Life Insurance

Group Term Life Carriers Brace for Change

A small number of companies will have a big impact on results

GenRe’s Mike Fullerton talks about how the industry will proceed among market uncertainty. Visit here for more details.

For nearly two decades, Gen Re has been tracking results for the Group Term Life (GTL) industry. We’ve seen various impacts on the marketplace, from mergers, acquisitions and subsequent growth to serious economic downturns. However, these past experiences don’t always tell us what the future holds. And, during these challenging times, Group Term Life carriers are bracing for change.

That being said, our recently published 2019 U.S. Group Term Life Market Survey, which tracks the sales and in-force results for a group of 29 companies, paints an encouraging picture of how carriers were faring in the past year. After experiencing a 5% decline in new sales premium in 2018, the GTL industry rebounded in 2019 with a 5% increase. Twenty-five out of 28 companies reported a positive change in new sales GTL premium.

Anecdotally, there were some signs of larger case activity, and average new sales lives per case also rose by 5% year-over-year.

Small Number Of Companies Have A BIG Impact

It is important to note that a small number of companies can have a big impact on overall results. Removing just two companies with large year-to-year changes from the industry calculations would result in sales premium growth changing from 5% to a flat 0%.

Another example is how GTL in-force premium showed a modest uptick of 2% in 2019. GTL in-force premium growth has remained in the 2% to 5% range over the last 10 years, which again can be driven by the results of a small number of companies.

Competition For Products & Pricing

As a backdrop to the GTL Market Survey, Gen Re’s related 2019 Market Pulse Survey outlined some of the qualitative challenges facing carriers in 2020. These include a high level of competition among carriers across both product offerings and pricing, financial pressures, and technology.

Such concerns have created headwinds for the industry for years and carriers have succeeded in dealing with them to varying degrees. However, these issues pale in significance compared with the potential challenges produced by the COVID-19 pandemic.

The far-reaching and tragic impacts of the unfolding health crisis will undoubtedly raise awareness of the financial protection that Group Life insurance provides. However, the pandemic will also have serious long-term implications for the economy and the financial markets. This could severely test the insurance market’s resilience. We’ll see how the marketplace responds to this new reality.

 

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