52411ACA Life Insurance - Annuities in Canada Industry Report

INDUSTRY REPORT 52411ACA
Life Insurance & Annuities in Canada
Under policy: Volatility in financial markets poses a threat to revenue and profit
Samuel Kanda | March 2023
IBISWorld.com 1-800-330-3772 info@IBISWorld.com

Life Insurance & Annuities in Canada March 2023
Contents
Recent Developments......................................................... 3 COMPETITIVE LANDSCAPE.......................... 22
ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 22
Key Success Factors........................................................22
Industry Definition................................................................5 Cost Structure Benchmarks............................................. 23
Major Players...................................................................... 5 Basis of Competition......................................................... 25
Main Activities..................................................................... 5 Barriers to Entry............................................................... 26
Supply Chain....................................................................... 6 Industry Globalization........................................................ 26
INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 27

Executive Summary............................................................ 9 Major Players.................................................................... 27
Other Companies.............................................................. 29
INDUSTRY PERFORMANCE..........................10
OPERATING CONDITIONS............................ 30
Key External Drivers.........................................................10
Current Performance........................................................ 11 Capital Intensity................................................................. 30
Technology & Systems......................................................31
INDUSTRY OUTLOOK.................................... 13 Revenue Volatility..............................................................32
Regulation & Policy........................................................... 32
Outlook.............................................................................. 13 Industry Assistance........................................................... 33
Industry Life Cycle............................................................. 15
KEY STATISTICS............................................ 34
PRODUCTS & MARKETS............................... 16
Industry Data..................................................................... 34
Supply Chain..................................................................... 16 Annual Change..................................................................34
Products & Services.......................................................... 16 Key Ratios......................................................................... 34
Demand Determinants...................................................... 17
Major Markets....................................................................17 ADDITIONAL RESOURCES............................35
GEOGRAPHIC BREAKDOWN........................ 19 Additional Resources........................................................ 35

Industry Jargon..................................................................35
Key Insights....................................................................... 19 Glossary............................................................................ 35
Business Locations........................................................... 21
CALL PREPARATION QUESTIONS............... 37
Role Specific Questions.................................................... 37
External Impacts Questions.............................................. 38
Internal Issues Questions.................................................. 38
2 IBISWorld.com
Recent Rising interest rates cause dramatic changes in consumer confidence

Developments
As the federal government attempts to steady economic growth following the COVID-19 (coronavirus) pandemic,
raising interest rates is one of the many ways the Bank of Canada can stabilize rapid growth. Although raising
interest rates is intended to help the economy in the long run, the short-term affect may have some negative
implications on Canada’s financial sector. Since interest rates play a vital role in dictating consumer confidence and
general investment activity, a large spike in the central bank’s policy rate (CBPR) can make consumers and
businesses more hesitant to invest in the domestic economy. As a result, financial service industries will have to
adapt to evolving consumer sentiment and strategize new investment tactics.
This section last updated March 31, 2023
3 IBISWorld.com
About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help
businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching
and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We
offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that
are truly global in nature.
4 IBISWorld.com
About This Industry

Industry Definition The Life Insurance and Annuities industry in Canada accepts liability under annuities and life, disability income and
accidental death and dismemberment insurance policies. Enterprises include fraternal organizations, privately held
insurers, publicly traded insurers and mutual insurance companies.
Major Players Canada Life Assurance Company
Sun Life Financial
Manulife Financial
Main Activities The primary activities of this industry are:
Underwriting group life policies
Underwriting individual life policies
Underwriting group annuities
Underwriting individual annuities
Investing insurance premiums
The major products and services in this industry are:
Group annuities
Individual annuities
Group life insurance
Individual life insurance
5 IBISWorld.com
Supply Chain
SIMILAR INDUSTRIES
Commercial Banking in Canada Credit Unions in Canada Loan Administration, Cheque Insurance Brokers & Agencies in
Cashing & Other Services in Canada
Canada
RELATED INTERNATIONAL INDUSTRIES
Global Life & Health Insurance Life Insurance & Annuities in the AD&D Insurance in the US Life Insurance in the UK
Carriers US
Life Insurance in Australia Life Insurance in New Zealand Life Insurance Providers in China Insurance in Ireland
6 IBISWorld.com
Industry at a Glance
Key Statistics Key External Drivers % = 2018–23 Annual Growth
$114.3bn 0.7% 2.6pp

Revenue Per capita disposable income Overnight rate
Annual Growth Annual Growth Annual Growth

3.6% 0.3%
Number of adults aged 65 and Median age of population
2018–2023 2023–2028 2018–2028 older
2.5% 1.6%
Industry Structure
$1.0bn POSITIVE IMPACT

Profit
Revenue Volatility Capital Intensity
Annual Growth Annual Growth Low Low
2018–2023 2018–2023 Barriers to Entry Industry Globalization
-31.0% High / Steady Low / Increasing
MIXED IMPACT
Life Cycle Concentration
Mature Medium
0.9%
Profit Margin Technology Change
Medium
Annual Growth Annual Growth
NEGATIVE IMPACT
2018–2023 2018–2023
Industry Assistance Regulation & Policy
-5.6pp Low / Steady Heavy / Increasing
Competition
High / Steady
101
Businesses
Annual Growth Annual Growth Annual Growth Key Trends

2018–2023 2023–2028 2018–2028
 Unfavourable market conditions have decreased investment
1.7% 0.8% income for industry operators
 Demand for industry products is affected by the continued

aging of the domestic population
107k  Annuity considerations continue to be the largest source of

Employment income for the industry
Annual Growth Annual Growth Annual Growth  Innovations in the area of risk assessment, capital
management and analytics will likely reduce costs of
2018–2023 2023–2028 2018–2028
operations
2.6% 1.5%
 Demand for industry products often increases as a
population grows and ages
 The industry is expected to endure threats that could

$5.9bn dampen revenue growth
Wages
 The industry has great potential to grow as the economy
Annual Growth Annual Growth Annual Growth recovers from the coronavirus pandemic
2018–2023 2023–2028 2018–2028
2.1% 1.5%
7 IBISWorld.com
Products & Services Segmentation
Major Players SWOT
STRENGTHS
High & Steady Barriers to Entry

Low Imports
Low Customer Class Concentration
Low Product/Service Concentration
High Revenue per Employee
Low Capital Requirements
WEAKNESSES
Low & Steady Level of Assistance

High Competition
Low Profit vs. Sector Average
OPPORTUNITIES
High Revenue Growth (2018-2023)

High Revenue Growth (2023-2028)
High Performance Drivers
Number of adults aged 65 and older
THREATS
Low Revenue Growth (2005-2023)

