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Life insurers saw increased earnings in 2013

Life Insurance and Annuities
by Tim DeMars
Addressing the life insurance coverage gap
Addressing the life insurance coverage gap

The life insurance industry has been taking steps forward for some time now and as more people come back to buying this type of coverage after not being covered by it for a period of a few years. That trend certainly continued last year, as operating earnings increased significantly on an annual basis.

ALIRT Insurance Research recently found that life policy issuers saw operating income increase by more than 10 percent in 2013 in comparison with the previous year, according to a report from Life Health Pro. In all, statutory earnings for these companies climbed to a height of $44.4 billion over the course of last year, up from $40.4 billion a year earlier, and just $15.5 billion in 2011. Part of the reason for this is that equity markets were doing much better over the past few years, allowing for the release of variable annuities and dropping expenses as a result of the downturn in the number of policies seen in the previous few years.

At the same time, the pure capital ratio enjoyed by these life companies only ticked up marginally, to 12.1 percent from an even 12 percent a year earlier, but this nonetheless drove earnings even as capital losses, dividends paid to shareholders and capital returned to other companies increased, the report said. The total surplus for these firms also improved somewhat, rising 3.1 percent to $376.1 billion last year from $364.8 billion in 2012. Moreover, that's a 9.5 percent improvement from 2011's $343.5 billion.

What does this mean?
In general, consumers only really turned away from life insurance during and even following the financial downturn because it was an expense that they might have felt necessary to their lives overall, but nonetheless were not able to afford. But with the economy improving and more people once again working regular hours, they may now be able to afford this vital coverage and want to take it on once again.

Of course, many might have also had their expectations for coverage changed by the new economic realities they faced in the last few years, and as such it might behoove life insurers to do more to reach out to people who might have been disenfranchised, for any reason, during that time. The more they can do to meet every potential customer's specific needs, the more likely they may be to buy that type of coverage again.



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