U.S. Life Insurance Sales Rise on Covid-19 Fears

Link: https://www.wsj.com/articles/u-s-life-insurance-sales-spike-on-covid-19-fears-11647347494

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Excerpt:

Americans went on a buying spree for life insurance in 2021, driven by concerns of death from the coronavirus pandemic.

Premium volume for new individual life-insurance policies surged 20% from 2020, while the number of policies issued rose 5%, the biggest year-over-year percentage gains since the 1980s, according to industry-funded research firm Limra.

“As we zero in on one million Americans who tragically lost their lives, it’s not a surprise that people are thinking about their own mortality and the impact on loved ones if anything were to happen to them,” said David Levenson, Limra’s chief executive.

The exact number of policies sold is still being calculated, but it is expected to top 10 million, Limra said. That milestone was last crossed in 2016. In 2020, an estimated 9.83 million policies were sold, up 1.7% from 2019.

Author(s): Leslie Scism

Publication Date: 15 March 2022

Publication Site: WSJ

COVID-19 Deaths Cause More Than $700M in Q1 Claims

Link: https://www.thinkadvisor.com/2022/05/09/covid-19-deaths-continue-to-hit-life-insurers-hard/

Excerpt:

COVID-19 returned to killing older Americans at a much higher rate than younger Americans in the first quarter, and that helped to hold down life insurers’ death claims.

The pandemic killed about 155,000 U.S. residents in the latest quarter. That was up from 127,000 in the fourth quarter of 2021, but down from 191,000 in the first quarter of 2021, according to statistics from the U.S. Centers for Disease Control and Prevention and other public and private sources.

Some life insurers and reinsurers that posted earnings last week skipped COVID-19 mortality details.

…..

MetLife: $230 million in world group life claims this quarter, down from $280 million a year earlier.

Hartford Financial: $96 million before taxes this quarter, down from $185 million a year earlier.

Unum: 1,400 deaths at an average of $55,000, or $77 million, down from 1,725 deaths at an average of $65,000, or $112 million, a year earlier.

Lincoln Financial: $53 million in group life claim claims and $18 million in group disability claims this quarter, down from $83 million in group life claims and $7 million in group disability claims a year earlier.

Voya: $35 million in group life claims this quarter, up from $29 million a year earlier.

Author(s): Allison Bell

Publication Date: 9 May 2022

Publication Site: Think Advisor

MetLife’s Earnings Surge, but Covid-19 Limits Insurer’s Latest Results

Link: https://www.wsj.com/articles/metlifes-earnings-surge-but-covid-19-limits-insurers-latest-results-11643844316

Excerpt:

High levels of Covid-19 deaths hurt fourth-quarter results in MetLife Inc.’s business of providing employer-sponsored life insurance as the Delta variant persisted in the U.S., but the outsize payouts were more than offset by unusually strong investment gains.

The New York company’s net income soared to $1.18 billion, compared with a year-earlier period that had been hurt by mark-to-market losses on financial hedges that aim to protect against falling interest rates. MetLife’s adjusted earnings, which analysts track as a measure of recurring profitability, were flat at $1.84 billion.

Another household-name insurer, Allstate Corp., reported a 70% drop in net income to $790 million, and a 50% decline in adjusted net income to $796 million, primarily driven by worsened car-insurance underwriting income. Accident volume increased on more-crowded roads, and inflation pushed repair costs higher.

Catastrophe costs were also higher. U.S. property insurers ended the year with two high-profile catastrophes: deadly tornadoes in and around Kentucky, and devastating wildfire between Denver and Boulder, Colo.

Author(s): Leslie Scism

Publication Date: 2 Feb 2022

Publication Site: WSJ

COVID-19 Deaths Cause More Than $700M in Q1 Claims

Link: https://www.thinkadvisor.com/2022/05/09/covid-19-deaths-continue-to-hit-life-insurers-hard/

Excerpt:

Reinsurance Group of America — a Chesterfield, Missouri-based reinsurer — said its U.S. COVID-19 individual life claims fell to $260 million in the latest quarter, from $340 million a year earlier.

“Our U.S. individual mortality results are very consistent with what we are seeing in the general population this quarter,” Jonathan Porter, RGA’s global chief risk officer, said Friday, during a conference call with securities analysts. “We saw a reduction in our claim cost per 10,000 general population deaths as compared to the third quarter and fourth quarter of 2021. This improvement, we believe, is in part due to the lower proportion of deaths in working ages.”

Here’s what happened to U.S. COVID-19 claim statistics at some other life insurers, including some that are known mainly for group life:

MetLife: $230 million in world group life claims this quarter, down from $280 million a year earlier.

Hartford Financial: $96 million before taxes this quarter, down from $185 million a year earlier.

Unum: 1,400 deaths at an average of $55,000, or $77 million, down from 1,725 deaths at an average of $65,000, or $112 million, a year earlier.

Lincoln Financial: $53 million in group life claim claims and $18 million in group disability claims this quarter, down from $83 million in group life claims and $7 million in group disability claims a year earlier.

Voya: $35 million in group life claims this quarter, up from $29 million a year earlier.

Primerica: $16 million in life claims this quarter, down from $21 million a year earlier.

Author(s): Allison Bell

Publication Date: 9 May 2022

Publication Site: Think Advisor

Trends in Life Insurance 2022: How the Industry Has Changed

Link: https://www.soa.org/sections/reinsurance/reinsurance-newsletter/2022/april/rsn-2022-04-gambhir/

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Growing popularity in no-medical-exam life insurance products has had one expected outcome: More life insurance policies with accelerated underwriting options available in the marketplace. For example, Policygenius offered just three accelerated underwriting options in 2020. In 2021, that number more than doubled to seven, and more options will likely be available in 2022.

