Studies provide snapshot of growing critical illness insurance market

Two recent research studies have provided a snapshot of the state of the critical illness (CI) insurance market and projections for its future.

CI insurance is a form of supplemental health insurance that provides coverage for expenses that a health insurance plan typically does not cover. The goal is to offer a monetary safety net in case of a medical diagnosis that could lead to expensive treatments or create other financial hardships for the policy owner.

The first study is the U.S. Critical Illness Insurance Market Survey by Gen Re, which was released last year. Of the 35 participating companies that took part in the study, 15 offer one CI insurance product, 17 offer two products and the remaining offer three products.

These carriers reported $1.7 billion in CI insurance in-force premium and $584 million in new sales for 2021. Twenty-nine carriers provided results for their Accident insurance product, reporting $454 million in new sales and $1.6 billion in-force premium for 2021.
The majority of respondents offer a Group/Worksite (G/W) product, with 15 companies offering both Attained Age and Issue Age CI.

In total, the results represent 68 products currently being marketed. While 10 companies plan to make changes to their current G/W offering, only one plans to modify its Traditional Individual product, the survey said.

Major survey findings

Key survey results include:

• In-force premium for all CI products combined increased 14% over 2020, based on companies providing data for both years.
• Group/Worksite Attained Age business accounted for 72% of the total policies/certificates that were sold in 2021.
• 43% of respondents met or exceeded their CI insurance sales goals for 2021.
• Close to two-thirds of companies expect to increase their focus on CI insurance over the next few years.
• About one-third of respondents have added, were considering adding, or planned to add a COVID-specific trigger and/or rider to their CI plan.
• For those carriers that provided Accident product data for both 2020 and 2021, in-force premium and policies grew by 8% and 12%, respectively.

Experience with sales goals

When asked how overall sales results compared to goals for 2021, 43% of respondents reported exceeding or meeting their sales targets.
For those companies that missed their goals, COVID 19 restrictions were cited as having the greatest impact on their results.

Other negative impacts were attributed to:

• Lower than anticipated prospect activity
• Pricing changes
• Filing limitations
• Ability to attract agents interested in selling CI insurance

However, increased awareness and interest in CI insurance due to the pandemic contributed to more positive results for those companies that exceeded their targets.

When comparing only those companies that provided product data for both survey years and taking into account any adjustments made to the 2020 data, the CI insurance industry as a whole continued to exhibit positive growth in 2021, despite COVID 19 impacts, the survey said.

Global market to reach $354 billion by 2031

The second report, published by Allied Market Research, said that the global critical illness insurance market was valued at $124.7 billion in 2021, and is estimated to reach $354 billion by 2031. By region, North America attained the highest growth in 2021.

According to the report, the pandemic had a positive impact on the CI insurance market because consumers became more aware of having insurance coverage for their health.

Moreover, COVID-infected patients are more prone to serious illnesses such as heart attack, cancer, and other illnesses due to weak immune systems, the report said. Therefore, the demand for CI insurance increased during the pandemic, which positively impacted global market growth.

In addition, with the rise in the incidence of serious diseases worldwide, people are more inclined towards having CI insurance coverage, along with health insurance.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].