New Disability Insurance Market Data: Key Sales Opportunities

disability-insurance-marketIndividual disability insurance sales posted new annualized premium (NAP) numbers not seen since the 1990s. The 2015 total NAP exceeded $392 million and the year-over-year growth rate of 5.8 percent is more than twice as much as a typical annual growth rate of 2 to 3 percent. The number of new policies issued is keeping pace with the premium and growth rates, confirming that growth is coming from new policies written, rather than increased coverage amounts or rising rates. Almost every year since 2002, Milliman, an international actuarial consulting firm, surveys disability carriers. Data found in this year’s 2016 Annual Survey of the U.S. Individual Disability Income Insurance Market, shows disability income insurance to be a strong product with an attractive future. What opportunities lay behind the numbers? Following the steep employment decline of the Great Recession, disability insurance sales were concentrated in physician and surgeon occupations. The trend appears to be leveling off with sales hovering around 30 percent. At 25 percent, executives, as an occupation, continue to regain the ground lost between 2008 and 2013. In fact, when the survey began in 2002, executive occupations were number one, representing 28 percent of sales. Attorneys and CPAs remain underrepresented occupations. Takeaway: The takeaway for producers is the opportunity in the underserved attorney and accountant categories, and the growing interest in executive coverage, most likely with employer-sponsored buy-up programs. Employer-sponsored multi-life (ESML) is also on the rise. Among the 15 surveyed DI carriers, more than 41 percent of 2015 NAP are ESML compared to only 30 percent in 2002 through 2006. The combined ESML new premium growth rate from 2012 through 2015 is more than 16 percent with employee-paid business growing at almost 18 percent over the same period. Takeaway: The clear and growing level of activity in the employer-sponsored multi-life market represents a hot opportunity. As the economy continues to improve, employees are more likely to enroll in voluntary disability insurance programs especially for coverages that protect bonuses and occupations that may not be covered under a basic group employer-paid DI plan. Disability underwriting has long been cited as the reason producers are not interested in the product. Carriers have made significant inroads to simplifying the application process, the underwriting requirements, and underwriting decisions. Most carriers now offer an electronic app, reducing the multi-page application. Improved underwriting practices like the use of prescription databases, motor vehicle records, and tele-apps, contribute to simplified underwriting with faster decisions. Takeaway: Disability products are easier to quote and to apply for. Many of the improvements seen in life insurance underwriting and applications are finding their way to disability insurance. A positive underwriting decision is also more likely. In 2015, 83 percent of applications were approved, or counter-offered. Less than 17 percent of applications were denied. Protecting the client’s greatest asset The Protecting assets is the business we are in. Life insurance protects loved ones, family, business partners, and lenders from the lost income due to a pre-mature death. Disability insurance provides financial protection of lost income due to disability from injury or illness. During the working years, the possibility of incurring an income-interrupting disability is much more likely, at 25 percent, than death. The reports by the Cohen Law personal injury firm on the financial impact this causes can be severe, especially when more than 42 percent of Americans are liquid asset poor. Access to cash or other liquid assets sufficient to cover three months of expenses can be difficult; most people are not prepared for the possibility. That applies to all income levels, even those with high net incomes. Help your client protect the most valuable of assets: The ability to earn an income. The Brokers Central approach is a holistic one. Our team of experts will assist you in protecting all your client’s assets, using disability insurance to protect the ability to earn a paycheck, with life insurance to provide financial protection in the event of a premature death, and long-term care insurance to protect the retirement assets from the expense of long-term care. Call us at 845-495-5000 to learn more about how we may serve you and your clients. Paul is the Vice President of Sales at Brokers Central, with more than 20 years of financial services experience under his belt, most recently as a Regional Marketing Specialist for Prudential Insurance.View Paul’s bioContact Paul.