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3、age 1 INDUSTRY PROFILE Life Insurance in Canada Reference Code: 0070-0976 Publication Date: August 2011 EXECUTIVE SUMMARY Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 2 EXECUTIVE SUMMARY Market value The Canadian life in
4、surance market grew by 3.1% in 2010 to reach a value of $51.5 billion. Market value forecast In 2015, the Canadian life insurance market is forecast to have a value of $68.7 billion, an increase of 33.4% since 2010. Market segmentation I Pension/annuity is the largest segment of the life insurance m
5、arket in Canada, accounting for 70.4% of the markets total value. Market segmentation II Canada accounts for 8.5% of the Americas life insurance market value. Market share Sun Life Assurance Company of Canada is the leading player in the Canadian life insurance market, generating a 17.1% share of th
6、e markets value. Market rivalry Despite global economic turbulences, the Canadian life insurance market has shown steady market growth in past years; despite the increase in growth the degree of rivalry is measured as strong. Buyer power is moderate overall as is the ability of new players in enteri
7、ng the market place with supplier power remaining strong. Despite savings and investments being among the alternative methods of insuring ones self, substitutes possess a weak force in the market, due to the expertise and capital required for investment. CONTENTS Canada - Life Insurance 0070 - 0976
8、- 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 3 TABLE OF CONTENTS EXECUTIVE SUMMARY 2 MARKET OVERVIEW 7 Market definition 7 Research highlights 8 Market analysis 9 MARKET VALUE 10 MARKET SEGMENTATION I 11 MARKET SEGMENTATION II 12 MARKET SHARE 13 FIVE FORCE
9、S ANALYSIS 14 Summary 14 Buyer power 16 Supplier power 17 New entrants 18 Substitutes 20 Rivalry 21 LEADING COMPANIES 22 Great-West Lifeco 22 Manulife Financial Corporation 26 MARKET FORECASTS 30 Market value forecast 30 MACROECONOMIC INDICATORS 31 APPENDIX 33 Methodology 33 Industry associations 34
10、 Related Datamonitor research 34 Disclaimer 35 ABOUT DATAMONITOR 36 CONTENTS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 4 Premium Reports 36 Summary Reports 36 Datamonitor consulting 36 CONTENTS Canada - Life Insurance
11、 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 5 LIST OF TABLES Table 1: Canada life insurance market value: $ billion, 200610 10 Table 2: Canada life insurance market segmentation I:% share, by value, 2010 11 Table 3: Canada life insurance mark
12、et segmentation II: % share, by value, 2010 12 Table 4: Canada life insurance market share: % share, by value, 2010 13 Table 5: Great-West Lifeco: key facts 22 Table 6: Great-West Lifeco: key financials ($) 23 Table 7: Great-West Lifeco: key financials (C$) 24 Table 8: Great-West Lifeco: key financi
13、al ratios 24 Table 9: Manulife Financial Corporation: key facts 26 Table 10: Manulife Financial Corporation: key financials ($) 27 Table 11: Manulife Financial Corporation: key financials (C$) 28 Table 12: Manulife Financial Corporation: key financial ratios 28 Table 13: Canada life insurance market
14、 value forecast: $ billion, 201015 30 Table 14: Canada size of population (million), 200610 31 Table 15: Canada GDP (constant 2000 prices, $ billion), 200610 31 Table 16: Canada GDP (current prices, $ billion), 200610 31 Table 17: Canada inflation, 200610 32 Table 18: Canada consumer price index (ab
15、solute), 200610 32 Table 19: Canada exchange rate, 200610 32 CONTENTS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 6 LIST OF FIGURES Figure 1: Canada life insurance market value: $ billion, 200610 10 Figure 2: Canada lif
16、e insurance market segmentation I:% share, by value, 2010 11 Figure 3: Canada life insurance market segmentation II: % share, by value, 2010 12 Figure 4: Canada life insurance market share: % share, by value, 2010 13 Figure 5: Forces driving competition in the life insurance market in Canada, 2010 1
17、4 Figure 6: Drivers of buyer power in the life insurance market in Canada, 2010 16 Figure 7: Drivers of supplier power in the life insurance market in Canada, 2010 17 Figure 8: Factors influencing the likelihood of new entrants in the life insurance market in Canada, 2010 18 Figure 9: Factors influe
18、ncing the threat of substitutes in the life insurance market in Canada, 2010 20 Figure 10: Drivers of degree of rivalry in the life insurance market in Canada, 2010 21 Figure 11: Great-West Lifeco: revenues despite the increase in growth the degree of rivalry is measured as strong. Buyer power is mo
