and encouraging self-care and wellness. This started with one-on-one mental-health first aid training for all employees, says Laleh Moshiri, the Toronto-based law firm’s national director of diversity and inclusion. “Raising awareness was the purpose, because we all have friends in the workplace, and it’s just good for everybody to better understand some of the issues.” BLG also rolled out the workplace mental-health leadership certificate offered by the faculty of health sciences at Queen’s University in partnership with Morneau Shepell Ltd. and Bell Media Inc. “I did both of them myself and I think they’re terrific,” says Moshiri. Read: Workplace mental-health training on the rise: Sanofi survey In addition, the organization often focuses on mental health in its monthly diversity and inclusion bulletin, and includes links to resources and articles on its company-wide intranet. This month, BLG is increasing the coverage for mental-health and psychological services under its extended health-care benefits plan, from $1,000 to $5,000. “We actually made sure every type of mental-health care provider was covered. . . . We made...

Business Wire A new strategic partnership was launched by National Guardian Life Insurance Company (“NGL”), a Madison-based life insurer with a rich heritage dating back to 1909 and assets of over $5 billion, and New York-based Insurance Capital Group (“ICG”), the leading strategic investor in the mutual insurance industry. NGL and ICG, through its Federal Life Group, Inc. (“Federal Life”) affiliate, have jointly developed and launched a national dental and vision insurance business called BrightBenefits, which will be led by insurance industry veteran Danny Bentley. BrightBenefits policies will be issued by Commercial Travelers Insurance Company, an A.M. Best A- (Excellent) rated affiliate of NGL, in which Federal Life will make a significant equity investment, subject to receiving regulatory approval. “This new strategic partnership with ICG allows NGL to diversify its investments into new markets without losing its focus on being a leading provider of preneed insurance for customers nationwide. ICG brings exceptional talent and additional capital to this partnership that will allow growth in new and exciting ways,” said Knut A. Olson, NGL President & CEO. “We are honored to have been selected by NGL as its strategic partner and we are extremely excited about the launch of BrightBenefits and...

Toronto, ON (Nov. 21, 2019) – CSIO is pleased to announce that the INNOTECH Advisory Committee had its first full day working session on November 15. The purpose of the working session was to identify and agree on major operational issues and challenges, and identify an initial high-level list of solutions to investigate further that may bring benefits to the industry as a whole. With representatives from both brokers and insurers, the committee looked at pain points in the underwriting, claims and servicing journeys, and focused the discussion on Personal Lines Auto and Habitational business. Launched in August 2019, the INNOTECH Advisory Committee was formed to evaluate the application of new and emerging technology and digital innovation in the P&C insurance industry and to identify potential implementation opportunities believed to have the highest likelihood of success and the broadest benefits to the industry. The Advisory Committee’s next meeting, scheduled for early January, will build on the foundational work achieved in the first working group meeting by continuing to discuss and explore potential digital operations solutions that would eliminate the key issues and pain points identified. “It was great to hear the different perspectives and common pain points from the other...