Insurable Interest Canadian Insurance Blog

The need for change in the insurance industry is compelling but the path to success is tough, according to one of the industry’s leading CEOs. Roy Gori, president of Manulife, was speaking at the Toronto Global Forum, The International Economic Forum of the Americas, and compared the sector to the likes of Airbnb, Netflix and Apple when it comes to having “promoters”. According to studies, these firms have about 89% more promoters than detractors, while the insurance score globally stood at a dismal -6%, meaning more detractors than promoters. Gori viewed this situation as a “tremendous opportunity” for companies to get on the front foot by driving a customer-centric agenda and “demonstrating how they can do things radically different to the way the industry is currently operating”. However, he warned that true change within a company, including the one the size of Manulife, is really difficult and that the problems can be drilled down to three root causes. He said the first is that organizations like his have old legacy systems. “These systems are typically 50-plus years old and are not designed to work in an agile, customer friendly and easy way. “The first port of call is acknowledging these...

According to new industry data from the Canadian Life and Health Insurance Industry Association (CLHIA), insurers paid out $98 billion in benefits to Canadians last year, representing an increase of 7% over 2017 and 50% compared to a decade ago. In 2018, the industry extended nearly $49 billion in retirement benefits from annuities to 8 million Canadians. Another $36.1 billion in health benefits for prescription drugs and extended health providers like dentists and physiotherapists went to 26 million Canadians with supplementary health insurance. Finally, 22 million Canadians who collectively owned $4.8 trillion in life insurance coverage received $13.2 billion in benefits, which included $7.7 billion in death benefits and $5.5 billion in disability benefits, cash surrenders, or dividends. Total premiums in Canada rose to $117 billion in 2018. Leading the year-on-year growth was health insurance, which increased by 7.8%; annuities (including segregated funds) went up by 4%, while life insurance grew more modestly by 3.8%. According to the report, each Canadian household with life insurance protection has an average of $423,000 in coverage, roughly five times household income and up from $417,000 in 2017. Individual policies account for the bulk of life insurance premiums, collecting 80% of the $22.2 billion...

In Canada, mortgage insurance is mandatory for all high-ratio loans – loans where 80% of a property’s value or more is financed through a mortgage. However, contrary to popular belief, borrowers are not obliged to get mortgage insurance from banks; they can also apply for it with independent insurance advisors. On the advisors’ part, educating clients allows them to offer those clients better solutions than what they would typically get from banks. While people will certainly go to banks to get a mortgage, advisors should contact their clients at the right time to offer them something better. Advisors can use social media to monitor changes in their clients’ lives – such as moving into a new home – and turn them into opportunities, showing genuine interest in their lives. “Once people understand the difference, they’ll be very happy with the advisor’s work, and they’ll also be obviously more inclined to refer this over to other clients,” says Kim Oliphant, Vice President, Sales and Marketing, Humania. “There are tons of reasons why advisors should be more active in the mortgage market with this opportunity right now.” Aside from using social media, Oliphant says that advisors can also partner up with professionals...

Prescription drug expenditures by Canadian public drug plans increased by 7.4% to reach $11.4 billion in 2017-2018, the Patented Medicine Prices Review Board (PMPRB) said in a new report. According to the board’s CompassRx, 5th edition: Annual Public Drug Plan Expenditure Report, that increase follows the modest 1.9% growth rate in 2016-2017 and the substantial double-digit increase observed the year before. Between the 2014-2015 and the 2017-2018 fiscal years, the total prescription-drug expenditure for Canada’s public drug plans rose by $2 billion, reflecting a compound annual growth rate of 6.6%. The acceleration in expenditures for the public plans last year was primarily driven by a rise in the use of higher-cost drugs: drug costs rose by 8.3% over the previous fiscal year, and expenditures on drugs that exceed $10,000 in annual treatment costs surged by 19.3%. Such high-cost drugs were used by less than 2% of public drug plan beneficiaries, and accounted for over 30% of the total drug costs in 2017-2018. Increased use of higher-cost medicines, along with renewed pressure from direct-acting antiviral (DAA) drugs for hepatitis C, accounted for a 7.1% rise in drug costs during 2017-2018. Changes to plan designs also contributed to the growth in expenditures....

In recognition of Life Insurance Awareness Month, LIMRA has released new figures reflecting the state of life insurance ownership among Canadian households. Drawing from its 2019 Canadian Life Insurance Ownership Series — Household Trends Study, the group reported that Canadian households have an overall life insurance ownership rate of 68%, unchanged from previous statistics reported by LIMRA in 2013. Less than half of all Canadian households (44%) have individual coverage, while nearly half (49%) have group coverage. According to LIMRA, the top three reasons given by Canadian consumers for owning life insurance are to cover final expenses (40%); because it’s a good/wise/necessary thing to do (32%); and to facilitate a transfer of wealth (30%). When asked how they buy life insurance, around three quarters (72%) said they prefer to get it through an agent. Other channels cited included online (14%), through work (8%), and directly by phone (5%) or mail (1%). Just over a third of Canadian households (35%) said they have a personal life insurance agent, while 23% said they had an agent at some point in the past. More than four tenths of Canadians (42%) said they have never had a personal life agent. Gauging the need for...