Low Outlier Growth
Overnight rate
8 IBISWorld.com
Executive Summary Under policy: Volatility in financial markets poses a threat to revenue and
profit
Insurers in Canada have experienced steady growth amid the COVID-19 pandemic. Industry operators accept
liability for annuities and life insurance policies, disability income and accidental death and dismemberment
insurance policies, while also investing the premiums received by clients into a variety of financial securities. The
industry has mainly suffered from the negative economic effects caused by the coronavirus pandemic, such as
volatile interest rates and an increase in the morbidity rate. Despite this, revenue still grew at a CAGR of 2.5% to
$114.3 billion, including a 1.9% rise in 2023 alone, when profit reached 0.9%. However, growth was limited due to
the decrease in investment income and increase in claim payouts from the pandemic, which forced industry
operators to pay consumers more while earning less interest on their invested capital. This has placed a significant
strain on industry profit, which has decreased throughout 2023.
More people are increasingly concerned with planning their retirement and preparing for worst case scenarios.
Whether they are life-altering ailments or the desire to retire earlier than initially planned, life insurance and annuities
are increasingly demanded to address these risks. These offerings, however, tend to be a discretionary purchase.
Therefore, demand for life insurance and annuities is also affected by how much money the population has at its
disposal. With the population continuing to age and expand, the industry has great potential to grow as the economy
recovers from the coronavirus pandemic.
Throughout 2028, industry revenue is expected to grow at a CAGR of 1.6% to $123.8 billion. The industry's
expansion is expected to be driven by improved macroeconomic conditions, increased per capita disposable income
and rising interest rates. Operators are expected to increasingly invest in new cost-cutting technologies that would
automate traditional operations and improve the efficiency of analytics, risk management and customer relations.
Additionally, operators have been targeting younger consumers via social media platforms to educate them on the
importance of insurance. This new way of targeting more clients has made the younger segment of the market buy
more policies than they have in the past. But volatility in financial markets poses a threat to revenue and profitability
amid concerns of global economic growth.
9 IBISWorld.com
Industry Performance
Key External Per capita disposable income

Drivers
There is a strong link between rising household wealth, as measured by per capita disposable income and demand
for life insurance. As consumers' asset base and incomes increase, protecting these assets with insurance products
becomes more feasible and important. Rising incomes also increase savings rates and the use of medium- and
long-term savings products such as annuities. Per capita disposable income is expected to increase in 2023.
Median age of population
The life insurance and annuities industry is known to appeal toward a more affluent and older market, emphasizing
the use of life insurance and annuities as retirement, estate planning and tax-preferred products. As a result,
demand increases as the average age of the population rises. The median age of the population is expected to
increase in 2023.
Number of adults aged 65 and older
Industry products tend to be disproportionately used by the portion of the population that is retired, which
overwhelmingly tends to be over the age of 65. This is because much of the benefits they provide are linked to
events that occur more as one ages, such as disability or retirement. The number of adults aged 65 and older is
expected to increase in 2023, representing a potential opportunity for the industry.
Overnight rate
The overnight rate dictates the direction of interest rates across the economy. Since annuity products and contracts
set established interest rates for benefits, the fluctuation of interest rates in the economy tends to affect the sales of
annuities in the industry. The overnight rate is expected to increase in 2023, however, its volatility poses a potential
threat to the industry.
10 IBISWorld.com
Current Life insurance and annuities' revenue has grown at a CAGR of 2.5% to
Performance $114.3 billion throughout 2023, including a 1.9% rise in 2023 alone, when
profit will reach 0.9%.
Insurers have increasingly consolidated

 Consolidation has increased in recent years. Larger insurers benefit from mergers and acquisitions due to
economies of scale and improved efficiency, mainly since the cost of investment management, underwriting
and back-office support can be spread across a greater number of clients.
 Larger companies can raise capital more easily than their smaller counterparts because they possess well-
diversified investment portfolios with strong risk ratings
COVID-19 lingering effects

 The record low interest rate environment to help spur economic growth after the pandemic has dampened
investment income for industry operators. This drop slightly limited the growth trajectory of this market
throughout 2023.
 In COVID-19's wake is inflation, economic uncertainty, and a K-shaped recovery. As more of the population
experience economic hardships, they aren't considering investing in abstract things such as life insurance.
The increase in individual and group life insurance and annuities are likely from the people who were
fortunate enough to come out better at the end of the pandemic than when it started.
Business environment
 Industry demand is also influenced by a variety of factors external to the economy, such as marriage trends
and mortality rates. These factors largely increase the share of revenue generated by annuity
considerations and traditional life insurance premiums over time.
 Increasing longevity has added pressure on individuals to protect assets and build wealth for longer
retirements. Government regulations and tax incentives also supported this transition because individuals
now use life insurance products and annuities for savings-related purposes and estate planning goals, as
opposed to survivor benefits.
11 IBISWorld.com
Historical Performance Data

Per Capita
Domestic Disposable
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Income
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) ($)
2014 97,197 3,460 1,911 99.0 94,587 N/A N/A 4,505 N/A 29,466
2015 98,132 8,260 2,120 97.0 91,187 N/A N/A 4,539 N/A 30,804
2016 101,270 11,627 1,106 96.0 94,980 N/A N/A 4,917 N/A 30,332
2017 98,876 8,535 1,167 91.0 94,866 N/A N/A 5,127 N/A 30,675
2018 100,977 12,198 1,238 93.0 94,228 N/A N/A 5,342 N/A 30,664
2019 104,411 3,555 1,204 100.0 97,075 N/A N/A 5,419 N/A 31,104
2020 106,416 6,628 1,193 101 99,327 N/A N/A 5,459 N/A 33,140
2021 111,477 8,109 1,177 101 105,160 N/A N/A 5,796 N/A 31,709
2022 112,118 6,377 1,192 103 106,121 N/A N/A 5,845 N/A 31,168
2023 114,263 7,303 1,160 101 107,245 N/A N/A 5,917 N/A 31,679
12 IBISWorld.com
Industry Outlook
Outlook Canadian life insurance and annuities' revenue is expected to grow at a
CAGR of 1.6% to $123.8 billion through the end of 2028, with profit
reaching 0.9% in 2028.
Demographic trends and macroeconomics

 Younger generations have been contributing more to life insurance and annuity demand recently. A big part
is due to companies' ability to advertise and educate younger generations through social media and other
platforms.
 Millennials will become a more significant market in the industry in the coming years. They are the largest
age demographic and will require more industry services as they get older.
 The battle for inflation will continue over the next couple of years. It is unlikely the Bank of Canada will
cease raising interest rates in the coming months. The continuingly higher rates will affect the equities and
bond markets, affecting the industry's investment income.
Increased regulation will occur as financial markets become more volatile

 The financial industries, including the Life Insurance and Annuities industry, still live in the shadow of the
Great Recession. The regulations enacted in its aftermath continue in place all these years later.
 The government will increase regulating the industry as the share of the retail investment market keeps
growing. The government's response to the retail investor frenzy over meme stocks and cryptocurrency in
2021 is an indicator of what is to come in the next couple of years.
 This industry will ultimately be affected by what happens to the overall financial markets. A significant
portion of its revenue comes from investment income.
Trends in technology and structure

 The industry is expected to continue experiencing a shift toward increasing technological development and
implementation that will likely disrupt traditional operations and procedures.
 Innovations in the area of risk assessment, capital management and analytics are anticipated to increase in
efficiency and reduce costs of operations. As a result, major players are expected to invest heavily in
artificial intelligence to improve insights into customers and assess the risk of individuals and groups.
 The technological trend is also anticipated to raise wages as a share of revenue due to the increased
demand in more skilled labour.
13 IBISWorld.com
Performance Outlook Data

Domestic Per Capita
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Disposable
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Income ($)
2023 114,263 7,303 1,160 101 107,245 N/A N/A 5,917 N/A 31,679
2024 116,196 7,417 1,173 102 108,954 N/A N/A 6,012 N/A 32,222
2025 118,172 7,544 1,182 103 110,668 N/A N/A 6,108 N/A 32,799
2026 120,097 7,668 1,185 103 112,326 N/A N/A 6,201 N/A 33,350
2027 121,951 7,777 1,191 104 113,952 N/A N/A 6,292 N/A 33,889
2028 123,838 7,894 1,198 105 115,604 N/A N/A 6,385 N/A 34,461
2029 125,677 8,004 1,207 105 117,123 N/A N/A 6,471 N/A 35,046
14 IBISWorld.com
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS
Product segments are defined and do not experience major changes

