23 August, 2018 07:00
Photo : Freepik
Sales of new premiums for individual life insurance in Canada declined by 49% in the first quarter of 2018, compared to sales to be unusually high in the first quarter of 2017. This is the fourth negative quarter in a row should be the last.
It is this that provides the research firm LIMRA, which compiles quarterly sales data for a twenty insurers in Canada. “We expect that the effect of the new tax rules passed out in the next quarter “, revealed in the Journal of insurance Catherine Theroux, assistant vice president and director of public relations.
The first quarter of 2018 could hardly be positive, with premiums of $ 284 million (M $). “The beginning of 2018 has been marked by a decline in compared with a first quarter results unusually high in the past year, particularly at the location of the products permanent,” said the author of the quarterly reports of LIMRA, Matthew Rubino.
Sales in the first quarter of 2017 were established at $ 553 Million of new premiums. It is a bond unusual, caused by the grace period granted to advisors to deliver until march 31, 2017 the fonts accepted by December 2016 by the insurers.
They had been $ 291 Million in the first quarter of 2015, a year that had not yet been tainted by the advent of the new tax rules. Things began to change in 2016 : advisors have anticipated the impact of these rules on their client’s high net worth. Several were ahead of the planned transactions in 2017.
Permanent insurance in game
As was pointed out by Mr. Rubino, the permanent product is available for most of the decline in sales in the first quarter of 2018 : 60 % in entire life and 43 % in universal life, compared to the first quarter of 2017. Sales of new premiums only fell by 10 % in insurance temporary during this period. It should be noted that the new tax rules had no effect on the sales of temporary insurance, or in 2016 or in the first quarter of 2017.
In terms of premiums, sales of whole life insurance accounted for 52 % of sales in the first quarter of 2018, with 147.2 Million $. This product accounted for 41 508 of the 156 993 policies sold during the quarter, or 27 %.
Term insurance accounted for 28 % of sales in the first quarter of 2018 in terms of premiums, with 81.3 M $. The whole is equal to 90 017 of policies sold in the quarter, or 57 % of the total sold in absolute numbers.
The premiums for universal life insurance have accounted for 20 % of total sales in the first quarter of 2018, with 55,7 M $, that is, 16 % of policies total sold, which corresponds to 25 468 fonts.
The policies of individual life insurance sold in the first quarter of 2018, representing a total insurance coverage of $ 57.7 billion (G $). Term insurance represents 75 % of the coverage, that is, 43.5 G $. The whole life insurance accounts for 13 % with $ 7.2 billion, and universal life insurance 12 %, with $7.0 billion.
Coverage average insurance per policy amounted to 367 259 $, drawn up by the temporary insurance policy.
The network tethered again
The network of exclusive agents were the hardest hit of the declines registered in the three last quarters of 2017. The situation reversed in the first quarter of 2018. While the independent network has seen its sales drop of 53 % in terms of premiums, the network captive has limited the damage to a decline of 27 %.
The sales of the exclusive network in terms of premiums had fought for all products, in the last three quarters of 2017. In the first quarter of 2018, the network has taken in achieving a 7% growth in its sales of universal life insurance. In comparison, the independent network has seen its sales of universal life insurance decline of 48 %.
In whole life, the sales of the exclusive network have decreased by 38 % in terms of premiums in the first quarter of 2018, compared to those in the independent network, which has fallen 63 %.
Only the sales of term insurance are more smiled at independent network : the drop in premiums has reached 9 % for this product in the first quarter of 2018, compared to a decline of 15 % on the side of the exclusive agents.
The independent advisors écopent
What are the sales made by the independent consultants, who have suffered the most in the first quarter of 2018. In terms of premiums, they have declined by 75 % compared to the first quarter of 2017.
The network of national accounts, present in a securities dealer, has experienced the second largest decline, with a decrease of their premiums by 56% during this comparison period.
The network of general agents, for its part, realized in the first quarter of 2018 lower sales of 43 % in the first quarter of 2017, in terms of premiums.
All in all, the independent network accounted for 78 % of the premiums sold in the first quarter of 2018 and the exclusive network to 22 %.
Within the independent network, sales in terms of premiums are divided between 53 % for the whole of life, 25 % for term insurance and 22 % for universal life insurance.
Within the exclusive network, sales in terms of premiums are divided between 50 % for the whole of life, 35% for insurance and 15 % for universal life insurance.