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Creditor Insurance in Canada

  • January 2015
  • -
  • Finaccord
  • -
  • 25 pages

Finaccord’s report titled Creditor Insurance in Canada offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Canada. Drawing on the results of a survey of 47 lending institutions, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details each of 75 creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Canada.

Table Of Contents

Creditor Insurance in Canada
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Canada 3
Rationale 3
The report tracks 75 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
2.0 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
The Canadian banking market can be sub-divided into three main ‘schedules'. 9
. with the ‘big five' controlling around 90% of total banking assets 10
Domestic regional banks and the larger credit unions are also significant 10
Consumer lending market size and growth 10
Mortgage lending 10
Mortgage balances outstanding increased consistently between 2010 and 2014. 10
Non-mortgage lending 12
… as did the value of total non-mortgage consumer lending albeit at a slightly slower rate 12
Credit and other pay later cards 13
Credit and other pay later cards in circulation hit a record figure of 83.9 million in 2014 13
Creditor insurance provision rates, operating models and partnerships 14
Creditor insurance linked to mortgages 14
Mortgage-related creditor insurance in Canada is often sourced from external underwriters. 14
. with two providers apparently dominant in the weighted analysis of partnerships. 14
. mainly by virtue of their relationships with ‘big five' banks 14
Manulife has very limited distribution of mortgage-related cover via banking partners 15
Captive underwriters owned by Desjardins and National Bank of Canada are also prominent. 15
. as is TD Life Insurance 15
CUMIS is likely to be the most significant competitor ranked outside of the top five underwriters 15
Creditor insurance linked to consumer finance 17
Around three quarters of non-mortgage lenders are also distributors of creditor insurance. 17
. with many partnerships similar to those for mortgage-related cover. 17
. albeit with some unique arrangements among smaller lending institutions 17
Creditor insurance linked to credit cards 19
The vast majority of credit card issuers have an arrangement for related payment protection insurance. 19
. with Canadian subsidiaries of Assurant especially prominent in this field. 19
. albeit with eight other underwriters also competing for card issuer mandates 19
Creditor insurance risk coverage 21
Availability of unemployment cover is ubiquitous with credit card credit but much rarer for other types of loan 21
Alternative distribution channels 22
Creditor insurance can also be acquired through mortgage brokers. 22
. as well as car dealerships 22
Mainstream insurance brokers tend to focus on term and permanent life insurance 22
Creditor insurance market size, growth and forecast 22
Policies linked to mortgages account for the majority of the market value… 22
. and are also expected to deliver the strongest growth up to 2018 23
A few card issuers have discontinued programs for card-related creditor insurance 25

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Canada, segmented by policy and cover type, 2010, 2014 and 2018 2
1.0 INTRODUCTION 3
Banks and other lending institutions in Canada contacted by Finaccord, segmented by type 4
2.0 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Canada (absolute and per capita), 2010 to 2014 11
Consumer non-mortgage lending balances outstanding in Canada (absolute and per capita), 2010 to 2014 12
Credit and other pay later cards issued and per capita in Canada, 2010 to 2014 13
Key data points for the consumer lending market in Canada, 2010 to 2014 14
Provision of creditor insurance linked to mortgages in Canada, 2014: provision rate, operating models and weighted provider share of partnerships 16
Provision of creditor insurance linked to consumer finance in Canada, 2014: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to credit cards in Canada, 2014: provision rate, operating models and weighted provider share of partnerships 20
Risk coverage of creditor insurance policies in Canada, segmented by type of underlying product, 2014 21
Creditor insurance gross written premiums in Canada, segmented by policy type, 2010, 2014 and 2018 23
Creditor insurance gross written premiums in Canada, segmented by cover type, 2010, 2014 and 2018 24
Creditor insurance gross written premiums in Canada, segmented by policy and cover type, 2010, 2014 and 2018 25

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