New Zealand's total annual in-force life insurance premiums for the year ended Sept. 30, 2010, rose 7.l% to NZ$1.75 billion (US$1.35 billion), but the domestic industry association said many citizens are still "inadequately insured" against the financial risks from unexpected injury, illness or death.
Overall new business growth in New Zealand was positive for the year, though the lapse rates and surrenders remained at high levels, according to the Investment Savings and Insurance Association of New Zealand.
The main contributions to the in-force premium growth came from age and inflation-based increases on existing policies, in addition to changes in the tax treatment of life policies that saw premiums rise 20% in some cases, noted the ISI.
"Net new policy growth was only a small part of the overall increase, which leaves the ISI concerned that many New Zealanders continue to ignore the need for adequate financial protection," said Chairman Sean Carroll in a statement.
Carroll also said although there has been an overall 25% increase in total in-force business over the past three years, initial investigations found "many Kiwis aren't protecting themselves sufficiently."
The Financial Services Council in Australia, according to Carroll, has conducted comprehensive research for the domestic under-insurance problem in Australia and saw that parents with dependents are "critically underinsured by A$1.37 trillion (US$1.35 trillion)."
"The Australian life insurance industry pays out nearly A$10 million a day in claims, while in New Zealand, the life insurance industry pays out just over NZ$2 million a day in claims. With a population around one-fifth the size of Australia's population, it is therefore reasonable to assume that we have a similar issue with under-insurance in New Zealand," said Carroll.
To help the industry understand the extent of the under-insurance problem and develop products, programs and incentives that will encourage citizens to better protect themselves and their businesses, Carroll said the ISI plans to undertake a comprehensive study into the insurance patterns of New Zealand in 2011.
During the year ended September 2010, New Zealand reported a fall in annual premiums for conventional policies of 6.5%, while annual premiums of term life and trauma increase recorded growth of 10.6% and 13.5%, respectively, said the ISI.
Term life insurance leads the market and accounts for 47.7% of the country's total life insurance contracts. It is followed by replacement income insurance and trauma insurance, which has respectively accounted for 13.8% and 12.1% of the market total.
Conventional policies, once the core market of the life insurance industry in New Zealand, now takes up 7% of the country's total annual in-force insurance premiums, noted the association.
The ISI said trauma insurance "remains the fastest-growing" product in the market, with total in-force premiums up 55.7% over the past three years. Term life and replacement income insurance premiums respectively reported growth of 32.7% and 28.4% over the past three years.
http://insurancenewsnet.com/article.aspx?id=236162
(By Rebecca Ng, Hong Kong news editor: Rebecca.Ng@ambest.com)
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As you go round the world, insurance companies are on the up, yet in certain pockets of the world, mostly the western countries/Anglosphere, you cannot get away from the fact not enough people have Life Insurance. Well that seems to be the complaint and warning anyways, though the sandalistas amongst us would argue it’s the life insurance companies marketing tactics and we’re fine. In my view it’s somewhere between.
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