Merger and acquisition activity has remained relatively steady
There is wholehearted market acceptance of annuities and life insurance policies
Contribution to GDP
The industry's contribution to GDP is falling. Despite the industry being mature, the aging population and decline in
investment income has caused the industry's profit margin to decline throughout 2023.
Market Saturation
Market Saturation in the industry is high. Operators offer similar products and seek differentiation by price and new
technological services.
Innovation
Innovation is limited. Insurance products are mostly the same. The biggest innovations are the advances in new
technology and the overall digitization of the industry.
Consolidation
Consolidation is slowly increasing. The stringent capital and regulatory requirements push smaller firms to
consolidate to maximize profit and lower costs.
Technology & Systems
This is an old industry; new technological systems are limited. It does rely heavily on information technology (IT) to
maintain customer records and process financial transactions. Computer systems are used for risk-management
purposes, sales and other operational functions.
15 IBISWorld.com
Products & Markets

Supply Chain Key Buying Industries Key Selling Industries
1st Tier 1st Tier
Consumers in Canada Commercial Leasing in Canada
Public Administration in Canada Wired Telecommunications Carriers in Canada
Mining In Canada Internet Service Providers in Canada
Manufacturing In Canada 2nd Tier
Construction In Canada Computer Manufacturing in Canada
Professional, Scientific and Technical Services In Telecommunications Networking Equipment

Canada Manufacturing in Canada
Communications Equipment Manufacturing in Canada
Products & Services
Group annuities
 Group annuities policies are purchased by a third party, such as an employer, for its employees.
 Annuities are sold as either immediate annuities or deferred annuities and the two products differ in
payment structures.
 Immediate annuities begin making policy payments directly after being purchased, while deferred annuities
delay payments until a later date, such as retirement.
 There are fixed versus variable annuities: fixed annuities provide stable returns for owners because
payments are pre-determined at a fixed rate of return. Variable annuities enable owners to increase the
potential payout of their annuity investment but are also considered risky because payouts are determined
by the performance of some underlying asset, such as equities or bonds. As a result, a variable annuity
places investment risk on the purchaser instead of the insurer; however, a minimum payment is typically
guaranteed.
Individual annuities
 An individual annuity has all the same options as a group annuity except for the fact that it is purchased by a
consumer directly.
 Annuities protect their owners against the possibility of outliving their financial resources during retirement.
Immediate annuities begin making policy payments directly after being purchased, while deferred annuities
delay payments until a later date, such as retirement. During the deferment period, the annuity owner often
makes periodic premium payments to help grow the annuity to its maximum level before payout.
Individual life insurance

 Individual life insurance is purchased directly by consumers.
 Life insurance protects dependents from financial hardship in the event of the policyholder's death, but has
increasingly incorporated other benefits and characteristics.
 Life insurance is either term life insurance or permanent life insurance. Term life insurance only provides
coverage for a specified period, usually on an annual basis, while permanent life insurance provides
16 IBISWorld.com
insurance protection for as long as the insured individual lives.
 Term life policies are only used for death benefits, while permanent life insurance can be used for various
other purposes.
 Permanent life policies build cash values that can help meet financial emergencies, pay for specific goals or
provide income for retirement.
Group life insurance

 Group life insurance premiums are purchased by a third party, such as an employer for its employees.
 In a group policy, a person's coverage will be cancelled if a person leaves their job. Also, in a group policy,
the contract can be cancelled by the life insurance company itself.
Demand Overall demand for insurer products is often determined by general

Determinants economic conditions, Canadian demographics, regulatory policies and tax
rates.
The two economic factors that considerably influence industry demand are fluctuations related to the total domestic
workforce and per capita disposable income. Industry premiums are generated through individual policies marketed
and sold directly to consumers and group policies sold to third-party entities, such as employers. The ability for
individuals to maintain insurance premiums or annuity payments is directly related to disposable income, which is
often influenced by employment levels. In addition, group insurance and annuity policies are anticipated to account
for 51.2% of total industry premiums in 2023, since employers are the third-largest parties these policies are sold to.
Therefore, workforce levels are a key factor in determining industry demand.
In addition to general economic factors, regulatory policies related to taxes and demographics, such as the median
age of the population, are highly correlated with demand for industry products. Older populations tend to focus more
on savings-related industry products, such as annuities, due to the increased importance these individuals place on
retirement planning. The need for estate planning is also important for older generations, but these factors are often
related to regulatory changes.
Additionally, the decline in both mortality and marriage rates has decreased the incentive for individuals to purchase
life insurance policies associated with survivor benefits. As a result, the industry has shifted its focus away from
traditional death benefit products and toward the retirement and estate planning arena. The rise in retirement related
products is increasing the popularity of variable annuities, separate accounts and other deposit-type products.
Following this shift, life insurers' investment performance relative to other substitute savings products is emerging as
a key demand determinant. Importantly, while the aging domestic population benefits from demand and premium
levels of insurance policies for retirement, it also puts a strain on industry profitability for annuity products that
guarantees payments until the policyholder's death.
Major Markets
Individuals aged 18 to 34
 Demand from younger individuals has increased throughout 2023.
 Operators are more equipped to target younger users via social media and educating them on the
importance of life insurance. By being able to target a younger audience, operators are able to educate
consumers at an earlier stage, thus boosting their application activity.
17 IBISWorld.com
Individuals aged 35 to 54
 This age group is the second-largest market since this is the time when the majority of people are settling
down with families and need to plan for retirement and their estates.
 Demand from this market has slightly decreased as some consumers are opting to rely on their own
personal investments and saving accounts.
Individuals aged 55 and older

 Individuals aged 55 and older account for the smallest, but one of the most important markets for insurers in
Canada.
 This is a crucial market for operators since these are the people that will soon be receiving payments from
annuities and life insurance policies once they retire and pass away.
 This market accounts for the smallest percentage of revenue since these people tend to already have all
their policies set up.
Exports in this industry are Low and Steady
Imports in this industry are Low and Steady
Insurers in Canada do not directly participate in the sale of goods, as exports and imports are not applicable.
However, the industry continues to expand operations globally. For more information on the industry's international
trends, please refer to the Industry Globalization section of this report.
18 IBISWorld.com
Geographic Breakdown
Key Insights
Ontario Ontario Prince Edward Saskatchewan Northwest Ontario
429 Est. $32.9bn Island -2.7% Territories 43,952
Most Establishments Highest Revenue 8.3% Slowest Growth $450.7k Most Employees
Fastest Growth Highest Average
Wage
19 IBISWorld.com
Province Data for Life Insurance & Annuities in Canada (2023)
Establishments Revenue Employment Wages

Province Establishments Growth Rate Revenue Growth Rate Employment Growth Rate Wages Growth Rate
(2017-2022) (2017-2022) (2017-2022) (2017-2022)
Alberta 124 -2.81% $9.6bn -1.24% 4,402 -3.03% $498.1m 4.72%
British 166 -2.04% $12.5bn 5.77% 9,010 -0.32% $667.5m 5.58%

