The COVID-19 Pandemic in Canada

The Coronavirus (COVID-19) pandemic continues to spread around the world, with over 1.3 million infected and more than 70,000 deaths by early April. Canada has been affected by over 17,000 cases and over 300 deaths, as of April 6, 2020. Everyone across the nation is affected in some way by the crisis.

With numbers rising sharply, particularly in America, and without a vaccine in place, insurance companies are doing their best to deal with the uncertainty of this threat; and underwriters are forced to adapt while burdened with insufficient information about how COVID-19 will play out in the future.

We talked with several life insurance professionals to better understand the changes being put in place, and how insurers plan to keep protecting their clients.

Change #1: Changes in life insurance application questions and the underwriting process

The COVID-19 crisis arrived very quickly, though the first signs emerged a few months ago in the form of an epidemic in China. This fast evolution and spread did not leave insurance companies any time to prepare. Many are still using old applications and lists of questions, while quickly adding a few additional ones. New questions may include asking about travel to high-risk countries, like U.S., UK, Italy, Spain, China, and Korea. Questions also may include asking about COVID-19 exposure, or if the applicant has been exhibiting COVID-19 symptoms.

This will lead to life insurance companies reworking their life insurance applications and questionnaires. These new ones might pose a higher difficulty for people who are seeking life insurance. That it is why it makes sense financially to apply now while the old life insurance applications are still being used. Getting life insurance now is important because the process and applications will change in the very near future.

Change #2: Pricing changes

We predict that the way various insurance companies evaluate and underwrite life insurance applications will change from company to company. Each insurer will be forced to rework their own risk models while relying on limited sets of COVID-19 data. Some insurers might take a more conservative approach and exclude people with respiratory conditions, or simply outprice certain groups of customers, making the price unattractive enough to discourage them from applying.

In general, we expect that life insurance prices will go up to account for the higher risk life insurance companies will be taking on, but also to compensate for the unexpected economic impacts insurance companies will feel (e.g. declining business, the need to enable employees to work remotely, etc.).

Change #3: Increased coverage amounts for no medical life insurance

It is important to understand that most life insurance products historically included a physical medical exam conducted by a nurse or medical worker that would come to your house. With COVID-19, this is no longer an option.

We predict that the sale of no medical life insurance policies, and the amount of coverage available with them, will increase. No medical life insurance is available without a medical exam, making it an attractive option right now.

It is important to remember, though, that no medical life insurance comes at a cost, and you will pay more for the same amount of coverage than you would to get a standard or traditional life insurance policy.

Change #4: Shifting phone and online meetings

The way customers interact with insurance professionals has changed very quickly. In the past, a good share of life insurance business happened in person. That is not the case during the pandemic. Both customers and insurers now use alternative channels. We predict that the share of insurance being sold over the phone will go dramatically up. The companies that do not transition into this new reality will be left behind.

Historically, car insurance and home insurance led the digital way of buying and managing insurance online. Now, COVID-19 will also force life insurers to follow the same route.

You can use our platform to access a variety of products through our remote insurance specialists and get term life insurance, whole life insurance, universal life insurance, disability insurance, critical illness insurance, and much more.

Change #5: Getting your policy in a digital form

Historically, the majority of all issued policies were delivered to the customers in a paper form, either sent by mail or given by a broker or agent. In this new world without contact, the mail avenue still exists, but we predict that more and more companies will decide to send policies digitally.

Imagine buying life insurance online and getting your policy sent to you just a couple minutes later – that is already happening in travel insurance, home insurance, and car insurance.

The benefits of this approach are obvious: immediate policy delivery, the ability to get a policy with updated data (e.g. if you changed your address or adjusted coverage), and the ease to forward a copy of a policy if needed.

Some insurers will struggle with the technology side of this solution, but sooner or later, we expect the majority of insurance companies to shift to this paradigm.

Change #6: Change in the insurance landscape, especially on the broker side

The Canadian life insurance landscape is composed of three mega companies: Manulife, Sun Life, and Canada Life (formerly Great-West Life). There are also plenty of smaller insurance companies, banks who have their own insurance channels, and numerous other organizations and professionals who are involved in selling insurance, such as brokers, financial advisors and planners, managing general agencies, etc. Many of these companies used to rely on brick-and-mortar ways of selling insurance, and they have already noticed a significant impact on their businesses. Some companies that did not have enough financial padding might also find themselves struggling during the pandemic.

We predict that there will be both winners (a few of them) and losers (more of them) in the new reality. We will see a good part of the brokerage market consolidating and disappearing because many stand-alone brokers will not be able to operate on their own. At the same time, companies and brokerages that have been investing into online channels will see growth as more and more people will be forced to use digital avenues (online and mobile).

Change #7: Increased innovation

“It is from their foes, not their friends, that cities learn the lesson of building high walls” – they say. That applies to the new reality as well. Under the circumstances, the insurance industry, as a whole, will be forced to evolve and innovate.

For decades, insurance has been considered a slow-moving industry, but times are changing rapidly. We predict that there will be growth in insurance innovation as related to a number of things: the underwriting approach, online distribution, and online policy administration. There will be innovation in biometrics to include remote underwriting and the increased security associated with doing insurance online.

Thinking about getting life insurance? What should you do next?

Are you living without the protection of life insurance? The time to act is now. The life insurance landscape is changing rapidly, and the window to get a policy at the pre COVID-19 rate may be closing. Our brokers are standing by to help so you can quickly get the policy you need.

We have been set up to offer remote service for more than 25 years, making us a leader in remote life insurance long before the pandemic. We also work with more than 20 insurance companies, ensuring we can get the policy best suited for your needs. Ongoing training means we remain updated on each company’s policies and their application processes. Our brokers save you money and time because of the strength and depth of our network.

We look forward to serving you. Call or click today.