Additionally, while such policies had historically only been available to applicants who were young and in good health, the competitive market has prompted more widespread availability. Now, applicants across all health classes can get no-medical-exam policies.

While no-medical-exam policies tend to be about the same cost as fully underwritten policies, applicants tend to favor them even when they are more expensive due to the convenience and expedited turnaround time.

Author(s): Nupur Gambhir

Publication Date: April 2022

Publication Site: Reinsurance News, SOA

New York May Develop Life Policy Disclosure Rules

Link: https://www.thinkadvisor.com/2022/01/24/new-york-may-develop-life-policy-disclosure-rules/

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An NAIC committee formed the Life Insurance Illustrations Working Group in 2016.

The working group chair report said states should become the laboratories for disclosure standards.

The committee disbanded the working group and put the disclosure standards effort back in the hands of the states.

Author(s): Allison Bell

Publication Date: 24 Jan 2022

Publication Site: Think Advisor

Digital-first life insurance policies see increase in demand, Policygenius

Link:https://www.dig-in.com/news/policygenius-life-insurance-policies-no-medical-exams

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The demand for digital-first life insurance products has grown in the last year, likely related to the COVID-19 pandemic. From October to December 2021, about 56% of applications submitted through Policygenius were for no-medical exam policies compared to January to March 2021, which was only 26%.

Author(s): Kaitlyn Mattson

Publication Date: 4 Feb 2022

Publication Site: Digital Insurance

Wave of COVID-19 Deaths Hit RGA Hard

Link: https://www.thinkadvisor.com/2021/11/08/wave-of-covid-19-deaths-hit-rga-hard/

Excerpt:

After the second quarter, RGA executives told analysts they were optimistic about the effects of COVID-19 vaccination programs on mortality.

Instead, “the third quarter saw increases in both COVID-19 and non-COVID-19 general population mortality,” Porter said.

In the United States and India, the typical age of people dying of COVID-19 is falling, Porter added.

That hurts life insurers because people under 65 are more likely than older people to have life insurance.

Author(s): Allison Bell

Publication Date: 8 Nov 2021

Publication Site: Think Advisor

Insurers Continue To Flirt With Electronic Health Records

Link:https://www.thewealthadvisor.com/article/insurers-continue-flirt-electronic-health-records

Excerpt:

The use of electronic health records in insurance underwriting has long held terrific potential to boost the industry. Progress has been slow to date, but that is about to change.

By late-2022, EHR will be standard at 50% of the top 20 carriers, said Nicholas Irwin, director of life underwriting at Verisk.

“I think once we get to that 50% hit rate threshold and same-day turnaround time, I’d be very surprised it didn’t become a standard at that point,” Irwin said Tuesday during the Society of Insurance Research annual conference.

The acquisition of a medical record, a crucial part of life underwriting risk-assessment, largely remains largely an inefficient paper process. The availability of healthcare information as a data stream is a critical advantage for insurers using rules-based decision engines for accelerated underwriting.

Author(s): John Hilton, InsuranceNewsNet

Publication Date: 24 Oct 2021

Publication Site: The Wealth Advisor

Wealth and Insurance Choices: Evidence from US Households

Link: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/RESEARCH/gropper_kuhnen.pdf

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Theoretically, wealthier people should buy less insurance, and should self-insure through saving instead, as insurance entails monitoring costs. Here, we use administrative data for 63,000 individuals and, contrary to theory, find that the wealthier have better life and property insurance coverage. Wealth-related differences in background risk, legal risk, liquidity constraints, financial literacy, and pricing explain only a small
fraction of the positive wealth-insurance correlation. This puzzling correlation persists in individual fixed-effects models estimated using 2,500,000 person-month observations. The fact that the less wealthy have less coverage, though intuitively they benefit more from insurance, might increase financial health disparities among households.

Author(s): Michael Gropper, Camelia M. Kuhnen

Publication Date: 16 July 2021

Publication Site: University of North Carolina

Is life insurance a human capital derivatives business?

Link: https://math.illinoisstate.edu/Krzysio/KO-JII-Invited.pdf

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Life and disability insurance, as well as annuities, traditionally have been analyzed as products providing protection against random losses. This article proposed that these products can be viewed as derivative instruments created to address the uncertainties and inadequacies of an individual’s human capital, if human capital is viewed as a financial instrument. In short, life insurance (including disability insurance and annuities) is the business of human capital securitization.

Author(s): Krzysztof M. Ostaszewski, PhD, MAAA, FSA, CFA

Publication Date: 2003 — vol 26, pp. 1-14

Publication Site: Journal of Insurance Issues

Rational Ignorance and the Protection Gap: Is There a Cure?

Link: https://www.soa.org/sections/reinsurance/reinsurance-newsletter/2021/march/rsn-2021-03-poon-affat/

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The phrase “coverage gap,” heard often from life insurance company executives, is defined as  “the shortfall in the amount of life insurance cover necessary to maintain the current living standards of dependents.” Life insurance companies devote extraordinary amounts of time, effort, and expense trying to educate underinsured individuals about the need to protect themselves and their families from this gap by buying more cover. Could our industry not be addressing one of the key issues leading to the lack of consumer enthusiasm for our products?

Here’s the issue: insurance products and contracts are not consumer-friendly. To the average person, life and living benefits products are at least as byzantine as Brazil’s political system, and the language of insurance contracts could almost be considered an actual dialect. Insurance is thus fertile ground for the manifestation of rational ignorance among potential customers, who are already known to be more likely to pay attention to information about it if it comes from friends and social media posts. (I pity the buyer researching concepts and options such as pure protection, accumulation, critical illness, disability income, or long-term care.)

Author(s): Ronald Poon-Affat

Publication Date: March 2021

Publication Site: Reinsurance News at the Society of Actuaries