Columbia
Manitoba 43 -2.58% $3.4bn -0.70% 3,931 -6.36% $177.6m 3.04%
New 26 -2.82% $1.9bn -1.99% 1,653 -5.08% $103.4m -2.67%

Brunswick
Newfoundland 20 3.30% $1.5bn 4.69% 320 -3.63% $82.0m 3.92%

and Labrador
Northwest 2 0.00% $163.1m 1.39% 19 -1.98% $8.6m 5.26%

Territories
Nova Scotia 35 -1.63% $2.7bn -0.22% 1,191 -1.43% $145.0m -0.98%
Ontario 429 0.38% $32.9bn 1.88% 43,952 -2.13% $1.8bn 1.11%
Prince Edward 11 4.10% $906.2m 8.28% 99 -1.91% $31.2m 7.40%

Island
Quebec 243 1.64% $18.4bn 2.91% 24,479 3.32% $987.6m 2.15%
Saskatchewan 39 -4.46% $3.1bn -2.72% 1,333 -1.46% $159.5m 2.12%
20 IBISWorld.com
Business Locations Ontario has the largest share of businesses

 Ontario is the most populous Canadian province. It contains the highest share of insurers of any province.
 Five of the 10 largest cities in Canada are located in the province. This includes Toronto, which is home to
more than 2.8 million people and is more than 50.0% larger than any other city.
Quebec contains the second-largest share of establishments
 Quebec accounts for almost one-quarter of all life insurance locations.
 Quebec has more than 8.0 million people and is a popular business destination. In addition to big cities such
as Montreal, this has helped drive demand for insurance firms.
Population trends dictate where businesses locate
 The dispersal of establishments also follows population trends. The four largest provinces by population
share are also the most popular for insurance firms.
 In general, the more businesses and consumers there are in a province, the easier it is for insurers to
succeed.
21 IBISWorld.com
Competitive Landscape
Market Share
Concentration
Concentration in this industry is Medium
Companies must achieve economies of scale
 Operators that can expand their operations can achieve economies of scale faster and in turn create lower
costs and expand operations more efficiently.
 Firms that can't achieve economies of scale will need to merge with larger operators, which increases
market share concentration.
Concentration is also dependent on companies' structures
 Life insurers issue stock and are owned by their stockholders. These entities tend to be less risk-averse
than mutual companies because their ownership is generally more concerned with profit, dividends and
stock appreciation than long-term financial stability.
 Mutual companies are generally more risk averse than stock-owned operators because owners are more
concerned with the company's ability to meet future obligations than appreciating stock prices.
 Fraternal organizations provide both social and insurance benefits directly to their members. These
organizations are often established with a particular set of goals in mind, including the promotion of religion
or service.
 These various types of structures limit further concentration. It is easier for there to be a concentration within
a type of operator structure, but not so much across the entire industry.
Key Success IBISWorld identifies over 200 Key Success Factors for a business. The most important for this industry are:
Factors
Financial strength:
Life insurers are required to maintain a minimum continuing capital and surplus requirements ratio to ensure
compliance with federal regulations. A strong capital position is also important for expanding operations.
Effective asset management:

Industry operators must effectively manage their asset portfolios to ensure adequate returns for long-term insurance
and annuities products, while also minimizing risk.
Effective cost controls:

Cost-efficient distribution channels and administrative systems are crucial to compete on the basis of price in the
industry.
Ability to establish remote work arrangements for employees:

Insurers heavily rely on employees for sales and other imperative tasks for successful operations. The ability to
establish efficient remote work is crucial for operators during the COVID-19 pandemic to ensure their employees
stay safe.
22 IBISWorld.com
Cost Structure
Benchmarks
Profit
Declining investment income
 Profit accounts for 0.9% of revenue in 2023.
 Despite improving economic conditions after the pandemic,

profit decreased throughout 2023. This can be mainly attributed
to a decline in investment income from record-low interest
rates.
 An aging population has also been attributed to the decline in

the industry's profit margin. As more people begin retiring,
insurers will be forced to pay out on existing policies and this
will drive profit downward.
Wages
Skilled employees are crucial for success
 Wages account for 5.2% of revenue in 2023.
 Wages account for a small portion of overall industry revenue

but are significant as operators compete heavily for skilled
workers.
23 IBISWorld.com
Purchases
Technological advancements drive purchase costs
 Purchases account for 45.7% of revenue in 2023.
 As technology continuously improves and new software gets

released, purchase costs for insurers seeking to adopt new
systems will grow.
Marketing
Marketing accounts for an estimated 5.7% of revenue in 2023.
Depreciation
Depreciation accounts for an estimated 0.3% of revenue in 2023.
Rent
Rent accounts for an estimated 5.1% of revenue in 2023.
24 IBISWorld.com
Utilities
Utilities account for an estimated 0.3% of revenue in 2023.
Other Costs
Other costs account for an estimated 36.8% of revenue in 2023.
Basis of Competition in this industry is High and the trend is Steady

Competition
Given the homogeneity in product lines, price represents one of the most
important means of competition for insurers in Canada.
However, competition in the industry also takes many other forms, including customer service, technology and
financial strength.
There is a significant amount of contact with potential and existing clients throughout the purchase, renewal and
claims process. Consequently, service quality forms a potent basis of competition in the industry. In general, an
operator's quality of service is largely dependent on the quality of its workforce. A life insurer's employees must
possess the market knowledge and experience to appropriately advise potential and current customers on their
future insurance needs. In turn, insurers must invest in training and development programs for internal sales teams
and rely on skilled third-party agents. Moreover, industry operators must employ talented actuaries and underwriters,
as there is a limited supply of individuals with these skills, life insurers must compete for their employment on the
basis of compensation packages.
The technological capability of life insurers continues to grow in importance as a basis of competition. Throughout
25 IBISWorld.com
the life of a policy, an insurer must provide customers with timely responses and easily accessible account
information. To do this, insurers must continually upgrade and improve technological systems. Proper system
upgrades lower operational costs by increasing employee productivity. At the same time, these systems help
improve consumer sentiment because users may benefit from various technology changes, particularly services that
enable clients to access information remotely via the internet. Yet, the increased use of digital technologies does
come with additional risks, with many industry operators, including Manulife Financial Corporation, implementing
enterprise-wide information security and privacy programs as a means to manage the risk of privacy breaches.
Industry operators also compete on the basis of financial strength. Given the significant time period between policy
initiations and claims for some life insurance products, potential clients often opt to source policies from large,
financially sound operators. These major players also tend to have extensive distribution networks and strong brand
name recognition, providing them with crucial competitive advantages in the industry. However, the existence of
Assuris reduces the advantages of the most financially sound companies to a certain degree, as it protects domestic
policyholders in the event that their life insurance company should become insolvent.
Barriers to Barriers to Entry in this industry are High and the trend is Steady
Entry
Legal Barriers to Entry Checklist
Operators must comply with capital and regulation Competition High

requirements, which produce additional costs.
Compliance costs are more burdensome for smaller firms,
Concentration Medium
as they need to devote a greater percentage of their
resources to stay in good standing with regulatory bodies.
Life Cycle Stage Mature
Start-up Costs
Technology Change Medium
New entrants require upfront capital to run operations.
After accumulating sufficient capital, new entrants must Regulation & Policy Heavy
build a distribution network that uses both in-house and
independent agents and brokers to sell their products.
Industry Assistance Low
Differentiation
This industry is very competitive in pricing. New operators

need to focus on achieving economies of scale to offer
comparable prices with existing brokerage firms.
Competitive pricing by industry incumbents can make it
difficult for new entrants to win customers.
Labour Intensity
Newly formed entities need to invest in skilled employees

since they determine the quality of asset management
services and broker-dealer functions.
Industry Globalization in this industry is Low and the trend is Increasing

