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People walking past the Bank of Nova Scotia, on Bay St. in Toronto’s Financial District are photographed on July 12, 2022.Fred Lum/The Globe and Mail

Canadian insurers paid out $580-million in mental-health claims through individual and group health benefit plans last year – a 75-per-cent increase from 2019 that the industry is attributing to the strains of the pandemic.

In 2021, life and health insurance companies in Canada paid out a total of $113-billion in claims for life, health and retirement benefits, nearly $10-billion more than in 2019, according to a report released on Thursday by the Canadian Life and Health Insurance Association (CLHIA).

Part of the increase came from the swell in the number of Canadians tapping into their mental-health benefits.

“2021 was a year of recovery ... and, as part of this, mental-health supports have become an increasingly important and relevant health benefit that is helping so many people through the strains of the pandemic,” CLHIA president and chief executive Stephen Frank said in an interview. “And we are not through this pandemic yet. We cannot yet forecast what’s coming, but we are not hearing of any sort of big slowdown.”

Despite the growing demand for help, only 19 per cent of Canadian companies and organizations increased their maximum coverage limits for mental health in 2021, according to research by Benefits Canada, a publication that covers employee pension and health benefits.

But that could change, Mr. Frank said.

“We are seeing employers responding by expanding mental-health supports in their group benefit plans,” he said. “So it’s a bit of a virtuous cycle where the employee needs help, so the employer increases the benefit – and in turn that contributes to higher claims.”

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On April 1, Bank of Nova Scotia increased its mental-health coverage to $10,000 annually for eligible employees and their dependants, up from its prior limit of $3,000. And last year, Coke Canada Bottling Limited boosted its employee mental-health benefits – increasing the maximum coverage to $5,000 from $1,500 a year.

Insurers paid out $40.8-billion in total health claims, including mental health, dental and prescription drugs, and $58-billion in annuities to retirees. Heath and annuity payments were up 11 per cent and 26 per cent respectively compared with the previous year.

Insurers paid another $14.3-billion in life insurance benefits, of which $8.8-billion was reported as death benefits.

More than 150 life and health insurers operate in Canada, along with their subsidiaries. In 2021, the group collected a combined $139-billion in premium revenue, up from $123-billion in 2020. The largest increase in premium revenue was from sales of annuities, which jumped by 20.7 per cent. Health insurance premium revenue increased by 8.1 per cent, while life insurance rose by 6.1 per cent.

Insurance premium revenues in Canada

In billions of dollars

$140

Life

Health

120

18%

Annuities

19%

100

18%

19%

80

18%

19%

37%

60

39%

40%

39%

39%

38%

40

20

43%

43%

41%

43%

42%

45%

0

the globe and mail, Source: canadian life &

health insurance association

Insurance premium revenues in Canada

In billions of dollars

$140

Life

Health

120

18%

Annuities

19%

100

18%

19%

80

18%

19%

37%

60

39%

40%

39%

39%

38%

40

20

43%

43%

41%

43%

42%

45%

0

the globe and mail, Source: canadian life &

health insurance association

Insurance premium revenues in Canada

In billions of dollars

$140

Life

Health

120

18%

Annuities

19%

100

18%

19%

80

18%

19%

37%

60

39%

40%

39%

39%

38%

40

20

43%

43%

41%

43%

42%

45%

0

the globe and mail, Source: canadian life & health insurance association

The jumps in premium revenue are primarily owing to Canadians having signed up for new life and health benefit policies as COVID-19 highlighted the need for greater security, Mr. Frank said.

The full impact of the pandemic on insurance claims – including mental-health and disability claims – is still not yet known, because claims are often delayed, according to a report by Sun Life Financial. Research suggests that mental-health disability claims tend to lag a crisis, as was the case after the 2003 SARS outbreak and the 2016 Fort McMurray wildfire in Alberta.

“The shoe that still has to drop is what will the impact of the pandemic be on Canadians’ health from a lot of the deferred diagnoses and treatments that were delayed due to COVID,” Mr. Frank said.

“There are hundreds of thousands of surgery backlogs in Ontario, 7 to 8 million people didn’t get the typical physician visit and all the blood work that goes along with those visits that didn’t get done. As an industry, we’re a long way from being through the impacts of COVID.”

Mr. Frank said the material impact on the sector is currently unknown, but insurers are already anticipating impacts to disability and health plans. There is “no question that there will be holdovers” for the industry to process, he said.

“People couldn’t get back to work as quickly as you’d hope because there weren’t treatments available, or your cancer treatments were being deferred. So now people are sicker than we would have expected a typical population to be. And some of that is just emerging now.”