19、derate overall as is the ability of new players in entering the market place with supplier power remaining strong. Despite savings and investments being among the alternative methods of insuring ones self, substitutes possess a weak force in the market, due to the expertise and capital required for
20、investment. The demand for life insurance is determined by various factors: i.e. gross domestic product, average length of life expectancy, inflation and interest rates. Additionally, in developing countries, factors such as market structure, the presence of foreign investors and financial developme
21、nt of economies should be taken into consideration. There are also various reasons for getting a life insurance policy. Such a policy guarantees a replacement income for ones dependents in case of death or major illness. Some types of life insurance create a cash value that, if not paid out as a dea
22、th benefit, can be borrowed or withdrawn on the owners request, which makes it an important element of sound financial planning and investment. FIVE FORCES ANALYSIS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 15 Since m
23、ost people consider paying their life insurance policy premiums a high priority, buying a cash- value type policy can create a kind of “forced” savings plan. Various companies can also use group life insurance to cover their employees or corporate-owned life insurance (COLI). COLI was originally pur
24、chased by companies to hedge against the financial cost of losing key employees to unexpected death, the risk of recruiting and training replacements of necessary or highly-trained personnel, or to fund corporate obligations to redeem stock upon the death of an owner. A point to consider in the curr
25、ent economic climate is the drop in real income during 2009. Followed by slow growth in 2010 this may limit the demand for insurance products, which are unlikely to be considered a priority by households at present. FIVE FORCES ANALYSIS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This pr
26、ofile is a licensed product and is not to be photocopied Page 16 Buyer power Figure 6: Drivers of buyer power in the life insurance market in Canada, 2010 Source: Datamonitor D A T A M O N I T O R Due to the nature of the market and importance of the product offered, there are many individual consum
27、ers, diminishing buyer power, as the impact of losing an individual customer is rather marginal. Large corporate clients have a lot more bargaining power with insurance companies as they usually pay millions of dollars a year in premiums and losing such high-margin corporate clients can negatively a
28、ffect a players revenues. This increases buyer power to some extent. Customers in this market are not particularly loyal to one specific company and are willing to shop round for the best deal. Online comparison sites allow customers to choose policies that meet their individual insurance needs, fur
29、ther boosting buyer power. However buyer power is weakened by the existence of switching costs, as for individuals, switching from one player to another will often involve surrendering a policy early (an exception is where a term policy reaches its end and the buyer chooses a different company for t
30、heir next policy). The payout on a surrendered policy may be taxable, whereas the payout on the death of the insured person is tax-free; also early surrender of an index-linked plan may mean that the policyholder misses out on some interest payments. Buyer power is assessed as moderate overall. FIVE
31、 FORCES ANALYSIS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 17 Supplier power Figure 7: Drivers of supplier power in the life insurance market in Canada, 2010 Source: Datamonitor D A T A M O N I T O R Suppliers in the
32、life insurance market include ICT manufacturers and software houses. Certain insurance companies require specialized computer systems, tailored towards their unique range of products or services. Underwriters, for instance, use computer applications known as “smart systems“ to manage risks. These ty
33、pes of systems are complex and are often linked up to an internet databases. A secure and reliable ICT infrastructure is essential and companies are often reliant on one supplier. This is normally a large and reputable company, such as IBM. Such suppliers may have their own unique and patented syste
34、ms. This creates a disincentive for insurance companies to switch suppliers as many employers are reluctant to spend the money training staff on new systems, which increases supplier power. Despite many insurance companies maintaining their own IT departments, there is little likelihood of significa
