Demographics is a useful tool for forecasting both future sales and the design of critical illness insurance products according to Monique Maynard, senior VP, Living Benefits at Great-West Life Assurance Co. and Canada Life Assurance Co.

“Understanding the age wave will help you understand future prospects,” she said during a presentation earlier today at the World Critical Illness Insurance Conference in Victoria, British Columbia.

Demographers believe that age considerations explain two-thirds of life decisions, she says. “That’s what makes demographics such a powerful tool.”

The baby boom generation, those born between 1947 and 1966 and currently comprising approximately one-third of Canada’s population, are the most significant demographic group in Maynard’s estimation.

During her presentation, she looked to past economic history to parallel the coming appetite of baby boomers for CI products with the boom in real estate prices in the 1970’s, caused by boomers making their first home purchases. “That happened because baby boomers were entering the stage of life where they were trying to buy their first homes.”

Baby boomers, currently between 37 and 56 years of age, have become now paying more attention to health care and are putting a greater focus their retirement years. This means increased awareness of the need for funds to cover health-related expenses. Their penchant for increasing savings and decreasing borrowing, combined with rising disposable income means they will focus on quality and service of a product rather than price and a desire to “buy what they want when they want it,” Maynard said.

Those attributes point to boomers’ attitudes towards health care, implying that this group would resist long waiting periods, preferring instead to demand to buy needed medical services.

Moreover, the proportion of the population aged 65 and older will continually increase due to medical advances and lifestyle changes such as smoking cessation. The elderly will need doctors’ visits and hospital care more often than in their younger years. These factors also mean increasing demands on the health care system and therefore increasing medical costs creating a crunch between demands and the ability of the health care system to provide them within 20 years, Maynard said.

For insurers, this means they will have to have to design CI products that combine sound design and effective pricing, while effectively meeting the needs of boomers and other demographic categories. For advisors, it means a growing role in educating clients about CI products, along with increased sales.

Part of the impact may have already taken place, she explained to Investment Executive during an interview following her presentation.

Cautioning that final 2003 sales figures had not become available, she suggested that sales of new CI policies will exceed sales of new disability insurance policies in total dollars. CI sales of new policies will range around $76 million in premiums, while sales of disability insurance will range below $70 million.

The second World Critical Illness Insurance Conference runs until Saturday, January 17 in Victoria. The third edition of the conference is tentatively scheduled for late Spring 2005 in Toronto.