Globalization
Insurers in Canada, similar to the financial services sector as a whole, continue to focus on international markets for
expansion. For example, the industry's major players have extensive operations across the United States, Europe
and Asia. However, The Canada Life Assurance Company, Manulife Financial Corporation and Sun Life Financial
Inc. are each headquartered in Canada. As these companies dominate the market, the industry maintains a low but
increasing level of globalization.
This level of globalization is expected to continue to increase. Industry operators benefit greatly from expanding to
international markets. By spreading out the risk a company needs to underwrite, operators would be able to insure
more people and expand operations.
26 IBISWorld.com
Major Companies
Major Players Canada Life Assurance Company
Market Share: 24.2%
Description
The Great-West Lifeco Inc. (Great-West Lifeco) is a global financial service holding company headquartered in
Winnipeg, MB. The company employs more than 31,000 employees worldwide and has more than 38.0 million
customer relationships, 10.9 million of which are in Canada. As of January 1, 2020, the Great-West Life Assurance
Company, London Life Insurance Company and the Canada Life Assurance Company (Canada Life), along with its
holding companies, became one company in Canada called the Canada Life Assurance Company. Great-West
Lifeco still maintains operations in Canada, the United States, Europe and Asia.
Growth from acquisitions
 In 2017, the company completed the acquisition of Financial Horizons Group Inc., a leading Canadian
provider that supports insurance adviser practices and is expected to help expand its client base.
 In September 2021, the company completed the acquisition of ClaimSecure Inc., which is a healthcare
management firm that provides health and dental claim management services to private and public
businesses in Canada.
Digitization supports growth
 Canada life has modernized its technology platforms to improve the advisor and customer experience. This
modernization has been focused on expanding its SimpleProtect app features and coverage.
 In preparation for supporting an additional 1.5 million Canadians covered by the Public Service Health Care
Plan, the company is improving its digital capabilities to improve efficiency and customer service.
27 IBISWorld.com
Canada Life Assurance Company (industry-relevant operations) - financial performance*

Revenue Growth Operating Profit Growth
Year ($m) (% change) ($m) (% change)
2018 21,804.9 N/C 9,519.1 N/C
2019 23,207.4 6.4 7,198.0 -24.4
2020 25,513.9 9.9 6,352.3 -11.7
2021 27,682.7 8.5 7,253.2 14.2
2022 34,830.9 25.8 7,886.5 8.7
2023 27,645.7 -20.6 8,710.1 10.4
Source: Annual Report and IBISWorld
Note: *Estimates
Sun Life Financial Inc.
Market Share: 11.8%
Description
Headquartered in Toronto, Sun Life Financial Inc. (Sun Life) is a global provider of protection and wealth products
to both individual and corporate clients. Founded in 1865, the company offers its products in Canada, the United
States, Europe and Asia. Sun Life employs more than 52,000 individuals in 28 markets.
Digitization supports growth
 Sun life is expanding its product lines by launching more digital services, such as a mental health coaching
platform and an investment application that aims to streamline the clients' investing experience.
 The company is also making it easier for clients to get coverage by improving its predictive underwriting
models with advanced data and analytics.
Macroeconomic conditions influence the company's performance
 The company's performance is heavily affected by interest rate levels. As interest rates increase, the value
of the company's securities will rise, attributing to increased revenue. The opposite occurs when interest
rates decrease.
 The aging population and favourable per capita disposable income growth are expected to provide Sun Life
with a strong foundation for expansion. Premiums have exhibited stable growth throughout 2023 and are
expected to continue growing in the future, as individuals seek to secure their retirement savings and ensure
preparedness for unexpected circumstances.
Sun Life Financial Inc. (industry-relevant operations) - financial performance*

2018 11,585.7 N/C 1,816.1 N/C
2019 11,957.0 3.2 1,495.0 -17.7
2020 12,611.5 5.5 1,286.2 -14.0
2021 12,363.9 -2.0 2,318.4 80.3
2022 14,499.1 17.3 2,017.9 -13.0
2023 13,437.3 -7.3 1,969.7 -2.4
Note: *Estimates
28 IBISWorld.com
Manulife Financial Corporation
Market Share: 5.2%
Description
Headquartered in Toronto, Manulife Financial Corporation (Manulife) is a global financial services company with
operations in Canada, the United States and Asia. Through its international operations, Manulife employs more
than 37,000 employees and 118,000 agents under contract. Founded in 1887, the company now offers a range of
financial protection and wealth management products and services to its customers. In Canada, Manulife operates
through its global wealth and asset management segments.
Decreasing revenue
 As interest rates have endured severe volatility throughout 2023, the company has experienced massive
losses in revenue. This decrease can be mainly attributed to poor investment activities that has resulted in a
massive drop in investment income.
 Declining annuity sales have also attributed to the company's falling revenue figures. One of the largest
factors that has caused annuity sales to decrease is due to demographic changes. As more baby boomers
retire, annuity demand has decreased as there are many other retirement options.
Macroeconomic conditions influence the company's performance
 The company's performance is heavily affected by interest rate levels. As interest rates increase, the value
of the company's securities will rise, attributing to increased revenue. The opposite occurs when interest
rates decrease.
 The aging population and favourable per capita disposable income growth are expected to provide Manulife
with a strong foundation for expansion. Premiums have exhibited stable growth throughout 2023 and are
expected to continue growing in the future, as individuals seek to secure their retirement savings and ensure
preparedness for unexpected circumstances.
Manulife Financial Corporation (industry-relevant operations) - financial performance*

2018 19,553.4 N/C 1,908.2 N/C
2019 27,734.2 41.8 1,698.6 -11.0
2020 26,257.0 -5.3 1,653.9 -2.6
2021 15,726.3 -40.1 1,499.4 -9.3
2022 5,544.5 -64.7 1,928.6 28.6
2023 5,937.9 7.1 1,631.7 -15.4
Note: *Estimates
Other Companies An estimated 109 companies operate in the Life Insurance and Annuities industry in Canada in 2022. Moreover, the
top three companies are anticipated to account for 52.7% of total market share. Consequently, the industry is
moderately concentrated.
29 IBISWorld.com
Operating Conditions
Capital The level of capital intensity is Low

Intensity
Life insurers operate with a low to moderate level of capital
intensity. IBISWorld estimates that for every $1.00 spent on
wages, the industry will allocate $0.06 to capital intensity.
The industry benefits from low depreciation rates since
most capital investment involves improving or innovating
software systems and long-lasting hardware with few
assets that experience strong depreciation. Capital
intensity is expected to increase slightly throughout 2028,
as operators increasingly invest in technology such as
artificial intelligence and robotics that can replace the
value-added of labour.
Industry operators rely on technological investment for

various tasks, including claims processing, policy
administration and actuarial activities. In addition, the
industry's major players continue to invest in technological
improvements to boost its profit margin. For example,
Manulife Financial Corporation is in the process of
finalizing a mobile point of sales platform that permits the
company's advisers to perform financial planning analysis
and complete an insurance application electronically.
Additionally, since the financial crisis, the Office of the
Superintendent of Financial Institutions has put industry
operators through a series of stress tests to ensure that
they can withstand poor operating conditions.
30 IBISWorld.com
Technology & Potential Disruptive Innovation: Factors Driving Threat of Change