35、nt backward integration, which further strengthens suppliers (although it is equally unlikely that suppliers would attempt to integrate forwards into insurance services). Life insurers also require the services of reinsurance companies, in order to reduce their own exposure to insured risks. Overall
36、 supplier power is strong in the life insurance market. FIVE FORCES ANALYSIS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 18 New entrants Figure 8: Factors influencing the likelihood of new entrants in the life insurance
37、 market in Canada, 2010 Source: Datamonitor D A T A M O N I T O R Barriers to entry into life insurance market are often described as low; however new players entering the market must decide whether to initially enter on a large or small scale, with each holding varying benefits and risks. The oppor
38、tunity to enter the market on a small scale boosts the threat of new entrants. Entry into the market for well developed insurance companies is capital intensive and players need to ensure some level of integration if market entry is to be a success. Leading incumbents have strong reputations and con
39、sumer recognition and they usually offer a vast range of services with which new entrants must compete. Most of the threat from new entrants lies within the insurance industry itself. Repeat business is difficult to attain in this market, since consumers will typically replace their life insurance p
40、olicies at infrequent intervals only. This means that finding new custom is vital, and access to distribution networks is a key criterion for successful market entry. Some companies have carved out niche areas in which they underwrite insurance. These insurance companies are fearful of being squeeze
41、d out by the bigger players. Another threat for many insurance companies is other financial services companies entering the market. Indeed some banks and investment banks have started to offer insurance products, while certain financial commitments, such as mortgages, have life policies attached to
42、them. In some countries however, regulations are in place to prevent banks and other financial firms from entering the market. Government regulation is generally stringent, limiting market entries by imposing capital adequacy and other requirements on players. FIVE FORCES ANALYSIS Canada - Life Insu
43、rance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 19 Supervision of Canadas life and health insurance industry is shared between the federal and provincial governments. Legislation was passed in 1999 allowing the life and health insurance comp
44、anies to convert from mutual companies (owned by policyholders) to stock companies (owned by shareholders). The likelihood of new entrants is assessed as moderate. FIVE FORCES ANALYSIS Canada - Life Insurance 0070 - 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photoco
45、pied Page 20 Substitutes Figure 9: Factors influencing the threat of substitutes in the life insurance market in Canada, 2010 Source: Datamonitor D A T A M O N I T O R There are a number of alternatives to taking out an insurance policy, i.e. in form of other financial products, such as savings and
46、investments. Savings and investments include deposits, mutual funds and direct investments in equities and bonds. Wills are also a way of accounting for risk and protecting family members after death. These options could be a cheaper alternative to life insurance, but savings do not guarantee protec
47、tion in the same way as life insurance, which reduces the benefit of this option. Consumers can adopt risk management strategies, such as Self-Insurance, whereby an eligible risk is retained, but a calculated amount of money is set aside. An organization could choose to operate its own captive struc
48、ture and form its own insurance company subsidiary. Although these are viable substitutes they require a certain amount of expertise and capital. The threat of substitutes with respect to the non-life insurance market is therefore assessed as weak. FIVE FORCES ANALYSIS Canada - Life Insurance 0070 -
49、 0976 - 2010 Datamonitor. This profile is a licensed product and is not to be photocopied Page 21 Rivalry Figure 10: Drivers of degree of rivalry in the life insurance market in Canada, 2010 Source: Datamonitor D A T A M O N I T O R The life insurance market in Canada is fragmented, with small and large companies working alongside each other. Players within the life insurance market offer similar services but some are diversified, and pursue a