Cigna's direct sales a winner

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Cigna was a standout in the life insurance market in the June quarter, one of the few companies whose new business wasn't eclipsed by even greater lapses and surrenders.

Friday, September 7th 2012, 6:48AM 3 Comments

by Jenny Ruth

Cigna's market share of new business fell, its $1.65 million accounting for 3.46% of the industry total, down from its 3.66% share in the March quarter. However, it enjoyed a net gain in in force business because lapses and surrenders totalled just $860,000.

"We're having a good sales year - our growth's come from our entry into simple term life and income products we've launched," Cigna chief executive Gail Costa says.

Cigna's retention rate reflects the fact it isn't relying on advisers to sell its policies, using direct advertising to attract customers who aren't already insured, Costa says.

"We don't have the distribution or cost issues our competitors have," she says.

Among those competitors, Asteron, Tower and Fidelity all saw greater lapses and surrenders than new business in the quarter.

Asteron's $3.49 million in new business accounted for 7.23% of the industry's total in the four key insurance products, up from 6.64% in the March quarter, while Tower's $2.39 million accounted for 5.01%, up from its 4.5% share in the March quarter.

However lapses and surrenders in the latest quarter of term, trauma, income replacement and TPD policies amounted to $4.39 million for Asteron and $2.46 million for Tower.

Fidelity's market share of new business slipped, its $3.13 million accounting for 6.57% of the industry total, down from 7.19% in the March quarter. Its new business was swamped by its $4.78 million in lapses and surrenders.

Tower attributes its high level of cancellations to "the financial strain on New Zealanders due to the current economic environment," adding it is working with customers to help them retain some form of cover where possible.

Asteron's product and marketing manager Don Allerston says his company's sales tend to peak mid-year and most lapses happen around the policy anniversary, although this year's level is higher than in past years. He also attributes this to the tough economy.

Fidelity chief executive Milton Jennings says the entry of Partners Life into the industry has also increased competition for the available business. However, Fidelity had lost a lot of business written by one adviser which had nothing to do with Partners.

He sees better days ahead: "I'm not sure if we're a lead indicator of the economy but certainly we're noticing a pick-up at the moment, particularly out of the South Island."

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