Retirement savings products once again led the way in the growth of the life and health insurance industry, according to the Canadian Life and Health Insurance Association’s annual fact book.
Of the $631 billion in employer-sponsored pension plans, the industry managed $142 billion in 2016, up from $131 billion in 2015. And life insurers paid out $43.5 billion in retirement benefits, up from $40.9 billion in 2015.
Read: Retirement planning leads growth in life, health insurance: CLHIA
The fact book noted three challenging areas for Canadian savers: the move away from defined benefit pension plans, low and more volatile investment returns and increasing lifespans.
While annuity products and other solutions from the insurance industry are becoming more common to counter these challenges, defined benefit plans transferred $2.6 billion in pension risk to life insurers in 2016, down very slightly from $2.7 billion in 2015. Despite this decrease, the report noted the trend of de-risking by pension plans is likely to grow as employers increasingly reduce risk and focus on their core business.
The report also noted that annuity payments on employer-sponsored and individual plans have increased by 63 per cent in the past decade. However, premiums for annuities fell by 0.8 per cent in 2016. When it comes to life and health insurance, premiums rose 9.8 per cent and 2.3 per cent, respectively.
Read: Benefits costs to trend even higher in 2017
In terms of health benefits, the industry paid out $32.5 billion in 2016. Three-quarters of that amount was for extended health coverage, including $11 billion for drugs, $7.9 billion for dental services and $3 billion for paramedical and vision benefits. The vast majority (90 per cent) of health insurance is through group benefits plans.
