Low interest rates pose challenge to life insurers
According to reports from the Federal Reserve, interest rates will remain low, hovering around zero until at least 2031. Changes in interest rates affect insurance company assets because of the considerable investments in interest-sensitive areas, such as bonds.
Life insurers are expected to face difficulties in the following areas; enterprise and financial risk management, financial reporting and forecasting, product pricing, balance sheet and capital and strategy and sales.
According to the report, they need to consider how big an impact the low-interest rates will have and what strategies can be applied to combat them. So heavy has the blow been already, that several life insurers took steps in Spring 2020, to halt the sale of long-term policies. Meanwhile, other companies have taken a proactive role in changing their game-plan by reducing pay-out guarantees on new businesses.
The report points to three more areas the industry can target to improve sustainability throughout a period of low interest. These are;
- Exiting certain lines of business that are hard-hit, and look at new crisis-created opportunities
- Putting new business seeking on hold in some market segments
- Reducing commissions and examine profitability
Though the exact impact of interest rate changes on insurance companies is difficult to forecast, historical analysis reveals that they are more profitable in an environment of rising interest rates. As such, the industry will have to find new strategies to ensure growth and survival over the next decade.
Tribe and APOLLO announce national insurance campaign
Tribe Property Technologies in partnership with APOLLO insurance has announced a national insurance campaign to digitise insurance for condominium owners, renters, landlords, and developers across Canada. The aim of the campaign is to make insurance access easier and faster for owners while improving the coverage and protection of condominiums and rental buildings.
According to several surveys, nearly half of 4.5mn rented houses in Canada do not have tenant insurance protection, meaning those individuals and their families are put at risk of fire and water damage.
What does the national insurance campaign include?
According to Tribe, the company is working with APOLLO to ensure that this type of insurance is easier to access. It aims to achieve this by introducing a direct connection to APOLLO's insurance technology from both Tribe's strata and condo management platform and rental software to allow for increased education and awareness for owners into insurance risks and options.
It also includes the future ability for notifications for mid-term cancellations, and plans to offer protection from potential strata/condo corporation deductibles, Tribe said.
"We are excited to partner with APOLLO to bring accessibility, visibility, and education around insurance options to our communities and reflect the current lifestyle expectations of condo owners and residents while protecting the value of their biggest assets", said Joseph Nakhla, Chief Executive Officer of Tribe.
Nakhla added: “This agreement with APOLLO is just the first step under our Digital Services & Partnerships revenue pillar. We will continue to layer on services to drive revenue for Tribe, and bring convenience and savings for our users, with the goal of being able to offer a one-stop-shop to our development partners and the over 100,000 residents in Tribe-managed communities”.
APOLLO uses technology as a channel between insurance brokers, carriers, and their mutual clients, offering insurance options from multiple companies on one integrated online platform.
"We like that Tribe is taking a fresh approach to condo living and building smart homes through tech-enabled service, and an integration with their Community Platform supports our goals of making insurance more accessible and supporting the needs of communities”, said Jeff McCann, Chief Executive Officer of Apollo.