Despite pandemic, life premiums took a dip in 2020

The COVID-19 pandemic did not seem to prod consumers to buy more life insurance last year, as the industry recorded $186.16 billion in total life premiums written in the U.S. in 2020, a 0.8% decrease from the previous year, an S&P Global Market Intelligence analysis showed.

Individual life premiums dropped 0.7% year over year to $146.99 billion, while group life premiums fell 1.4% to $39.17 billion.

Northwestern Mutual Life Insurance Co. held onto its position as the top life insurer in the U.S., logging $15.72 billion of total life premiums written in 2020, representing a year-over-year total premium increase of 2.3%. The company also posted the strongest growth in group life premiums among the largest underwriters at 27.8%.

MetLife Inc. climbed over New York Life Insurance Co. to the second spot with $14.20 billion of total life premiums written in 2020, up 0.8% compared to 2019. New York Life slumped to third as its total life premiums written declined 5.4% year over year to $14.15 billion.

Prudential Financial Inc. remained as the fourth-largest writer of life insurance policies in the U.S. It recorded $12.80 billion in total life premiums written in 2020, up 2.9% from the prior year.

Among the largest underwriters of life insurance in the U.S., Lincoln National Corp. recorded the largest decline in total premiums during the period. The company landed at the No. 6 spot with $8.40 billion in total life premiums written, a 13.2% year-over-year decrease.

A J.D. Power study published in October 2020 found that consumers did not seem motivated to purchase life insurance even as COVID-19-related deaths climbed.

Robert Lajdziak, senior consultant of insurance intelligence at J.D. Power, said customer satisfaction starts to decline after life policies are purchased and continues to decline throughout the relationships due to lack of contact.

“The life insurance industry has a significant perception problem because, in the throes of a pandemic, consumers naturally should be more engaged with their insurer,” Lajdziak said. “The fact that insurers and agents have not been able to reverse this trend during a historic global pandemic speaks to the depth of the challenge the industry faces.”

An October 2020 report from Ernst & Young Global warned that life insurers needed to shift their focus to a more customer-centric model that offers flexibility on the types of products they offer, as well as the way customers can engage with their insurers to address challenges posed by the evolving market in the U.S.