April 24, 2018 07:00
Photo : Freepik
Insurers expect that the sales whole life insurance resume of the force later this year. The brake caused by the new tax rules will soon be a thing of the past, to anticipate-they.
According to the most recent report from LIMRA on life insurance sales individual carried out in Canada by 2017, sales of whole life insurance have declined 20% compared to 2016, in terms of premiums. This decrease peaked at 61 % in the fourth quarter of 2017, compared to the first quarter of 2016. The body of research revealed in the Journal of the assurance that a further decline will follow in the first quarter of 2018, and that it might be the last backlash. LIMRA will publish its official results for the first quarter to the month of may.
«Although there has been a certain decline in the first quarter of 2018, several of the people resources of our member companies have indicated to us believe that the worst of the fluctuations is past, has revealed to the analyst responsible for reporting on the life and health insurance in Canada, LIMRA, Matthew Rubino. This decrease is likely at its end. The second quarter of 2018 will show some growth, at the scale of the industry. «
Mr. Rubino believes that the whole of life will appear in the head of this growth. «Given that the sales whole life insurance in terms of premiums accounted for 57 % of new premiums in 2017, the major part of the growth of the industry will be based on the performance of the whole life,» he said.
To the rhythm of sunny days
Sales of whole life insurance are, according to him, back to the rhythm of sunny days. «If the industry expected a decline after the frenzy of the sales driven by the tax changes, I think we can leave those expectations behind us, believes Matthew Rubino. At the end of 2017, the results of the whole of life in terms of premiums have exceeded those of 2015, that is, the results before the reform. It seems that the effect of the tax changes to be completed. «
The return in force, however, will be more difficult for the universal life insurance. «The universal life is near premium levels achieved by 2015. She will likely return to these levels in the coming years, » said Mr. Rubino. In contrast even more marked, with sales of 2016, universal life sales were down 30 % in 2017.
The year 2016, it is a bit of an anomaly, says Guy Couture, vice-president, sales, insurance, Quebec, Manulife. «There has been an upsurge at the end of 2016, in addition to business-residual which have continued to impact on 2017. The advisors were asked to submit their proposals before December 31, 2016, but we give them by following up in the month of march and place them in the client. «
This upsurge has seemed more blatant with the whole of life. Mr smith now believes that the worst is past. «Sales are stable compared to the second quarter of 2016 and the fourth quarter of 2015. «
In the sales of the industry as a whole, the results of the third and fourth quarters of 2016 are outstanding compared to the last 10 years, says Stéphane Beaumier, regional vice-president, network career, at Sun Life Financial. «We tried not to compare the results from 2017 to those of 2016, but rather for those of 2015. «
Steep learning curve
The learning curve for new products has also contributed to the slowdown in sales in 2017, is estimated Saundra Roll, assistant vice-president, support, products and business of a large size, insurance solutions, individual client, Great-West. «We’ve made more changes to our products than just those required by the new tax. Counselors need more time to adapt, » she said.
Great-West also expects sales to decline in the first quarter of 2018, compared to the first quarter of 2017. According to Ms. Roll, the second and third quarters of 2018, however, should show a return to growth. «The councillors have worked hard over six months to conclude the business before the end of 2016, she says. They have done two years of sales in less than a year. As a result, councillors took a break in the second quarter of 2017. «
Saundra Roll said now hear it in the network comments to the effect that the business has resumed and the advisors open new folders. «The business of a large size can take up to two years to conclude, does it. It depends on the size and complexity of the case. It also depends on the involvement of accountants, lawyers and other professionals in the client. «
Sun Life financial has also observed the effect of the learning curve. «We changed all of our products by 1 January 2017, recalls Stéphane Beaumier. He needed to train counselors, who then had to take ownership of the new products. The people were on a good end of year 2016. In the third and fourth quarter of 2017, sales have started to pick up in the level where they were in 2015. «
One last bubble to burst
The sales of permanent insurance in the first quarter of 2017 will be the last bubble tax, believe insurers. «There will be sales declines when the report of LIMRA’s first quarter will be released in may, because there is more sales unusually high in the first quarter of 2017,» said Louis-Charles Leclerc, director, insurance products ofiA financial Group.
The second quarter will be more interesting, provides for Mr. Leclerc. «We will see which product has known of the growth or not. The whole life insurance products with participation, there are still the craze. They form a large market in which the advisors seem to many to believe. «
Figures from LIMRA on the breakdown of premiums by product indicate that 84 % of the sales of whole of life in terms of premiums went to the product with participation in 2017.
But a slowdown in sales of whole life participation is possible, according to Mr. Leclerc, as this product has been weakened by the decline of the rate of dividend made by a number of companies from year to year. «It is more vulnerable. Having learned to love it when the dividend rate was high, the advisors will may be give when the rates will decrease and to sell something else, he believes. We will have a more accurate portrait, no later than 2018. «
Mr. Leclerc recalled that these rates are decreasing under the constant pressure of low interest rates. «Companies like Sun Life and Great-West have sold a lot of these products, in which the flow of premiums has been invested at lower yields,» says the director of the insurance products. The companies that will maintain their dividend yields are those which have achieved good yields in the portion shares of the participation fund. «
The options iA
iA financial Group has no participating product. «We have a competitor’s product to this market : our universal life Capital Value,» said Mr. Leclerc. In the Face of the products entire life with participation, iA positions the universal life Capital Value as a product where everything is guaranteed and known in advance, in contrast to the amount of the redemption value and dividends that will be credited to the fund of a participating whole life, term.
He adds that iA also markets a life insurance product as a whole, » The universal life insurance is more important in our sales of individual life insurance, and represent a view of nose at least 90 % «. He also notes that a lot of life insurance payable in 20 years sold in the market.