Mixed results: sales premium declined and in-force premium increased
May 20, 2021 — PORTLAND, Maine–(BUSINESS WIRE)–Gen Re has released results of the 2020 U.S. Group Term Life Market Survey. This annual industry benchmark survey covers Group Term Life and Accidental Death & Dismemberment (AD&D) in-force and new sales results for the U.S. market, representing combined employer-paid and employee-paid business.
Twenty-nine companies participated in this year’s survey, reporting both Group Term Life and AD&D results. For those providing comparable data year to year, sales premium declined and in-force premium increased. Mike Fullerton, VP, Sr. Account Executive, commented: “2020 was an extraordinary year and the results in the Group Term Life insurance market were no exception. Although in-force premium growth was positive, new sales premium decreased by 9%. This represents the largest drop in sales premium reported on the survey looking back as far as 2009.”
Key observations of the survey include:
- Participants reported just over $27.4 billion in total Group Term Life in-force premium, a 3% increase compared to 2019 results.
- Both the total number of employers offering coverage as well as the number of insured employees grew by 1% year-over-year.
- Reported in-force and new sales average face amounts for Group Term Life policies reached over $100,000 in 2020 ($102,707 and $104,769, respectively).
- For Group AD&D, in-force premium was up by 1% and new sales premium increased by 3% compared to 2019.
- With new sales totaling just over $2.5 billion in 2020, participants reported a 9% decline in new Group Term Life sales premium.
Excerpts From The Market Survey
Group Term Life and AD&D In‑force Results
Twenty-nine companies provided Group Term Life (GTL) and AD&D results for 2020. On a combined basis, total GTL and AD&D in‑force premium reached $29.3 billion, with GTL representing the majority (94%) of the total.
For GTL in‑force premium, reported industry growth has ranged between 2% and 5% over the past 10 years. In 2020, in‑force premium grew by 3% compared to 2019.
After posting increases of 5% or more over the past several years, AD&D in‑force premium rose by a slight 1% in 2020.
Group Term Life and AD&D Sales Results
Participating companies reported just under $2.8 billion in combined GTL and AD&D sales premium in 2020, with GTL accounting for 91% of the total.
Following a modest increase in 2019, GTL new sales premium decreased by 9% in 2020. This represents the largest drop in sales premium reported on the survey looking back as far as 2009, when premium fell by 5% for the industry. For 12 of the 17 companies reporting a negative outcome, premium declined by 10% or more.
The top ten companies held 81% of the market share for new sales premium in 2020, down slightly from 82% reported last year. As reported in the past, a small number of companies can strongly influence industry growth. Removing just two of the top ten companies that experienced significant declines in GTL new sales premium from the calculations would result in a 0% growth rate versus a 9% decline.
AD&D sales premium, which has tended to be volatile over the years, increased by 3% year‑over‑year.
Group Term Life Growth – Cases and Lives
GTL new sales case counts fell by 10% in 2020, ending a five-year period of flat to positive growth for the industry. Sixty-eight percent of companies reporting this data (19 out of 28) experienced a negative result, with six showing a decrease greater than 20%. In‑force results remained relatively unchanged, up by a slight 1% for the third straight year.
For companies providing sales case size breakdown information for the two‑year period, the 10–99 category accounted for the highest percentage of cases in 2020 (53%), followed by the 1–9 grouping (29%). Results were similar for in‑force (53% and 28%, respectively). Less than 1% fell in the 5,000+ range for both sales and in‑force.
The Market Survey is an annual benchmark survey produced by Gen Re, with the full results available only to participating companies. A summary report is available online at genre.com/lhsurveys.
About Gen Re
Gen Re, a Berkshire Hathaway Company, is one of the leading Life/Health and Property/Casualty reinsurers in the world. Our North American Life/Health reinsurance company, General Re Life Corporation, has superior financial strength ratings among Life and Health reinsurers. Gen Re delivers customized reinsurance programs and risk management solutions for the Life, Medicare Supplement, Critical Illness, and Individual Disability Income markets. Through our research, we also offer valuable information and insights. www.genre.com.