ISI figures show new business hard to net
Sovereign is top of the pops again in the ISI statistics, but the company’s leader acknowledges the industry has had a hard time making new business pay.
Thursday, June 24th 2004, 9:06PM
Simon Swanson, chief executive of Sovereign and also chairman of the Investment Savings and Insurance Association (ISI), says anyone looking at the March 2004 quarter statistics would see the risk management sector has had a hard time recently.The market summary for term life, trauma, income replacement and disablement policies shows annual premiums for new business grossed just over $31.6 million. But in net terms it was only worth just under $12 million.
Swanson says the result reflects normal trends during an economic upturn. The more confident and wealthy people feel, the less they feel the need to cover risk.
“After September 11 life insurance went up 20% in the US alone,” he says to illustrate the point.
But Swanson also personally blames the advent of mortgage broking in New Zealand. He says the trend for brokers to sell home loans has been at the expense of other news business.
“It’s a limited bandwidth issue,” Swanson says about the new business statistics. “But who can blame brokers when they can get a commission of around $1,600 for a loan of $200,000 without their clients having do things like medicals?”
However, with the slowing of the housing market Swanson believes attention will return to risk products. “There are a lot of people in New Zealand that need life insurance.”
And he says medical insurance statistics show health cover is on the rise.
Sovereign is one of the top eight life and risk insurers. The others at the time of the data collection were AIA, AMP, AXA, ING Life, Fidelity, Asteron and Tower.
Sovereign managed to score the top spot in new business for term life, trauma and lump sum disablement, but yielded that spot to AIA in income replacement.
For all products the net new business data shows Sovereign with 43.7% of the market, followed by AIA (17.9%) and Tower (6.5%).
AIA scored its premier position with 38.2% of the total market for net new business in income replacement. Swanson says Sovereign has had a couple of good years, but he puts that down to it being focused on its business, remaining financially secure with strong parental backing and maintaining an advisor focus.
Swanson says the issue of public release has been discussed at board level and is being worked through and a release process is likely to be agreed upon in the next couple of months.
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