(Kingston, ON – January 29, 2024) – Advisors and their customers are more focused on cost containment in their group benefits plans this year compared to 2023. This was a key finding of an industry trends panel discussion hosted by The Empire Life Insurance Company (Empire Life) and featuring the Canadian Life and Health Insurance Association (CLHIA) and The Conference Board of Canada.
Stephen Frank, President and CEO, Canadian Life and Health Insurance Association; Mark Sylvia, President and CEO, Empire Life; Susan Black President and CEO, The Conference Board of Canada
Focus on cost containment increases
In a live poll of more than 600 advisors, 56% ranked balancing costs and enhancements to their benefits plans as the top priority—an increase of 10% over last year. 36% ranked cost containment as the top priority—a 17% increase compared to January 2023.
Today’s cost-conscious climate makes it especially important for advisors and customers to clarify priorities, said Mark Sylvia, President and CEO of Empire Life. Sylvia underscored that advisors play a key role in making sure business owners understand all the available options: “Business leaders need somebody who can help them understand the value of additional benefits versus their costs and trade-offs. There’s no one better placed than the advisor to help them to figure out the best combination of price and value for their particular circumstances.”
Stephen Frank, President and CEO of the CLHIA, commented that the role of the advisor will increase in importance as the health-care system changes and innovation increases. “In the next 10 years, there's going to be a huge number of new opportunities, including advances in virtual care, genetic testing, pharmacogenetics, and more. Business owners need to decide whether and how to incorporate these opportunities, and the role of the advisor is just going to get more important going forward.”
Susan Black, President and CEO of The Conference Board of Canada, reported that the annual Conference Board C-suite survey placed attracting and retaining talent as the top priority for 2023. For this reason, Black believes cost containment will always need to be balanced with the need to offer benefits to attract the right talent. “The economy has its challenges—and it’s a very competitive world when it comes to talent. Leaders need to remain mindful of the need to bring in great talent, and retain it.”
Frank noted that drug costs are straining benefits plans, and that more than 30,000 customers in fully insured plans have annual drug plan costs over $10,000. Calling the current situation a “crisis,” Sylvia stressed that there are limits to what customers can bear, and that the solution to high cost drugs will take concerted action: “It’s going to take affirmative action on it to keep costs down, and it's going to be a complicated battle that's going to involve a lot of different layers of government and employers, insurers and drug companies to make sure we deal with this.”
Mental health and general employee well-being remain a priority
Frank noted that employers have stepped up efforts to provide mental health supports to their employees, paying out $650 million in 2022—more than double the amount at the start of COVID-19. Black confirmed this, citing Conference Board research started in 2022. “A third of the organizations we talked to last year, as part of this study, increased coverage for psychological services and another 16% plan to do so in the coming year. We definitely see an increased emphasis on making sure employees can come to work feeling better, feeling healthy, feeling connected.” According to Black, 72% of businesses surveyed had a specific strategy to support mental health and 30% were adopting the National Standard for Psychological Health and Safety.
Uncertainty about the impact of government programs on group insurance
Another theme for 2024 is uncertainty around government programs— including pharmacare legislation, the next phase of the dental care program, drug reform via the Patented Medicine Prices Review Board and new Canadian Drug Agency, as well as a rare disease strategy—and what they will mean for group insurance plans.
Life and health insurance industry fast facts (Canadian Life and Health Insurance Facts 2023 Edition)
- Provided coverage for over 29 million Canadians, or 74%
- Paid out $114 billion in claims: $2 billion a week, an increase of 10% over 2019
- Paid $650 million for mental health supports, up 10% from 2021 and nearly double the amount paid in 2019.
This is the third year Empire Life has run the industry outlook advisor webinar.
###
About Empire Life
Established in 1923 and a subsidiary of E-L Financial Corporation Limited, Empire Life provides individual and group life and health insurance, investment and retirement products. The company’s mission is to make it simple, fast and easy for Canadians to get the products and services they need to build wealth, generate income and achieve financial security. As of September 30, 2023, Empire Life had total assets under management of $17.2 billion. Follow us on social media @EmpireLife or visit empire.ca for more information.
About the CLHIA
The CLHIA is a voluntary association whose member companies account for 99 per cent of Canada's life and health insurance business. These insurers provide a wide range of financial security products including life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to over 29 million Canadians. They hold over $1 trillion in assets in Canada and employ more than 166,000 Canadians.
About the Conference Board of Canada
The Conference Board is the foremost, independent, not-for-profit applied research organization in Canada. It builds leadership capacity for a better Canada by creating and sharing insights on economic trends, public policy and organizational performance.
Contact: Shelly Potter, shelly.potter@empire.ca