Individual Disability Insurance Market Delivers in 2012 - But Challenges On The Horizon
June 03, 2013| By Drew King |
According to our latest U.S. survey of the sector, 2012 was a pretty good year for most carriers operating in the Individual Disability insurance industry. For the second straight year, total new premium growth was over 5%. These positive results were not just a result of higher premium per policy amounts: the number of new policies also increased in 2012.
Both Non-Cancellable (Non-Can) and Guaranteed Renewable (GR) sales were strong, though of the two GR saw strongest growth.
Not every carrier posted an increase in sales, and one third of the carriers in our survey reported negative growth in new sales. When factoring in the carriers that were flat in 2012, this represents one half of the reporting companies.
Guaranteed Standard Issue (GSI) is becoming a greater focus for some carriers and in 2012 the carriers that reported GSI represented 13% of all new sales. Even with employers pulling back on employer-paid benefits, employer-paid GSI accounted for 40% of new Non-Can GSI premium, just slightly less than 2011. We also see more carriers offering GSI in the medical market. In 2012, medical GSI sales were 20% of all new GSI sales.
It’s worth pointing out that while the overall industry numbers were favourable for 2012, the business is not yet out of the recovery phase. In our opinion, the Individual Disability market still faces a number of potential challenges.
The impact of the full implementation of the Affordable Care Act on physician business has yet to be felt, for example. Meanwhile, secondary issues such as an aging distribution channels, saturated markets, aggressive underwriting guidelines, and income protection alternatives can’t be ignored.
With current economic conditions improving, we believe the industry is well positioned and should continue to produce favourable sales growth in 2013. But carriers must educate the public on the need for disability insurance protection and re-focus on producer training if they want the industry to fully realize its potential.
Read the summary publication of our 2012 U.S. Individual DI Market Survey for more details.