Disability Declines Squeezing Agents

A recent study from General Re found that the total number of disability insurance policies fell by 2 percent last year – building on a 2 percent decline from the prior year. Agents selling to the individual market took it on the chin, with total individual disability insurance premium falling by six percent, compared to 2009 levels, for a total of $325 million. New individual disability policy sales also declined by about six percent, reflecting continued pressures on small business owners – the prime market for individual disability insurance. Buy-sell disability sales didn’t fare much better.

In addition, the study found a marked decline in premium per life for new sales of long term disability. In force policies are faring much better, while people purchasing new policies are opting for significantly lower premiums – and more limited benefits. The only bright spot for the moment: selling short-term disability on a voluntary basis, typically via payroll deduction. These are low-ticket premiums, however. It’s tough to build a new practice around this product, though they can help pad an agent’s income when part of a broader voluntary employee benefits package.

The General Re 2010 U.S. Individual Disability Market Survey tabulated the sales and collections experience of 17 disability insurance carriers nationwide. Interested readers can download the full report here: http://www.genre.com/sharedfile/pdf/GDMS201103-en.pdf.

Participating carriers reported a slight increase (0.7%) in total inforce premium (Non-Can, GR, and Buy-Sell) in 2010, nearing $4.5 billion. Non-Can and GR inforce premium results increased less than 1%, to $3.8 billion and $551 million, respectively. Buy-Sell inforce premium decreased 0.2% to $73.5 million.
Similar to 2009, the total number of inforce policies declined about 2%, and they declined across all three product lines – 1.5% for Non-Can, 3.6% for GR, and 3.7% for Buy-Sell.
Total IDI sales premium was 6% lower than in 2009, totaling $325 million in 2010. By product, Non-Can declined 6.3%, GR fell 3.6% and Buy-Sell declined 5.1%. Total new IDI policies also declined about 6%. By product line; Non-Can policies fell 6.4%, GR fell 3.0%, and Buy-Sell fell 14.7%