Systems
Level Factor Disruptive Description

Effect
Very Low Rate of Very A ranked measure for the number of patents
Innovation Unlikely assigned to an industry. A faster rate of new
patent additions to the industry increases the
likelihood of a disruptive innovation occurring.
Very High Innovation Very Likely A measure for the mix of patent classes
Concentration assigned to the industry. A greater
concentration of patents in one area increases
the likelihood of technological disruption of
incumbent operators.
Very Low Ease of Entry Very A qualitative measure of barriers to entry. Fewer
Unlikely barriers to entry increases the likelihood that
new entrants can disrupt incumbents by putting
new technologies to use.
High Rate of Entry Likely Annualized growth in the number of enterprises

in the industry, ranked against all other
industries. A greater intensity of companies
entering an industry increases the pool of
potential disruptors.
Low Market Unlikely A ranked measure of the largest core market for
Concentration the industry. Concentrated core markets
present a low-end market or new market entry
point for disruptive technologies to capture
market share.
The rate of new patent technologies entering the industry is low, which limits the potential for innovations. A low rate does
not mean that innovations cannot occur, just that the likelihood of some innovation materializing as a threat is lower.
However, the concentration of technologies is high in this industry. This suggests that industry operators have exposure to
potentially unforeseen areas of innovation.
Additionally, this industry's structure makes it difficult for new operators to enter and succeed. These barriers have the
potential to disincentivize potential disruptors. Despite these barriers, the industry is experiencing a rapid growth in the
number of companies. A difficult operating environment for new entrants combined with a large cohort of them may create a
situation where these companies may take on a disruptive trajectory in non-traditional markets.
Major market segments for industry operators are relatively diversified. The spread of market segments suggests that there
are limited entry points other than those already served my incumbent operators.
Insurers offer a vital service to consumers that wish to secure their financial
well-being and the welfare of their beneficiaries.
As a result, there is no significant technological disruption that affects life insurance policies and the growth of this segment.
However, there are more potential disruptors of demand for annuity policies since this service is more replaceable with
different financing methods. As a result, technological developments that increasingly enable Canadians to manage their
retirement money and spending as well as improve their planning act as technological disruptors that shift demand away
from annuities. Annuities are exposed to several alternatives for retirement plans such as employers' plans or funds that
manage retirement accounts. Technological advancements in investment algorithms and portfolio optimization that lead to
greater returns are disruptors that can shift demand from annuities to retirement accounts.
The level of technology change is Medium
Insurers rely heavily on information technology (IT) to maintain customer

records and to process financial transactions.
Computer systems are used for risk-management purposes, sales and other operational functions. Additionally, many life
insurers continue to expand online-based infrastructure so that clients can access their accounts and make changes and
31 IBISWorld.com
limited transactions online. However, domestic life insurers have yet to fully obtain the benefits of digital technology. For
example, while life insurers have improved expense management through outsourcing and focusing on core businesses,
most have yet to replace existing systems with digital technologies at the enterprise level. This change would enable
industry operators to more easily and efficiently use forecast modelling and consumer analytics to expedite the underwriting
process. Moreover, other areas for improvement with respect to additional technology use include efficiency gains from
cloud computing and increased social networking campaigns. Artificial intelligence to improve analytics and risk
management systems is also in the scope of many operators to improve efficiency.
However, the increased use of digital technologies does come with additional risks. As technology is used extensively in the
industry, systems disruptions can affect life insurers substantially. The Office of the Superintendent of Financial Institutions
is increasing its focus on future technology risks while working with industry operators to increase preparation for these
challenges. Moreover, many life insurers, including Manulife Financial Corporation, have implemented enterprise-wide
information security and privacy programs to manage the risk of privacy breaches.
Revenue The level of volatility is Low

Volatility
Aggregate changes in premiums and purchases of life insurance and annuities

 Various factors affect the aggregate changes in risk premiums, such as mortality rates and level of disposable
income. Lower disposable income leaves less money to make premium payments on life insurance policies.
 Demographic considerations, such as the median age of the population, have a significant effect on demand for life
insurance and annuities. The overall decline in mortality rates and marriage rates in recent years decreased the
incentive for individuals to purchase life insurance policies associated with survivor benefits. Industry operators
adapting to changing demographics influence volatility.
The fluctuations in investment activity

