1 Comment 1 Commentby Paul McBeth
Risk insurance products, the most popular sector of life insurance, rose 11% to $1.365 billion for the 12 months ended in March 31, outstripping a total increase of 7.9% to $1.548 billion, the ISI said in its latest update on the sector.
Risk products such as income protection and trauma policies were more attractive in a downturn as people want more security in uncertain times, said Ian Whitehead, head of marketing and product development at Sovereign, the largest life insurer with 31.8% of the total premiums.
"There's certainly still healthy appetites from consumers and advisers in risk products," he said.
Whitehead said the economic downturn added pressure on households struggling to pay their bills, and that this could lead to the increase in discontinuances and lapsed policies.
ISI chief executive Vance Arkinstall said an increase in discontinued or lapsed policies failed to offset any of these gains, with net growth around 10 or 11%.
"Fortunately the growth in new sales considerably exceeds the level of lapses and discontinuances creating good positive growth," he said.
Trauma policies have seen a rapid increase, and Arkinstall predicts this will be an area of growth for the industry.
Payments for death claims by life insurers rose 3% over this period to $474 million, while payments for policies maturing declined to $196 million from $201 million in the same period a year earlier. Other payments remained steady at $224 million, with the total amount of $874 million paid to policyholders and their dependents over the 12 month period.
Paul is a staff writer for Good Returns based in Wellington.
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