insurance-files

Long-term interest rates have remained at historic lows for several years.

What started as a knee-jerk response by central banks to keep consumers spending and mitigate the effects of a worldwide recession has turned into a trend.

Persistently weak economic indicators, and dragging jobless recoveries, continue to suppress both bank and long-term bond interest rates in the world’s safer countries. And there’s no sign of when the trend will turn.

Read: Future bleak for guaranteed income products

All that’s spelled trouble for insurers, which traditionally pull a high percentage of the cash they need to fund obligations from fixed-income markets. So-called long-tail products, which provide incremental payout guarantees to policy holders, have long been the preferred vehicle for Canadian insurance consumers.

Read: What’s next for GMWBs?

But suppressed rates have made those guarantees hard to, well, guarantee.

Read: Annuities: is it now or never?

In response, some companies have ceased issuing certain types of products, exited certain lines of business, or tweaked terms to make payouts possible.

Here’s a rundown of changes since the beginning of this year:

January 2012: Transamerica cuts shelf to focus on life

April 2012: Standard Life to suspend GLWB sales

June 2012: Say goodbye to GMWB as you knew it

June 2012: RBC exits permanent insurance

July 2012: Assumption Life products on chopping block

July 2012: Manu to close deposits on two guaranteed income products

Originally published on Advisor.ca
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