Life and health insurers pay out almost $100 billion in health and financial benefits

Stephen Frank, President and CEO, Canadian Life and Health Insurance Association (CLHIA)

More Canadians than ever before are relying on life and health insurers to protect themselves from life’s uncertainties.

Last year, 29 million Canadians – more than the entire populations of Ontario, British Columbia, Alberta, the territories and Atlantic provinces combined – counted on private insurers to provide them with extended health benefits, life insurance coverage and retirement planning products. In total, we paid benefits totalling $98 billion to Canadians, up seven per cent from last year.

The latest edition of the Canadian Life & Health Insurance Facts provides a snapshot of the life, health and annuity businesses in Canada. The report is published annually by the Canadian Life and Health Insurance Association. Some of the interesting highlights of 2019 edition includes:

• Domestic employment in the industry is up to over 156,000 and insurers hold $780 billion in long-term investments in Canada that contribute to Canada’s economic growth
• Insurers worked hard to meet the promise of client satisfaction, with only one in 100,000 claims resulting in a complaint
• The industry maintains capital reserves 39 per cent higher than regulators’ targets, making insurers among the most stable and secure financial institutions in Canada
• There are 160 insurers, including some very large, internationally active companies, as well as non-profits, co-operatives and fraternals, all of which operate head offices across the country
• And that by offering financial protection services to 60 million people in 20 counties, insurers are exporting the strength of our industry to the world

Health insurance benefits is the second largest class of coverage insurers offer, behind annuities. In 2018, insurers paid $27 billion in extended health coverage (EHC) for prescription drugs and health services like dental care, vision care and physiotherapy, up $1.4 billion from 2017.

The report also highlights that the role insurers’ play in covering Canadians’ health care costs is growing. The number of people with EHC coverage has grown from almost 23 million people a decade ago, to nearly 26 million people today. Driving this has been a steady rise in the number of employees with group coverage, as employers work to attract and retain talent and keep their employees healthy.

The report also draws out the fact that insurers are continuing to manage a dramatic growth trend in prescription drugs, particularly speciality drugs, which account for a large and growing share of insurers’ costs. Of the $27 billion in health claims paid-out in 2018, nearly $12 billion went to pay for prescription drugs. A large and growing component of this is the costs of specialty drugs. As Express Scripts Canada’s recent Prescription Drug Trend Report shows, the cost of specialty drugs has surged from 15 per cent of total drug spending in 2008 to 33 per cent in 2018.

The ever-increasing cost of specialty drugs is one reason why our industry is playing a collaborative role with governments at all levels around pharmacare reform. We agree there are too many Canadians who struggle to access the medications they need and that these costs are too high. This is why smart reform is so important – reform that builds from what is working well, but addresses drug prices and ensures that everyone has coverage.

Related: The right path forward for national pharmacare

Our “Fact Book” also shows that insurers are working hard to keep minimize premium increases. For example, over the last decade, total premiums for all health insurance products, including EHC, disability insurance and long-term care, as a percentage of total premium revenues for all lines of business has remained stable at around 40 per cent. Health insurance continues to be purchased primarily on group basis by employers, unions, and professional associations. Only 10 per cent of health insurance premiums is paid on an individual basis.

Together, insurers are working hard to meet the health and financial needs of Canadians by offering reliable products and services that help make life more affordable and provide important health products and services that are not covered by public health systems.

Canadian Life & Health Insurance Facts is published annually by CLHIA drawing on industry and publically available data. It is available at clhia.ca.