AMP says conventional life policies being phased out
AMP is talking down the impact a merger with AXA Asia Pacific might have on New Zealand’s insurance market, saying the phasing out of conventional life policies will keep the market share of a combined company within the regulator’s tolerance levels.
Wednesday, May 5th 2010, 6:13PM
by Paul McBeth
Having already secured approval from the Australian Consumer & Competition Commission (ACCC), AMP has applied to the Commerce Commission for approval to acquire AXA's Australian and New Zealand businesses. The ACCC shot down a rival bid by National Australia Bank last month, though the bank is looking to persuade the regulator to change its mind.
AMP's application to New Zealand's regulator said the combined market share for conventional life was the only product that was "outside the safe harbours", but this would not reduce competition because they were likely to be phased out, and customers could substitute these policies by purchasing a contemporary policy and equivalent investment product separately.
"There has been a trend away from ‘conventional' life insurance type products, known as "endowment" or "whole of life policies", which combine protection and investment in a single policy, towards protection only type policies," the application said. "Customers are tending to look for insurance policies that provide high protection for specific events (such as death or illness) at a relatively low premium but which have no investment component."
AMP's application said the merger would boost its adviser network to between 700 and 750 owned, aligned and non-aligned advisers from 400 advisers currently. That is approximately 10% of the country's network, according to Ministry of Economic Development estimates.
The insurer said competition was unlikely to be constrained with its existing competitors, including registered banks and Australasian insurers and fund managers, expected to expand their own businesses.
Paul is a staff writer for Good Returns based in Wellington.
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