Most of the growth in the Canadian life and health insurance industry in 2015 came from the pensions and retirement market, the Canadian Life and Health Insurance Association noted in its 2016 factbook.
The industry manages $131 billion of the $592 billion in employer-based pension plans, which accounts for 70 per cent of small and medium-sized plans. Life insurers paid out $40.9 billion in retirement benefits in 2015, a 7.8 per cent increase since the previous year.
Pressures from an aging population and longer life expectancies are encouraging employers to look to insurers for help, says Noeline Simon, vice-president of taxation and industry analytics at the CLHIA.
“You have a market that is kind of volatile so there’s the security in annuity products and so on,” she says.
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The factbook also highlighted two retirement products in which the industry is heavily involved. Last year, employers with defined benefit plans transferred $2.7 billion of pension risk to life insurers, which also provided $5 billion of longevity insurance protection to those plans.
Simply put, if plan members live beyond a certain age, additional pension payments will come from the insurer and not the plan sponsor, says Simon.
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CLHIA’s report also pointed to pooled registered pension plans as a new option for smaller employers looking to provide retirement help to their staff. “Just like the managed pension funds today, [insurers] will manage the assets of the PRPP, both in terms of asset management and some of the administrative details around it,” says Simon.
On the health side, the report noted that the majority of health insurance is purchased through group health benefits plans. In fact, 90 per cent of the $39.9 billion in 2015 health premiums was from group plans.
