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The post-pandemic Supplemental Health industry is emerging from one of the most challenging periods in its history. Yet, despite the socio-economic fallout from COVID-19, a big share of Critical Illness (CI) insurance providers (43%) exceeded or met their sales targets in 2021.
Encouragingly, close to two-thirds (66%) of companies expect to increase their focus on CI over the next few years. None said their focus would decrease.
These positive indicators are among many revealed in Gen Re’s recently released U.S. Critical Illness Insurance Market Survey. The annual survey covers Traditional Individual CI, Group/Worksite CI, and Accident products.
Thirty-five carriers participated in the latest survey, reporting $1.7 billion in total CI in-force premium for 2021. CI sales premium increased 14% among survey participants producing data for 2020 and 2021, reaching $584.2 million.
When asked how overall sales results compared to goals for 2021, 43% of our respondents reported exceeding or meeting their sales targets. For 2021, participants reported selling 2.6 million new policies/certificates and roughly $584 million in new sales premium. In terms of new sales premium, Group/Worksite Attained Age represents the largest segment, with $342.1 million, or 59%, of the total.
For those companies that missed their goals, COVID-19 restrictions were cited as having the greatest impact on results. Other negative impacts were attributed to lower than anticipated prospect activity, pricing changes, filing limitations, and ability to attract agents interested in selling CI. Increased awareness and interest in CI due to the pandemic contributed to more positive results for those companies that exceeded their targets.
At the time that data was collected in April and May of 2022, all carriers with CI products reported their claims incidence was less than, or matched, their expectations since the inception of their program.
For those companies whose claims experience deviated from expectations, close to twice as many companies reported that changes such as rate reductions and adding new benefits were implemented nationwide, versus only in a few states.
Two-thirds of participating companies were not considering adding a COVID-specific trigger at the time the survey was conducted. Thirty-four percent had already added, were considering adding, or planned to add a COVID-specific trigger to their CI plan. Similarly, 37% of companies (13 out of 35) had already added or were considering/planning to add a COVID-specific rider to their CI plan. Sixty-three percent of respondents were not considering adding a rider at the time of the survey.
Seventy-five percent of companies indicated that technology deficiencies is one of their top three challenges to underwriting CI products. Less than a third of companies mentioned getting necessary medical/physician support (30%), maintaining underwriting manuals (30%), and having insufficient resources (25%).
For Accident insurance, 29 companies provided results, and they reported writing more than 2.5 million new Accident policies and $454 million in new sales premium. For in-force Accident business, roughly 7.4 million policies and $1.6 billion in premium were recorded.
The different trends highlighted in our survey are a reminder that carriers need to be agile and responsive in such uncertain times. They need to be ready in terms of product design flexibility to satisfy changing employer/broker demands. Insurers also need to exercise compliance/pricing adaptability to navigate a path through developing state objections.
Gen Re delivers customized reinsurance programs and risk management solutions for Supplemental Benefits carriers – with our research complementing that by offering valuable information and insights. If you’d like to learn more about the survey results, feel free to reach out to me directly.
