Figures achieved despite economic challenges
The year 2022 has been challenging for many industries, and the Canadian life insurance market was no exception. Despite the challenging economic conditions, the latest survey conducted by LIMRA’s Retail Canadian Life Insurance Sales Survey reports a slight improvement in the new annualized premium for Canadian life insurance policies.
According to the survey, the total Canadian life insurance new annualized premium increased by 1% in 2022. This is significantly lower than the growth rate of 25% observed in 2021. The growth rate in 2022 was impacted by inflation and other economic conditions that made it difficult for people to purchase life insurance policies.
Matthew Rubino, the research analyst at LIMRA Insurance Research, said, "Inflation and challenging economic conditions dampened Canadian life insurance sales growth in 2022. That said, 2022 sales exceeded pre-pandemic levels. The new annualized premium in 2022 was 23% higher than in 2019, suggesting sales are returning to a more predictable pattern as the disruptions from the pandemic have passed."
Life insurance numbers in Canada
The fourth quarter of 2022 witnessed a decline of 2% in new annualized premiums, compared to the fourth quarter of 2021. Additionally, the year-over-year policy count decreased by 8% for both the quarter and the year.
Despite the overall slowdown, whole life insurance saw an increase of 1% in the fourth quarter, with more than half of the carriers reporting positive sales growth. The whole life premium grew by 2% in 2022, compared to the previous year. Whole life insurance represented 65% of the total Canadian life insurance market in 2022.
The survey reveals that the new annualized premium for whole life insurance policies increased by 1% in the fourth quarter of 2022, with more than half of the carriers reporting positive sales growth. In 2022, the whole life premium grew by 2% compared to 2021 results, and it represented 65% of the total Canadian life insurance market.
However, the survey also showed that term sales have dropped for the fifth consecutive quarter. Term new annualized premium fell by 10% in the fourth quarter, resulting in an 8% decline for the year. Term premium held a 20% market share in 2022. Rubino explained, “Sales of these products normalized in 2022 and are in line with results experienced in 2019.”
After three consecutive quarters of growth, universal life (UL) new premium dropped by 7% in the fourth quarter compared to the 45% growth experienced in the fourth quarter of 2021. For the year, UL new premium remained 9% above 2021 results, driven by non-level cost of insurance product sales. UL premium held 15% of the total Canadian life insurance market in 2022.
The survey showed that the year-over-year policy count dropped by 8% for the fourth quarter and 8% for the year. Although the growth rate was not as remarkable as that of 2021, the slight improvement in sales in 2022 indicated that sales are returning to a more predictable pattern.
US life insurance sales
On the other hand, despite a slowdown in the second half of 2022, US life insurance sales matched the record-high premium sold in 2021, according to LIMRA's US Retail Individual Life Insurance Sales Summary for the Fourth Quarter of 2022. The report shows that life insurance premiums totaled $15.3 billion in 2022, propelled by strong growth in the first half of the year.
However, LIMRA Senior Vice President John Carroll noted that "life insurance sales slowed in the second half of the year as consumers' worries about inflation and the economy increased and concerns about COVID-19 declined." As a result, LIMRA forecasts that life insurance sales growth will remain level until 2024.
The report shows that all product lines experienced declines in the fourth quarter of 2022, with the total new annualized premium falling by 13%. Policy sales fell 10% in both the quarter and the year. Whole life (WL) new premium dropped 19% in the fourth quarter of 2022, compared with the prior year. Overall, WL premium totaled $5.8 billion in 2022, a 5% drop from 2021, but still above pre-pandemic sales results. WL premiums represented 38% of the individual life insurance market in 2022.
Term new premium growth fell 5% in the fourth quarter, year-over-year. In 2022, the term new premium was $2.8 billion, 5% lower than the 2021 results. Term premium held a 19% market share in 2022.