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Demographic shifts in Canada and the US are changing life insurance demand

Morningstar DBRS says aging and lower fertility are boosting retirement income product demand while pressuring insurers to rethink product design, pricing, distribution, and risk management.

Reported · Written up by our desk · Life Insurance

Morningstar DBRS says demographic trends are reshaping the life insurance markets in Canada and the United States, with slower population growth and an aging population changing both customer demand and how insurers operate. In its commentary, the agency points to declining birth rates and longer lifespans driven by healthcare advances, which are increasing the share of retirees and older adults. It says this supports higher demand for products aimed at retirement income, including annuities, wealth management, estate planning, and broader long-term financial security. At the same time, Morningstar DBRS warns that the same shifts may undermine traditional life insurance models. It says insurers may need to reassess product design, pricing, distribution strategies, and risk management as the mix of future customers changes. Morningstar DBRS also notes that the demographic pressures are unlikely to immediately affect insurers’ credit profiles, but longer-term consequences could emerge if firms fail to adapt, leading to weaker business growth, lower revenue generation, reduced profitability, or declining internal capital generation that could eventually weigh on credit ratings.

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