2012 U.S. Critical Illness Insurance Market Survey

November 09, 2012| By Steve Rowley | Critical Illness | English

Gen Re, in conjunction with the National Association of Critical Illness Insurers (NACII), has been conducting a survey of the U.S. Critical Illness insurance market since 2006. We have just completed our 2012 survey (which covers 2011 sales). While results are only made available to participating companies, we will outline some of the key findings here. As with all surveys, caution should be used when comparing year-to-year results because different companies may participate each year.

Responses were received from 48 different companies, 31 of which distribute Critical Illness (CI) insurance. The responses included 15 companies that are not yet in the CI market, indicating that they are exploring or developing a product. The data covers 54 different products.

Participants report $147.5 million in new premium sales for the year 2011. When we compare year-over-year growth for companies participating in both our 2011 and 2012 surveys, we find strong premium and policy/certificate growth of 26%. Additionally, we continue to pool our data with LIMRA’s Critical Illness survey results (removing duplicate company data). The combined results, which we believe represent 85%-90% of the U.S. Critical Illness market, show total 2011 new business premium of $161.5 million.

One interesting finding is the shift in the mix of business between Traditional Individual, True Group, and Worksite/Voluntary. Whereas our 2011 survey reported the composition of total CI industry premium for these segments as 14%, 14% and 72% respectively, 2012 results showed 16%, 28% and 56%. And when we examined the breakdown of policies/certificates sold for those same three segments, we found a dramatic shift - from 8%, 21% and 71%, respectively, to 10%, 37% and 53%. We expect this trend to continue as more group carriers enter this marketplace.

One area of concern raised by these survey results is an unexplained, and potentially disturbing, change in premium rates per thousand. Reported True Group and Traditional Individual rates per $1,000 of benefit amount dropped 43% and 25% respectively over the past two years. Over the same period, rates for Worksite/Voluntary increased by 25%. The movement toward attained age rates may partially help explain this for the True Group product. However, with 63% of the in-force premium attributable to Worksite/Voluntary, one must wonder why the business with the most in-force experience is increasing rates while those with the least have dropped rates considerably.

Most companies, regardless of platform, indicate that profitability met or exceeded their expectations. Only 23% of Traditional Individual, 27% of True Group, and 36% or Worksite/Voluntary respondents report that they missed their profitability expectations. Upon closer examination, this appears to be an issue of high fixed expenses as only 4% of all respondents indicate that claims incidence is greater than anticipated, and a high percentage (60% - 77%) reported missing their sales expectations.

Despite the inevitable frustration resulting from lower than anticipated sales, none of the participating  companies report planning to decrease their focus on CI insurance, and 69% plan to increase their focus. One reason may be that producers are finally embracing the value proposition of CI insurance for their consumers. This is evidenced by the fact that 61% of respondents currently developing a product cite agent demand as a primary reason. The optimism is further supported by the majority of respondents stating that they believe the market will continue to grow at 10% or more annually over the next five years.

If you would like to participate in the 2013 Critical Illness Insurance Market Survey, and gain access to the complete report, please contact Steve Rowley at


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