COVID-19 pandemic has entailed a greater degree of adoption of digitalization by brokers, agents and insurers in the Canadian insurance industry to ensure remote connectivity with customers, says GlobalData, a leading data and analytics company.
GlobalData’s report, ‘GlobalData’s report Covid-19 Impact on the Payments Industry: Canada Forecast Snapshot’, reveals that the Canadian insurance industry is set to decline in 2020, but smaller life sector keeps losses down.
GlobalData has revised its forecasts for the total Canadian insurance industry to reflect the reduced growth expected post-COVID-19. The updated forecasts see the industry declining by 1.4% in 2020, against an initial growth forecast of 3.8%.
Life insurance is expected to fare worse, with a forecasted decline of 4.2%, compared to an initial growth estimate of 4.7% for the year. General insurance accounts for 70% of the Canadian industry, in part because it has a strong national health service, which will take the brunt of COVID-19 costs.
The Office of the Superintendent of Financial Institutions (OSFI) announced a temporary freeze on defined benefit (DB) pension plans’ portability transfers and annuity purchases, on 27 March. This includes all buy-out annuity plans that were initiated, but not completed by 27 March. Annuity purchase and portability transfer due to winding up of the plan, termination of the employment, cease of marital relationship or civil partnership and death benefits entitlement to survival spouse.
Because of this, GlobalData expects the market for general annuities to decline by 11.4% in 2020, against pre-COVID-19 estimate of 8.1% growth.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “Insurers are doing everything they can to keep business going. They are offering an extension to the grace period, and the waiving of missed payment fees or payment deferrals to individuals, families, and businesses who are unable to pay premiums.”