Insurable Interest Canadian Insurance Blog

Windsor, CT (Apr. 8, 2020) – A new LIMRA study finds just 25% of Americans have a favorable view of the economy, down from 56% in January 2020, which marked the highest consumer sentiment about the economy since LIMRA began tracking the metric in 2008. In the midst of the coronavirus pandemic, more than half (57%) of Americans are very or extremely concerned about the economy. “Uncertainty about the coronavirus pandemic undercut the economic growth we have experienced over the past several years,” said Alison Salka, Ph.D., senior vice president and research director for LIMRA. “Consumers are not only worried about their health and well-being and the health and well-being of family and friends, but they are also worried about the economic impact this will have on them now and in the future.” LIMRA’s new study finds the coronavirus pandemic is undermining consumers’ confidence in their short-term and long-term financial security. Forty-four percent say they are very or extremely concerned about their household’s short-term financial security and nearly half (49%) are very worried about their long-term financial security. More than 4 in 10 consumers are very worried that the coronavirus pandemic will: Limit their access to medical care; Hurt their...

Milwaukee Journal Sentinel (WI) The Wisconsin Supreme Court on Tuesday decided the question of who should get a life insurance payout – a dead man’s minor children or his second wife – needs more exploration before the correct answer can be known. In a 3-1 decision, the court reversed a Court of Appeals ruling that favored the children, over a stern dissent about the sanctity of contracts. Justices Brian Hagedorn and Rebecca Dallet did not participate in the case, which wound up involving three judges who would run against each other in two elections. In settlement of his 2009 divorce from Joan Pulkkila, James Pulkkila agreed to keep a $250,000 life insurance policy that named their two children as “sole and irrevocable beneficiaries” paid up until they became adults. But in 2014, he changed the beneficiary to his new wife, Lynnea Landsee-Pulkkila. When James died a year later at age 47, she got the $250,000. Joan Pulkkila asked Waukesha County Circuit Court Judge Paul Bugenhagen Jr. to enforce the provision in the divorce and impose a constructive trust to benefit the kids, who had been teenagers when their father died. Bugenhagen, while sympathetic, concluded divorce’s marital settlement agreement specified an...

The coronavirus crisis has been a transformative event for business across the world, sending some sectors to their knees while giving others a massive boost. Canada’s life and health insurance space has not been immune as the pandemic pushes players to adapt their operations and products at probably the fastest pace ever. “I’ve seen the biggest change with respect to digital insurance applications and processes,” said Darren Abrahams, principal at SC Insurance. “What was considered a convenience has now become a necessity in order to continue to do business.” In recent years, Manulife has been the most aggressive in terms of providing simplified underwriting among Canada’s traditional insurers. But other carriers have followed suit in recent weeks as the usual requirements — long paper applications, in-person medical examinations, and so on — become too onerous, if not impossible to fulfill. “We are already seeing a change in the way carriers are operating,” Abrahams said. “I can see many insurance companies and their different affiliates working remotely now, and they might not have access to the same resources and speed they normally do. Some areas can be a little bit slower, particularly from a servicing standpoint.” Insurers are also relaxing their...

While the COVID-19 pandemic has pushed federal and state governments across North America to issue strict social distancing guidelines, a significant proportion of life insurers have not seen a significant change in overall applications. That was one of LIMRA’s key findings following a survey on trends in individual life insurance application activity last month, which included 47 life insurers from the U.S. and 12 from Canada. Among the participating companies, one third reported a decrease in face-to-face applications last month, and one quarter said that online applications increased. Focusing on U.S. companies, nearly one quarter of those accepting online/mobile applications (24%) saw an increase, though half saw no change. On the Canadian front, most life insurers reported a slowdown in face-to-face applications; among 10 companies accepting online/mobile applications, five saw no change and three saw increased applicant activity. Call centre and mail application activity was unchanged for most U.S. life insurance carriers in March; among the surveyed Canadian companies accepting such applications, none saw any significant change. The survey also examined the different ways insurers have changed their application process for policies, considering the restrictive conditions necessitated by the pandemic. Among U.S. life insurers, more than a quarter have expanded...

InsurTech provider Breathe Life has made available a digital insurance distribution kit to support advisors and their clients as the coronavirus pandemic spurs a massive shift to remote work. With many advisors accustomed to face-to-face and paper-based applications being forced to quickly change gears, Breathe Life has decided to offer what it calls a valuable “digital on-ramp.” “Advisors are telling us that they need tools to help them help their clients remotely to meet the surge in consumer demand for life insurance products,” said Breathe Life co-founder and CEO Ian Jeffrey. “Our digital distribution kit is designed to address this pressing need.” The kit, which can be deployed remotely, incudes remote selling features such as chat, video, or co-browsing to allow advisors to support clients through the application process up to secure digital policy delivery. Through the distribution kit, advisors can perform tasks such as engaging with clients remotely; entering and managing client information; automating fact-finding to understand client needs; and providing e-signature and online payment processing. Clients using the package, meanwhile, can learn about products and services; reach out to their advisor for help through call scheduling, chat, phone, and video; and easily navigate life insurance purchases from the...

