Most companies in the life insurance industry showed less new business in the March quarter compared with December and the Investment Savings and Insurance Association (ISI) blames the continuing impact of the weak economy.
Thursday, May 12th 2011, 7:17AM
by Jenny Ruth
The latest statistics show growth in new business for term life insurance, the largest product category accounting for 47.5% of the total, fell to $21.1 million in the three months ended March compared with $23.6 million in the three months ended December and $22.7 million in the March quarter last year.
However, lapses, surrenders and cancellations of term life insurance policies also fell, leading to policies in force at the end of the three months being 1.3% higher than in December and 7.8% higher than in March last year.
Growth in new business was also down for the next two largest products, replacement income and trauma policies although in-force business was up for both products.
New business rose slightly for traditional whole of life and endowment policies although lapses, surrenders and cancellations were nearly five times higher. Most companies showed lower in-force business for those traditional policies.
Total benefits paid in the quarter were $250 million, slightly more than the $245 million paid in the December quarter.
The ISI says only four companies submitted nil returns for claims relating to the February 22 Christchurch earthquake and all other companies paying death claims.
"The total number of lives insured at 63 represents about 35% of the current expected death toll of 181. Overall, reinsurance recoveries are almost 40% of the gross payments, although the situation varies considerably between companies," it says.
In total, companies paid out $12.5 million with reinsurance recoveries at $4.9 million.
Only six companies reported quake-related redundancy claims but their claims totaled 180. They paid out $103,000 before GST in the three months. There were only two trauma claims for which $32,000 was paid and 16 income protection claims on which $31,000 was paid, $8,000 covered by reinsurance.
The ISI says it will ask for similar information in the June quarter because it's possible further claims will be paid.
