Life and health insurers report nearly $100 billion in benefit payouts last year

A new industry report outlines how life and health insurance solutions influence the lives of Canadians

Life and health insurers report nearly $100 billion in benefit payouts last year

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 reported premiums for 2018.

Individual life insurance in-force has grown more quickly than group over the past decade; from 55% in 2008, the category has grown to account for 62% of the total in 2018, mostly driven by expansion in individual term life insurance.

Annuity contributions in 2018, including pension plans, RRSPs and TFSAs, RRIFs, and non-registered savings accounts, amounted to $48 billion. Most of the growth in retirement assets held by insurers over the past decade has occurred in accumulation annuities, which went up an average of 7% annually since 2008. As of 2018, insurers held around $400 billion in retirement assets for Canadians, with 79% in the accumulation stage.

As for health insurance, the report revealed that insurers covered $26.9 billion in extended health care benefits for 26 million Canadians; that included $11.7 billion for drugs, $8.5 billion for dental procedures, and $3.9 billion for paramedical and vision issues. Another $7.8 billion in disability benefits went to 12 million Canadians, while $1.4 billion in benefits were paid out to 20 million Canadians.

The report also noted an increase in the cost of specialty drugs, such as drugs to treat rare diseases. They represented 24% of prescription drug costs in 2013; that figure grew to 33% in 2018, and is expected to reach 40% by 2023.

Health insurance premiums totalled $46.3 billion in 2018, with 90% paid to group plans provided by employers, unions, or professional associations.