 The returns from investment activity affect revenue volatility. Investment income is dependent on the whims of the
markets, as net gains from equity and bond investments are a big portion of industry revenue.
 Investment income in recent years experienced more volatility than usual. The low-interest rates in response to the
COVID-19 pandemic pushed equities to skyrocket. Now, as the Bank of Canada is raising interest rates, many are
transitioning from equities to bonds.
Regulation & The level of regulation is Heavy and the trend is Increasing
Policy
Life Insurance Capital Adequacy Test
The Office of the Superintendent of Financial Institutions (OSFI) has established a capital adequacy measurement for life
insurance companies incorporated under the Insurance Companies Act and their subsidiaries. This measure is known as
the Life Insurance Capital Adequacy Test (LICAT). The LICAT has formatted the way credit risk, solvency ratios and overall
capital management must be carried out by insurance companies in the industry.
32 IBISWorld.com
Own Risk and Solvency Assessment
The OSFI recently finalized its Own Risk and Solvency Assessment (ORSA) draft released in 2012. According to Ernst and
Young, the requirements are similar to Solvency II in the European Union and ORSA requirements issued by the National
Association of Insurance Commissioners in the United States. Canadian insurers have started reporting on the ORSA
initiative in 2014, with the initiative potentially increasing the cost of regulatory compliance.
Industry The level of industry assistance is Low and the trend is Steady
Assistance
Public
COVID-19
Small companies qualified for several aid programs amid the COVID-19 pandemic, including the Canada Emergency
Business Account and the Canada Emergency Wage Subsidy. These programs provided companies with money to stay
open and continue paying workers even as business dried up and they had to start using emergency funds to stay afloat.
Insurance Companies Act
The insurance companies act is a set of federal supervisions that extend to all insurers. All federally incorporated or
registered insurance companies in Canada must follow all the regulations imposed by this act. These regulations include
compliance requirements, the cost of borrowing regulations, credit information requirements and much more.
Private
Canadian Life and Health Insurance Association
The Canadian Life and Health Insurance Association (CLHIA) was founded in 1894 and promotes a favourable regulatory
environment for insurers. With its members accounting for 99.0% of domestic life and health insurance businesses, the
CLHIA also seeks to foster sound practices in the conduct of these same members.
Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions (OSFI) regulates and supervises federally regulated life insurance
companies and their subsidiaries. The office conducts reviews of industry operators to determine their financial state.
Alternatively, the provinces regulate the licensing of insurers that choose to operate in their jurisdictions, while also
regulating the marketing of insurance products and services.
Assuris
Founded in 1990, Assuris is an independent compensation organization. Its mission is to protect Canadian policyholders if
their life insurance company fails. Every life insurance company is required to be a member of Assuris, to ensure
Canadians that their policies are protected by a variety of compensation plans.
33 IBISWorld.com
Key Statistics
Industry Data
Domestic Per Capita
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Income ($)
2014 97,197 3,460 1,911 99.0 94,587 N/A N/A 4,505 N/A 29,466
2015 98,132 8,260 2,120 97.0 91,187 N/A N/A 4,539 N/A 30,804
2016 101,270 11,627 1,106 96.0 94,980 N/A N/A 4,917 N/A 30,332
2017 98,876 8,535 1,167 91.0 94,866 N/A N/A 5,127 N/A 30,675
2018 100,977 12,198 1,238 93.0 94,228 N/A N/A 5,342 N/A 30,664
2019 104,411 3,555 1,204 100.0 97,075 N/A N/A 5,419 N/A 31,104
2020 106,416 6,628 1,193 101 99,327 N/A N/A 5,459 N/A 33,140
2021 111,477 8,109 1,177 101 105,160 N/A N/A 5,796 N/A 31,709
2022 112,118 6,377 1,192 103 106,121 N/A N/A 5,845 N/A 31,168
2023 114,263 7,303 1,160 101 107,245 N/A N/A 5,917 N/A 31,679
2024 116,196 7,417 1,173 102 108,954 N/A N/A 6,012 N/A 32,222
2025 118,172 7,544 1,182 103 110,668 N/A N/A 6,108 N/A 32,799
2026 120,097 7,668 1,185 103 112,326 N/A N/A 6,201 N/A 33,350
2027 121,951 7,777 1,191 104 113,952 N/A N/A 6,292 N/A 33,889
2028 123,838 7,894 1,198 105 115,604 N/A N/A 6,385 N/A 34,461
Annual Change
Domestic Per Capita
Year (%) (%) (%) (%) (%) (%) (%) (%) (%) Income (%)
2014 14.7 -70.2 11.7 10.0 6.47 N/A N/A 4.35 N/A 0.33
2015 0.96 139 10.9 -2.03 -3.60 N/A N/A 0.73 N/A 4.53
2016 3.19 40.8 -47.8 -1.04 4.15 N/A N/A 8.32 N/A -1.54
2017 -2.37 -26.6 5.51 -5.21 -0.13 N/A N/A 4.28 N/A 1.12
2018 2.12 42.9 6.08 2.19 -0.68 N/A N/A 4.17 N/A -0.04
2019 3.40 -70.9 -2.75 7.52 3.02 N/A N/A 1.45 N/A 1.43
2020 1.92 86.5 -0.92 1.00 2.31 N/A N/A 0.73 N/A 6.54
2021 4.75 22.4 -1.35 0.00 5.87 N/A N/A 6.16 N/A -4.32
2022 0.57 -21.4 1.27 1.98 0.91 N/A N/A 0.84 N/A -1.71
2023 1.91 14.5 -2.69 -1.95 1.05 N/A N/A 1.23 N/A 1.64
2024 1.69 1.55 1.12 0.99 1.59 N/A N/A 1.61 N/A 1.71
2025 1.70 1.71 0.76 0.98 1.57 N/A N/A 1.59 N/A 1.79
2026 1.62 1.64 0.25 0.00 1.49 N/A N/A 1.52 N/A 1.67
2027 1.54 1.41 0.50 0.97 1.44 N/A N/A 1.46 N/A 1.61
2028 1.54 1.50 0.58 0.96 1.44 N/A N/A 1.46 N/A 1.68
Key Ratios
Imports/ Exports/ Revenue per Wages/ Employees per
IVA/Revenue Demand Revenue Employee Revenue estab.
Year (%) (%) (%) ($'000) (%) (Units) Average Wage ($)
2014 3.56 N/A N/A 1,028 4.64 49.5 47,632
2015 8.42 N/A N/A 1,076 4.63 43.0 49,772
2016 11.5 N/A N/A 1,066 4.85 85.9 51,764
2017 8.63 N/A N/A 1,042 5.19 81.3 54,047
2018 12.1 N/A N/A 1,072 5.29 76.1 56,687
2019 3.40 N/A N/A 1,076 5.19 80.6 55,824
2020 6.23 N/A N/A 1,071 5.13 83.3 54,962
2021 7.27 N/A N/A 1,060 5.20 89.3 55,111
2022 5.69 N/A N/A 1,057 5.21 89.0 55,075
2023 6.39 N/A N/A 1,065 5.18 92.5 55,168
2024 6.38 N/A N/A 1,066 5.17 92.9 55,178
2025 6.38 N/A N/A 1,068 5.17 93.6 55,192
2026 6.39 N/A N/A 1,069 5.16 94.8 55,206
2027 6.38 N/A N/A 1,070 5.16 95.7 55,217
2028 6.37 N/A N/A 1,071 5.16 96.5 55,227
Figures are inflation adjusted to 2023
34 IBISWorld.com
Additional Resources
Additional Canadian Life and Health Insurance Association Inc.
Resources http://www.clhia.ca
LIMRA
http://www.limra.com
The Globe and Mail

http://www.theglobeandmail.com
Statistics Canada
http://www.statcan.gc.ca
Industry Jargon FIXED ANNUITY

A type of investment vehicle that guarantees a future stream of fixed payments. Annuities transfer investment risk
from the insured to the insurer.
PERMANENT LIFE INSURANCE

A policy that provides similar coverage as term life insurance but is meant to be held and paid for during the duration
of the insured person's life.
TERM LIFE INSURANCE

A policy that provides life insurance coverage at a fixed rate of payments over a limited period of time, usually one
year. After the period, coverage at the previous rate is not guaranteed.
VARIABLE ANNUITY
A type of annuity that provides future payments to the contract holder, usually at retirement. Payments are
dependent on the performance of annuity's underlying portfolio of securities.
VARIABLE LIFE INSURANCE

A type of life insurance in which benefit payments are determined by the performance of underlying investments
chosen by the policyholder.
WHOLE LIFE INSURANCE

A permanent life insurance policy that remains in force for the insured person's whole life as long as premium
payments remain current or on time.
Glossary BARRIERS TO ENTRY

High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labour.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labour; medium is $0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of
capital for every $1 of labour.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
Statistics Canada's implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within Canada, regardless of their country of origin. It is derived by adding
imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
35 IBISWorld.com
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Canadian companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in Canada.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED

The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%; medium is 5% to 20%; and high is more than 20%. Imports/domestic demand:
low is less than 5%; medium is 5% to 35%; and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-
employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
REGIONS
Prairies | AB, SK, MB
Atlantic | NB, NS, PE, NL
Territories | YT, NT, NU
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
36 IBISWorld.com
Call Preparation Questions

