More People Have Individual Disability Insurance: Gen Re
The increase came despite a drop in new sales.
Insurers generated a little less premium from new individual disability insurance policy sales in 2020, but they ended the year covering more people.
Gen Re has provided an update on the individual disability market in a summary of results from an issuer survey. Sixteen insurers sent Gen Re data.
The number of new policies sold fell 11%, to 245,851, and premiums from the new policies fell about 7%, to $399 million.
Gen Re says the drop in new sales is due to the effects of the COVID-19 pandemic.
“Even though most carriers were able to adjust their internal processes to address the challenges of COVID, producers still struggled to close sales without having the ability to meet their clients face-to-face,” the company says.
Despite the drop in new sales, an increase in the number of people who kept policies already in force helped insurers increase the total number of people covered by individual disability insurance by about 1.2%, to 3.1 million people, according to Gen Re.
Premium revenue from individual disability insurance policies already in force increased 2%, to $5 billion.
Here’s how premiums from new policy sales for three major types of individual disability insurance policies changed between 2019 and 2020:
- Non-cancelable:$332 million (down 2.6%)
- Guaranteed Renewable:$63.5 million (down 12%)
- Buy-Sell:$3.3 million (down 20%)
The issuer of a non-cancelable policy must keep the policy in force, with the same terms and the same premiums, as long as the policyholder makes the premium payments on time.
The issuer of a guaranteed renewable policy has the ability to increase the premiums.
A buy-sell policy is a policy used to protect partners or other stakeholders in a business against the risk that one or more of the other owners might become disabled.
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