The Insurance Bureau of Canada has applauded the Global Commission on Adaptation on its flagship report, Adapt Now: A Global Call for Leadership on Climate Resilience. The IBC announced Sept. 10 that it is joining in this call to action for climate adaptation. The GCA report says the economic benefits of climate adaptation “have very high rates of return, with cost-benefit ratios ranging from 2:1 to 10:1, when investment is made in five areas: early warning systems, climate-resilient infrastructure, improved dryland agriculture, mangrove protection and more resilient water resources.” The report also underlines that investing more in natural infrastructure, such as wetlands, is critical. This is in line with the IBC’s policy recommendations. Last fall, IBC released a report calling for urgent action to curb the possible devastating loss of natural infrastructure: Combatting Canada’s Rising Flood Costs: Natural Infrastructure Is an Underutilized Option “IBC joins the GCA in this urgent call to adaptation,” said Don Forgeron, President and CEO, IBC. “IBC and its members advocate strongly for increased funding for climate resilience from all orders of government and the private sector. The property and casualty insurance industry continues to see the devastating effects of this new era of an unpredictable,...

Staff | September 10, 2019 The Canada Pension Plan Investment Board is opening an office in San Francisco. The new location is the CPPIB’s second U.S. office, after New York City, and its ninth worldwide. “One of the pillars of our growth strategy is to place a focus on technology and data and to better understand its impact on our overall portfolio,” said Mark Machin, president and chief executive officer of the CPPIB, in a press release. “Having a team of highly experienced investment professionals in the Bay Area is a significant step towards delivering on this strategy.” Read: CPPIB invests in Indian logistics company The CPPIB is appointing Monica Adractas as head of venture capital funds at the new office. Most recently, she was the global director for Workplace, a subset of Facebook Inc., which she helped launch in 2016. Several internal personnel are set to be transferred from the CPPIB’s direct private equity, thematic investing, private equity funds and portfolio value creation departments. “We are excited about the great talent, both new and existing, who are going to build CPPIB’s presence in San Francisco,” said Machin. “In addition to gaining direct access to a network of investment opportunities and exposure to an innovative community, having people on the ground...

Scale, efficiency and risk knowledge become more important Swiss Re expects further rate increases for loss-affected and underperforming businesses and broadly stable rates elsewhere as capital remains abundant In Swiss Re’s view, the upward trend in rates needs to continue to reach a long-term sustainable reinsurance market Change in the industry is accelerating, impacting the entire re/insurance value chain Swiss Re is leveraging its R&D capabilities, technology and scale to support clients in managing increasing risk complexity, wealth of data and changing protection needs Monte Carlo, Monaco (Sept. 8, 2019) – Swiss Re expects further rate increases for loss-affected and underperforming businesses and broadly stable rates in other areas, amid continued capital abundance in the reinsurance market. To ensure a long-term sustainable reinsurance market, further rate increases are needed. The hurricane season that is now upon us highlights the importance of having prices that adequately reflect the risks. Fast-paced change creates challenges and opportunities for the industry, which is facing growing and ever-more complex risks, a wealth of data and a highly competitive market. In this environment, Swiss Re supports clients with its risk knowledge and builds on strong partnerships and technological innovation to meet the increasing need for insurance...

Global temperature change, global trade collapse, and cyber warfare top the ranking of extreme risks that could have a significant impact on economic growth and asset returns, should they happen Arlington, VA (Sept. 9, 2019) – The Thinking Ahead Institute’s (TAI) Extreme risks 2019 report and ranking,† which categorizes rare events that could have a high impact on global economic growth and asset returns, has a new top three: global temperature change, global trade collapse, and cyber warfare. TAI is an outgrowth of Willis Towers Watson Investments’ Thinking Ahead Group. The Extreme Risks 2019 ranking saw global temperature change climb to the top spot, which covers scenarios where the planet becomes far less habitable. The number two extreme risk is the potential collapse of global trade, driven by the rise of protectionism primarily due to developments in global politics over the past six years. Joining in third place is cyber warfare. As the world has become ever more connected, the risk of the Internet being weaponized has also increased. The Thinking Ahead Institute’s top 15 extreme risks ranking for the first time includes: biodiversity collapse, abandonment of fiat money and cyber warfare; while those that have dropped out of the...

Zurich Insurance Company Ltd. and Driveway Software launch smartphone-based telematics platform to power new mobility solutions Los Angeles, CA (Sept. 4, 2019) – Driveway Software Corporation is pleased to announce that it has entered into a cooperation agreement with Zurich Insurance Company Ltd (“Zurich”) in order to leverage the Driveway technology platform and analytics engine. As Zurich develops innovative new products and services to meet customers’ evolving mobility needs, the companies plan to leverage the Driveway platform to power mobile experiences with driving insights, safety solutions and connected services. The companies’ initial collaboration is the Zurich Driver app in Brazil. Zurich Driver uses Driveway’s telematics platform to analyze data collected from smartphone sensors. The app automatically detects driving and scores drivers on excessive speeding and aggressive braking, acceleration and cornering. It also measures the driver’s phone distraction and provides feedback to drivers about their phone use while driving, encouraging distraction-free driving. The platform allows Zurich’s policyholders who enroll in the program to save on their insurance pricing and they may win prizes for demonstrating safe driving. “Zurich is one of the most respected insurance companies in the world, and our collaboration highlights the value they see in bringing innovation to...