The life insurance industry has been affected by a number of factors over the past few years: the 2008-2009 financial crisis, increasing regulation, historically low interest rates, aging populations and tougher accounting rules. And while the future may be hard to predict, it’s definitely not impossible to prepare for. There is life within the life insurance industry and like Albert Einstein said, the key is to “keep moving” and take action for the uncertain future, and exploit the emerging opportunities. This special life edition of the Insurance Review spotlights articles on three compelling issues in today’s life insurance market:
Long gone are the days where life insurance was mainly about managing mortality risk, when the role of life insurers was to create predictable mortality risk by pooling sufficiently large numbers of lives.
Insurers must now deal with many types of risks, including longevity, policyholder behaviour, operations, expenses, policy guarantees, and long term investment returns.
|Low interest rates; Life insurers’ great depression|
The life and pensions sector has many reasons to be upbeat about its future. A larger and longer living global population is increasing demand for retirement products. In turn, the increasing affluence of people within the high-growth markets of South America, Asia, Africa and the Middle East (SAAAME) is creating a growing need for wealth protection.
But this is also a time of massive and potentially disruptive change. As customers become accustomed to the ease, elegance and intuition of the Apple/Amazon ‘experience’, they want the same accessibility, transparency and responsiveness in their life insurance and pensions products.
|Life insurance 2020: Competing for a future|
Intra-group reinsurance is a common transaction used by many multinational insurance groups to efficiently allocate capital among their worldwide operations. However, as the parties in an intra-group reinsurance arrangement are related and located in different jurisdictions, these transactions are subject to the transfer pricing rules under section 247 of Canada’s Income Tax Act and can be reviewed by the Canada Revenue Agency (CRA) as part of an international tax audit.
|Intra-group reinsurance - Considerations to preempt a transfer pricing dispute with the CRA|