Life and health insurers pay record claims to make drugs and other costs more affordable

Stephen Frank, President and CEO, Canadian Life and Health Insurance Association

Canada’s life and health insurers paid out more benefits to more people than ever before in 2021.

Canadians received more than $113 billion in benefits from life and health insurance products last year – up 17 per cent from 2020 and nearly $10 billion above pre-pandemic levels. This includes payments for drug and health insurance claims, as well as life insurance benefits and retirement savings.

Insurers are partners in the recovery

2021 was a year of recovery. And insurers have been proud to partner with employers and their employees helping them get back on their feet with workplace benefits that can attract and retain talent and contribute to the health of millions. The number of Canadians with workplace benefits is increasing, with hundreds of thousands more workers and their dependents having workplace health benefits than the year prior.

Among the findings in our recent report, Canadian Life & Health Insurance Facts are that last year, life and health insurers:

  • Provided coverage for over 29 million Canadians – or 76 per cent of the population
  • Paid a record $40.8 billion in total health claims, including prescription drugs and dental – up 11 per cent from 2020
  • Paid out $58 billion in annuities to retirees - up 26 per cent from the previous year
  • Employed 166,000 Canadians – up more than 5,000 from 2020
  • Provided insurance products to nearly 100 million people worldwide

Growth in mental health claims

One of the more remarkable facts is that mental health claims have grown 75 per cent since 2019.  COVID-19 has put severe strains on many over the past two years as lockdowns and precautions have isolated millions from their normal support networks. Insurers have stepped up, paying out nearly $600 million in claims for mental health counselling and therapies in 2021.

One positive effect of the pandemic has been how it has removed a lot of the remaining stigma around mental health. People talk much more openly about needing and getting help. So, we are seeing employers responding by expanding mental health supports in their group benefit plans. It’s a virtuous cycle where the employee needs help, so the employer increases the available benefits – and this in turn contributes to higher claims.  We aren’t through this pandemic yet. And we can’t yet forecast what’s coming this year or next, but its easy to imagine that mental health coverage claims will continue to grow as people see counselling as part of their overall health.

Specialty drugs continue to drive costs

Insurers continue to help patients with specialty drug costs to treat serious, chronic, and complex health conditions. The increased use of these typically high-cost drugs has been a driver of higher claims costs and 2021 was no exception.  The year-over-year spend per plan member for specialty drugs increased by 6.8 per cent, compared to less than four per cent for traditional drugs. Specialty drugs now represent 29 per cent of total drug spend.

This concerning trend is one of the reasons the CLHIA and our members have been supportive of federal initiatives aimed at better controlling drug costs. For instance, in July, we welcomed the implementation of reforms to Patented Medicine Prices Review Board regulations. In addition, insurers are supportive of the government’s plans for a Canada Drug Agency that will lower costs for public and private plans by negotiating better prices from suppliers.

Reliable coverage that’s there when you need it

Throughout this recovery, Canada’s life and health insurers have demonstrated their financial strength and resilience. Insurers’ capital reserves have remained in excess of government requirements, so Canadians can have confidence that when the unexpected occurs, their insurance protection will be there for them.

About the CLHIA

The CLHIA is a not-for-profit, membership-based organization that represents 99% of Canada's life and health insurance companies. CLHIA's member companies, through a wide range of products and services, help Canadians to protect themselves and their families against the financial risks surrounding premature death, illness and retirement.