Canada’s individual life insurance claims saw a sizable bump in April and May, at the height of the spring coronavirus lockdown, compared to the same period in 2019, says a new report by the Canadian Institute of Actuaries (CIA).
The study reports a total of 1,916 death claims attributed to COVID-19 in the first six months of 2020, with more than 12 per cent of individual claims in April attributed to the virus.
The CIA began collecting monthly data from 13 Canadian insurers at the start of the pandemic.
The spike in individual claims was short-lived and remained “within the range of normal volatility,” the report says. But as Canada copes with a second wave of the pandemic, it will be critical to keep a close eye on ongoing trends, it adds.
As Canada’s death toll from COVID-19 surpasses 10,000, could the pandemic drive up life insurance premiums?
The short answer is “‘probably not,” according to Keith Walter, who chairs the CIA’s Research Council.
The spike in pandemic-linked claims seen in the middle of the first wave was “noticeable” but within range of what insurers have built into their reserves and capital allowances, he says.
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But as the country heads into the next phase of the health emergency, he says, “the big unknown here is what comes next.”
Any premium increases would only affect a portion of policyholders, Walter says.
With guaranteed life insurance policies, premiums are locked in. A move to higher premiums for these policies would only affect those taking out new policies or those who want to increase their coverage, Walter says.
Term life insurance, which covers you for a set period of time and payout and can be an affordable form of coverage for young families, is a type of guaranteed life insurance.
With some types of life insurance policies that provide lifetime coverage, on the other hand, both premiums and benefit amounts can vary depending on interest rates and a number of other factors.
Group life insurance policies offered by employers didn’t show much of an increase in claims during the first phase of the pandemic, Walter notes.
That’s possibly because these policies tend to cover a healthier, working-age population that was less affected by COVID-19 during the first wave, he says.
There were 782 individual claims due to COVID-19 in April compared to just 163 in group claims, the study shows.
Still, one thing to watch going forward will be the impact on claims as the virus spreads among younger Canadians, Walter says.
And as the pandemic drags on, deterring many Canadians from accessing hospitals and delaying medical diagnoses, Walter says there will be the long-term ripple effects from COVID-19 that won’t show in the data for months and even years.
“I do have a serious concern that we will see a lasting impact on the health of Canadians in general,” he says.
Canadians currently have $5 trillion worth of life insurance policies in force, according to CIA.
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