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December life insurance sales flatline

The life insurance industry blames slowing growth in new business in the December quarter on legislative headwinds, significant merger and acquisition activity, economic uncertainty and the Christchurch earthquake.

Friday, March 18th 2011, 9:32AM 1 Comment

by Jenny Ruth

The latest statistics show growth in new business for term life insurance, the largest product category which accounts for 47% of the total, fell to $23.6 million in the three months ended December from $28.8 million in the September quarter and $26.8 million in the December quarter of 2009.

Growth in new business was also down for the next three largest products, replacement income, trauma and whole of life and endowment policies.

Investment Savings and Insurance Association (ISI) chairman Sean Carroll says the results reflect the large number of issues the industry faced during the year.

"Companies have been distracted with a number of internal and external challenges and advisers have been dealing with the impact of the new FAA (Financial Advisers Act) regulations," Carroll says.

"And, of course, the events in New Zealand's second largest city will have understandably had a major impact on sales activity," he says.

He expects these same trends will continue to affect the March quarter statistics.

Total life insurance in-force premiums rose 2.1% in the December quarter despite growth being almost flat in term life insurance. The stand-out product was trauma, the third largest, for which in force premiums rose by $22.4 million, or 10.6%, to $233.5 million in the three months ended December and by $39.8 million, or 20.6%, in calendar 2010.

However, the main reason for both the flat term life insurance and the surge in trauma policies was that AXA reclassified $17.2 million in policies previously classified as term, reducing its in force term policies from $83.3 million at September 30 to $67.1 million at December 31, and added nearly $14 million to those classified as trauma policies, increasing its in force trauma policies from $6.6 million to $21.1 million.

AXA's new business in term policies was $1.1 million while new trauma business was $0.5 million

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Comments from our readers

On 19 March 2011 at 10:38 pm BRM said:
The new business figures given in this article simply confirm my earlier assertion that Ralph Stewart and his immediate predecessor effectively reduced AXA's new business market share by more than 50% over the past eight years or so. Hardly cause, one would imagine, for regret at his passing, in a business sense.
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