July
16, 2020| By Mike Fullerton
For nearly two decades, Gen Re has been tracking
results for the Group Term Life (GTL) industry. We’ve seen various impacts on
the marketplace, from mergers, acquisitions and subsequent growth to serious
economic downturns. However, these past experiences don’t always tell us what
the future holds. And, during these challenging times, Group Term Life carriers
are bracing for change.
That being said, our recently published
2019 U.S. Group Term Life Market Survey, which tracks the sales and in-force results for
a group of 29 companies, paints an encouraging picture of how carriers
were faring in the past year.
After experiencing a 5% decline in new
sales premium in 2018, the GTL industry rebounded in 2019 with a 5%
increase. Twenty-five out of 28 companies reported a positive change in
new sales GTL premium.
Anecdotally, there were some signs of larger
case activity, and average new sales lives per case also rose by 5%
year-over-year.
It is important to note that a small number of
companies can have a big impact on overall results. Removing just two companies
with large year-to-year changes from the industry calculations would result in
sales premium growth changing from 5% to a flat 0%.
Another example is how GTL in-force premium
showed a modest uptick of 2% in 2019. GTL in-force premium growth has
remained in the 2% to 5% range over the last 10 years, which
again can be driven by the results of a small number of companies.
As a backdrop to the GTL Market Survey,
Gen Re’s related 2019 Market Pulse Survey outlined some of the qualitative
challenges facing carriers in 2020. These include a high level of competition
among carriers across both product offerings and pricing, financial pressures,
and technology.
Such concerns have created headwinds for the
industry for years and carriers have succeeded in dealing with them to varying
degrees. However, these issues pale in significance compared with the potential
challenges produced by the COVID-19 pandemic.
The far-reaching and tragic impacts of the
unfolding health crisis will undoubtedly raise awareness of the financial
protection that Group Life insurance provides. However, the pandemic will also
have serious long-term implications for the economy and the financial markets.
This could severely test the insurance market’s resilience. We’ll see how the
marketplace responds to this new reality. In the meantime, don’t hesitate to
reach out to us if we can help you in any way.
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