Role Specific Sales & Marketing
Questions
How has the shift toward conducting business online affected demand for your services?
Online services have been growing in the industry and have the potential to grow demand for the services since it
increases the reach a company has. It is a strong service to grow revenue. Making products available online also
allows life insurance and annuity providers to reach younger demographics.
How diversified are your product offerings compared to competitors?
Operators primarily generate revenue through premiums paid on policies.
Broadening the scope of life insurance and annuity products can enable providers to attract a customer base whose
needs are diverse.
Strategy & Operations
Are your operations spread across the country or are your establishments more concentrated in a certain
geographic location?
Operators tend to not have many physical establishments since everything can now be accessed through online
mediums. This also reduces purchase costs and may help raise the industry's profit margin.
What is your company doing to reduce costs?
Benefit payments represent the bulk of an insurance provider's costs, so managing risk associated with those
insured can minimize benefits paid out. Hiring more skilled labour is a good way to minimize benefits paid as
intelligent workers can create models to minimize risk exposure.
Technology
To what extent are your processes automated and how do you plan on investing in automation over the coming
years?
More and more, activities that once required representatives can now be done through voice-prompts on a phone or
through online forms. These forms of automation are expected to increase through online and mobile platforms.
What steps does your company take to ensure that it is safeguarding proprietary information?
Proprietary information such as in-house financial models serves to provide a competitive advantage over other
operators, so it is necessary to ensure they are well-guarded.
Companies also continue to invest in cyber security infrastructure services to protect their company against hackers.
Compliance
Is your company adequately prepared to adjust to new regulations?
The life insurance and annuity industry is so central to the economy that it is heavily regulated and new regulations
arise every year. It is important to stay up-to-date with these regulations. Such as the Life Insurance Capital
Adequacy Test (LICAT), which has formatted the way credit risk, solvency ratios and overall capital management
must be carried out by insurance companies in the industry
How have the increased capital requirements under Basel III affected operations?
Insurance providers must meet more stringent capital requirements, to ensure flexibility and preparedness in the
case of a financial crisis. Increased reserve requirements may affect a company's ability to create more insurance
policies.
Finance
To what extent are you affected by hard and soft pricing cycles?
Broader economic conditions can affect competition, premiums, coverage conditions and, ultimately, insurance
providers' bottom lines. Due to the adverse economic effects of the COVID-19 pandemic, the industry is expected to
endure a period of hard pricing market conditions.
How does your profit margin compare to those of your competitors?
Differing profit margins between competitors can signal efficient or inefficient practices. Overall, the industry's profit
IBISWORLD.COM 37
margin has decreased due to the coronavirus pandemic.
External Impacts Impact: Median age of population

Questions How does an aging population affect demand for your products and services? Do you focus on retirees or all age
groups?
The Canadian Life Insurance and Annuities industry is known to appeal toward a more affluent and older market,
emphasizing the use of life insurance and annuities as retirement, estate planning and tax-preferred products. As a
result, demand increases as the average age of the population rises.
Impact: Overnight rate

How have fluctuations in interest rates affected you in the past? Do you tend to lose business when uncertainty
increases?
Since annuity products and contracts set established interest rates for benefits, the fluctuation of interest rates in the
economy tends to affect the sales of annuities in the industry. The decrease in the overnight rate is expected to
mitigate the sales of annuities. This decrease in the overnight rate can be mainly attributed to the COVID-19
pandemic.
Impact: Number of adults aged 65 and older

How does a rise in the number of adults aged 65 and older support demand for your company? How do you plan to
take advantage of this opportunity?
Industry products tend to be disproportionately used by the portion of the population that is retired, which
overwhelmingly tends to be over the age of 65. This is because much of the benefits they provide are linked to
events that occur more as one ages, such as disability or retirement.
Internal Issues Issue: Effective asset management

Questions How do you go about assessing risk? What measures do you use to assess these risks?
Industry operators must effectively manage their asset portfolios to ensure adequate returns for long-term insurance
and annuities products, while also minimizing risk. Managing risk is especially difficult during the COVID-19
pandemic, so operators are less likely to create new policies while economic conditions are uncertain.
Issue: Effective cost controls

How much of your company's revenue is accounted for by wages? How often do make budget cuts from various
sectors in your company?
Cost-efficient distribution channels and administrative systems are crucial to compete on the basis of price in the
industry. Over 5.0% of revenue is accounted for by wages. This figure has increased as operators are consistently
seeking highly skilled labour to assess risk and create policies.
Issue: Having an extensive distribution network

How extensive is your company's collection network? Are there any target markets that are difficult to reach via
current networks?
Life insurers must have a large distribution network to provide services to clients in a range of geographic areas.
These distribution networks often include agents, brokers, online resources and physical establishments.
IBISWORLD.COM 38
IBISWorld helps you find the industry
information you need – fast.
With our trusted research covering thousands of global industries, you’ll get a quick and intelligent
overview of any industry so you can get up to speed in minutes. In every report, you’ll find
actionable insights, comprehensive data and in-depth analysis to help you make smarter, faster
business decisions. If you’re not yet a member of IBISWorld, contact us at 1-800-330-3772 or
info@ibisworld.com to learn more.
DISCLAIMER
This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use by its authorized licenses strictly in
accordance with their license agreements with IBISWorld. IBISWorld makes no representation to any other person
with regard to the completeness or accuracy of the data or information contained herein, and it accepts no
responsibility and disclaims all liability (save for liability which cannot be lawfully disclaimed) for loss or damage
whatsoever suffered or incurred by any other person resulting from the use of, or reliance upon, the data or
information contained herein. Copyright in this publication is owned by IBISWorld Inc. The publication is sold on
the basis that the purchaser agrees not to copy the material contained within it for other than the purchasers own
purposes. In the event that the purchaser uses or quotes from the material in this publication – in papers, reports,
or opinions prepared for any other person – it is agreed that it will be sourced to: IBISWorld Inc.
Copyright 2023 IBISWorld Inc.

52411ACA Life Insurance - Annuities in Canada Industry Report

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

52411ACA Life Insurance - Annuities in Canada Industry Report

Uploaded by

Copyright:

Available Formats

INDUSTRY REPORT 52411ACA

Life Insurance & Annuities in Canada

Samuel Kanda | March 2023

IBISWorld.com 1-800-330-3772 info@IBISWorld.com

INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 27

GEOGRAPHIC BREAKDOWN........................ 19 Additional Resources........................................................ 35

Recent Rising interest rates cause dramatic changes in consumer confidence

This section last updated March 31, 2023

About This Industry

Major Players Canada Life Assurance Company

Sun Life Financial

Main Activities The primary activities of this industry are:

Underwriting group life policies

Underwriting individual life policies

Underwriting group annuities

Underwriting individual annuities

Investing insurance premiums

The major products and services in this industry are:

Group life insurance

Individual life insurance

RELATED INTERNATIONAL INDUSTRIES

$114.3bn 0.7% 2.6pp

Annual Growth Annual Growth Annual Growth

$1.0bn POSITIVE IMPACT

Annual Growth Annual Growth Annual Growth Key Trends

 Demand for industry products is affected by the continued

107k  Annuity considerations continue to be the largest source of

 The industry is expected to endure threats that could

2018–2023 2023–2028 2018–2028

Products & Services Segmentation

Major Players SWOT

High & Steady Barriers to Entry

Low & Steady Level of Assistance

High Revenue Growth (2018-2023)

Low Revenue Growth (2005-2023)

Key External Per capita disposable income

Median age of population

Number of adults aged 65 and older

Insurers have increasingly consolidated

COVID-19 lingering effects

Historical Performance Data

Demographic trends and macroeconomics

Increased regulation will occur as financial markets become more volatile

Trends in technology and structure

Performance Outlook Data

Product segments are defined and do not experience major changes

Technology & Systems

Products & Markets

Consumers in Canada Commercial Leasing in Canada

Public Administration in Canada Wired Telecommunications Carriers in Canada

Mining In Canada Internet Service Providers in Canada

Manufacturing In Canada 2nd Tier

Construction In Canada Computer Manufacturing in Canada

Professional, Scientific and Technical Services In Telecommunications Networking Equipment

Communications Equipment Manufacturing in Canada

Products & Services

Individual life insurance

insurance protection for as long as the insured individual lives.

Group life insurance

Demand Overall demand for insurer products is often determined by general

Individuals aged 55 and older

Exports in this industry are Low and Steady

Imports in this industry are Low and Steady

Province Data for Life Insurance & Annuities in Canada (2023)