The increase in life insurance premiums marks another record in 2023, LIMRA finds – Insurance News

For the third year in a row, new annual whole life insurance premium sales set a new sales record, rising 1% to $15.7 billion, according to LIMRA’s U.S. Life Insurance Sales Survey.

Life insurers have the COVID-19 pandemic to thank for driving underwriting changes that boosted sales, said senior vice president John Carroll, head of Life & Annuities, LIMRA and LOMA.

“The pandemic prompted carriers to accelerate their digitization efforts, transforming the life insurance purchase process and improving the customer experience. This investment, coupled with a strong economy and high consumer interest, certainly contributed to the growth of sales in 2023,” he said. “LIMRA expects life insurance sales to normalize over the next few years, growing by up to 5% in 2024 and 2025.”

In the fourth quarter, total life insurance premiums increased 4% to $4.2 billion, compared to a year ago. The number of policies sold increased by 2%, mainly driven by indexed universal life (IUL) and long-term policy sales.

LIMRA has divided the sales figures according to product categories:

Whole life

New whole life premium fell 1% in the fourth quarter to $1.6 billion. Most whole life carriers reported premium declines. The number of whole life policies sold fell 3% in the fourth quarter, compared to the fourth quarter of 2022.

In 2023, new premium was $6.1 billion, up 1% from last year, and the number of policies increased by 2%. For the year, sales of whole life products represent the largest market share (measured by premium) at 39%. LIMRA is forecasting the whole life premium to increase by up to 5% in 2024 and up to 6% in 2025.

Longevity

New term life insurance premium grew 6% in the fourth quarter to $745 million. The number of policies increased by 4% for the quarter. This is the fourth consecutive quarter of growth in both premium and sales.

In 2023, term premium reached nearly $3 billion, 5% higher than 2022 results. The number of long-term policies also increased in 2023, up 3% year over year. Term premium held 19% of the total US life insurance market share in 2023.

“Inflation and unemployment pose a risk to long-term sales, especially those in the middle market,” said Karen Terry, assistant vice president and head of LIMRA Insurance Product Research. “With inflation softening and unemployment remaining below 4%, we expect long-term product sales to normalize and growth to be between 1-3% in 2024 and 2025.”

Universal Indexed Life

The fourth quarter 2023 indexed universal life premium was $1.05 billion, 3% higher than last year’s results. The number of policies increased by 12% year on year. Most IUL carriers reported gains in both premium and policy counts in the fourth quarter.

In 2023, new IUL premium fell 4% year over year to $3.7 billion. The number of policies sold increased by 19%, compared to the previous year. For the year, IUL premium represented 24% of total premium sold in the US. LIMRA predicts that the IUL premium will increase to 4% in 2024.

Universal variable life

Universal variable life was the biggest driver of premium growth in the fourth quarter. New VUL premium grew 11% in the fourth quarter to $536 million, driven by a small group of carriers. The number of policies increased by 9% for the quarter, compared to the fourth quarter of 2022.

Premium VUL reached $1.9 billion in 2023, an 8% increase from last year’s results. For the year, policy sales fell 1%, compared to 2022 results. Premium VUL held 12% of the total US life insurance market in 2023. Strong growth in the VUL market is expected to continue over the next two years with LIMRA predicts double-digit growth in 2024 and 2025.

Universal fixed life

For the second consecutive quarter, the new universal fixed premium increased. In the fourth quarter, UL’s new fixed premium was $266 million, up 9% year over year. The number of policies sold fell 3% from Q4 2022 results.

Despite strong growth in the fourth quarter, UL’s new fixed premium was $977 million, 3% below 2022 levels. The number of policies also fell in 2023, falling 6%. Fixed premium UL held 6% market share in 2023.

“While we might expect rising interest rates to drive universal fixed life insurance sales, we haven’t seen that response this year After more than a decade of ultra-low interest rates, many operators are focusing on lines other products, such as and universal variable life,” Terry noted. “As a result, LIMRA predicts the fixed UL premium will drop more than 10% in 2024 and up to 8% in 2025.”

The LIMRA survey represents 85% of the market. For more details on sales results, visit the LIMRA fact repository.

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