Staff | April 14, 2020 A new report by the C.D. Howe Institute is urging the federal government to suspend taxes on registered retirement savings plan withdrawals during the coronavirus pandemic. The report said the current financial assistance measures are an excellent start, but may still leave certain individuals and households with immediate cash-flow problems. Indeed, even for those to whom government assistance applies, there could be a delay in when they receive that assistance. As such, C.D. Howe’s crisis working group is recommending that the government suspend both tax withholding and collection on RRSP withdrawals, up to a maximum amount, for a limited time. Read: Consulting firm urging government for non-punitive RRSP withdrawal plan “Design attributes for this policy measure could draw on existing programs such as the home buyers’ plan and the lifelong learning plan,” said the report. “Tax-free RRSP withdrawals would have to be recontributed in the future over a maximum number of years (say, 10) with no loss of tax-deferred retirement savings room for participants.” The report also noted the suspension could be implemented quickly through the financial institutions that typically withhold taxes on withdrawals. It added the government would receive its taxes, as intended, when the recontributed funds are eventually taken out...

Staff | April 14, 2020 The vast majority (86 per cent) of Canadians feel safe in their workplaces right now, according to a new survey. The survey, conducted by Angus Reid on behalf of ADP Canada, found 75 per cent of frontline workers and 97 per cent of those working remotely said they feel safe at work. Men (79 per cent) were more likely than women (70 per cent) to say they feel safe at work. And looking at different generations, 82 per cent of employees aged 55 and above said they feel safe at work, compared to workers aged 35 to 54 (70 per cent) and 18 to 34 (75 per cent). Among working Canadians, 80 per cent said they believe their workplace has taken all necessary precautions to protect them from the coronavirus. These measures include allowing employees to work from home (61 per cent), encouraging social distancing (58 per cent) and increasing sanitization and cleaning of workspaces (56 per cent). Read: Number of staff working remotely, part time up 415%: survey However, the survey also found 42 per cent of frontline workers said they feel pressured to go into work during the pandemic. This is highest among employees aged 18 to 34 (37...

Yaelle Gang, the Canadian Investment Review | April 14, 2020 With coronavirus causing market volatility and an increase in the size of solvency liabilities, defined benefit pension plans are feeling the impact. One potential way for plan sponsors to ease the pain is by performing an early actuarial valuation to capture year-end 2019 numbers. While most Canadian jurisdictions require plans to file valuations every three years, a valuation may be required more often if there’s some sort of solvency issue. “Early valuations have been practiced for a long time and people do strategically sometimes choose when to do a valuation within the three-year cycle and don’t necessarily wait the full three years to do one,” notes Jason Vary, president at Actuarial Solutions Inc. Read: Canadian DB solvency levels dropped double digits in Q1 If a plan sponsor files a valuation and is underfunded on a solvency basis, it must make special payments into the pension plan. For example, the threshold for special payments in Ontario is 85 per cent. “If you’re over 85 per cent funded then a) no special payments on a solvency basis and b) your next valuation is due three years from now,” says Vary. “But if you’re below 85 per cent, then...

Business Wire More than 38 percent of individuals who sold their life insurance policies in life settlement transactions last year said they were planning to lapse, cancel or surrender their policies until they learned of the life settlement alternative, according to a newly released survey from Welcome Funds, one of the nation’s leading life settlement brokers. “The findings from our survey of more than 200 clients provide clear evidence that we need to increase awareness among American seniors that they may be able to obtain far more value from their life insurance policies by selling them as life settlements than they can by lapsing or surrendering them back to the insurance companies,” said John Welcom, founder and chief executive officer of Welcome Funds, and one of the pioneers in the U.S. life settlement industry. The survey found there were six primary reasons why policy owners chose to sell their policies: 38% were planning to lapse, cancel or surrender the policy until informed of the life settlement option; in addition, another 29% were likely to lapse their policies in the future because they no longer required or wanted to pay for life coverage 16% preferred cash liquidity due to a current...

Staff | April 14, 2020 Private drug plans saw a slight uptick in costs in 2019 due to the increased use of specialty drugs and higher price points for traditional medications, according to Express Scripts Canada’s annual drug trends report. The report found private drug plan spending per claimant increased one per cent over 2018’s figures. Plans’ annual spend per claimant on specialty drugs — representing just two per cent of claims — increased by 2.8 per cent and spend on traditional medicines per claimant increased 0.1 per cent. “While the overall private drug trend is up one per cent, prescription drug benefits continue to be threatened by the growing use of very high-cost specialty drugs,” said the report. “Sustainability depends on benefits management solutions that translate into lower costs and improved health outcomes.” Read: Growing use of specialty drugs putting pressure on plan sponsors: report The increase in traditional drug spend reversed a 1.8 per cent decrease in 2018, which was due to a 7.2 per cent increase in spending on diabetes drugs and a 16 per cent increase in diabetes supplies and monitoring technology. However, Ontario’s short-lived OHIP+ program and the pan-Canadian Pharmaceutical Alliance price negotiations helped to keep costs lower, noted the report. Looking forward, Express...