OLDWICK, N.J.--(BUSINESS WIRE)--A new A.M. Best Co. Statistical Study shows the face amount of life insurance policies issued during 2010 declined 3.1% to $2.87 trillion compared with a year earlier, according to the latest issue of BestWeek U.S./Canada. Term life on a business issued basis marked a steeper descent, falling 11.7% to $1.13 trillion. The five A.M. Best Statistical Studies featured in BestWeek looked at total life issued; ordinary life issued; term life issued; group life issued and credit life issued.
Group life business issued declined at a less significant rate yet ended up at essentially the same plateau, dropping 1.5% to just above $1.13 trillion, according to another study.
Andrew Edelsberg, a vice president in the life/health division at A.M. Best Co., said term sales were driven down last year by higher rates and the sluggish economy's impact on consumer spending. “Term pricing generally increased as carriers were, in many cases, forced to self-fund Regulation XXX reserves as alternative solutions became relatively expensive,” Edelsberg said. “We saw an increase in whole life and universal life sales due to consumer's demand for cash value policies, as well as universal life with no-lapse guarantees.” Edelsberg also said that large mutuals with career distribution had a favorable experience with whole life sales trends.
In BestWeek Europe, the purchase by Arthur J. Gallagher (UK) Ltd. of part of the liability and affinity business of independent Lloyd’s broker Lonmar Global Risks represented a further step into the international arena by a U.S. group already known for a strong acquisitive appetite at home.
Also in BestWeek U.S./Canada, the $5.25 billion expansion of the Panama Canal, one of the world’s largest infrastructure projects, is having a significant impact on Panama and its insurance market, experts said.
“The estimated cost of the project in its entirety is equivalent to about 25% of Panama’s annual economic output,” said Andrea Keenan, assistant vice president for economic and industry research for A.M. Best. “Even though that cost is spread out over years, it contributes to the direct written premiums directly. Insurance, particularly property/casualty insurance, tends to follow economic growth.”
Panama saw economic growth of 7.5% in 2010 and is expecting to see 7.2% growth in 2011. However, Panama isn’t expected to sustain that level once the expansion project is completed in 2014, Keenan said.
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