The Going Gets Tough in the Individual Disability Market
June 27, 2014| Von Lisa Bolduc
On face value the Individual Disability insurance market had a positive year in 2013, with new sales premium growth of 1.5% and policy growth of 2.5%. But dig deeper into Gen Re’s recently released 2013 U.S. Individual Disability Market Survey and it becomes apparent that not all carriers did well in 2013. Half of the carriers surveyed had negative premium results and all but one of these carriers also saw a fall in the number of policies sold in 2013 - up from one-third of the market having negative sales results in 2012.
The Guaranteed Standard Issue (GSI) segment had mixed results, with overall GSI premium up nearly 10%, yet the number of policies issued was down almost 5% across both employer- and employee-paid segments.
The most dramatic changes were in the voluntary market where premium was up 5% yet the number of policies sold was down by around 10%. The results reflect how carriers are increasing GSI offers and writing larger policies. In 2013 the average benefit amount per Non-Cancellable policy increased for both employer-paid and employee-paid business.
The results are perhaps a little surprising; in 2011 and 2012 it looked as though the Individual Disability market had shaken off the recession, expanding by 7.1% and 5.5%, respectively.
With a continued focus on the medical market by some carriers, the escalation of GSI offers, as well as a continued exodus from the producer community, it’s likely that some are questioning the long-term viability of the Individual Disability product in its current form and with its current distribution model.
At the same time, competition from emerging worksite solutions is going to challenge traditional, Individual DI carriers in certain markets as Human Resource teams look for easy to understand, easy to enroll and more cost effective programs.
Individual carriers know they need to adapt to this changing landscape. That’s why many are testing, and in some cases implementing, strategies for new products and alternative delivery systems. Both carriers and industry organizations are reaching out to the next generation of disability producers to fill the advisor void.
As a leading source of information and insight about the Life and Health markets, Gen Re is committed to helping carriers meet these new challenges.