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Last quarter's winners and losers

AMP's life insurance policies lapsed at about twice its very sluggish new business in the three biggest product categories during the March quarter while the largest player, Sovereign, also lost market share.

Friday, May 13th 2011, 9:49AM 5 Comments

by Jenny Ruth

AMP's new stablemate AXA's lapses also exceeded its sales which also grew below its market share, although considerably faster than AMP's.

OnePath was the stand-out performer in the quarter, its sales growing at significantly faster than its market share in all three products.

Among other companies, AIA grew its term business at more than twice its market share but lost ground in trauma and replacement income policy sales, Asteron's term and trauma policy sales were slow but Fidelity and Westpac showed good growth.

The latest Investment Savings and Insurance Association (ISI) data shows AMP's sales of new term policies at just below $1 million in the March quarter, 4.6% of total term sales, while its lapses, surrenders and cancellations stood at $2.2 million. AMP, the second largest player in term policies, held 12.1% of in force policies at the end of the March quarter.

It was a similar story with trauma policies where AMP's $282,000 of new business was less than half its $615,000 of lapses, surrenders and cancellations and in replacement income policies where its new business of $304,000 was more than cancelled out by its $706,000 of lapses.

AXA's new business in term policies at just above $1 million accounted for 4.9% of total sales compared with its 8% market share but was dwarfed by its $1.7 million of lapses.

Sovereign's $4.5 million of new business in term policies accounted for only 21.1% of total sales compared with its 28.1% market share in that category and was well below its $5.3 million of lapses.

Sovereign's $1.5 million of new replacement income business was also well below its $2.5 million of surrenders but it did better with trauma policies, new business of $2.6 million comfortably exceeding its $2.2 million of lapses.

OnePath's $3.4 million of new term business accounted for 16.1% of total sales compared with its 8.6% market share in the category and was well above its $2.4 million of lapses. In trauma policies, its $1.5 million of new business accounted for 19.9% of total sales compared with its 9.7% market share and its just under $2 million in new replacement income business accounted for 28.9% of total sales compared with its 10.7% market share.

« New life sales down in March quarterS&P reports on merged AMP group »

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Comments from our readers

On 13 May 2011 at 10:50 am sceptic said:
Interesting but perhaps you could do a similar article over 12 months and say three years which may be a bit more meaningful.
On 13 May 2011 at 12:35 pm 6ftndr said:
So basically sovereign wrote $8.8m in new business but this was offset by $10m in lapses - pretty good business model - NOT, no wonder they do what they do.

Please provide figures for 20008-2011 - would be eye catching????
On 16 May 2011 at 1:50 pm Comrade said:
I think all the companies showing hi lapse rates is pretty understandable. A lot of this is probably attributable to older risk/investment policies which can be surrendered for funds.

Also if you have clients on older style model premiums they can be easily turned to other companies for YRT style permiums which look cheaper initially.
On 19 May 2011 at 3:57 pm 6ftndr said:
Unfortunately Comrade, the lapses and new biz figures where for the same products, i.e like for like - you seriously would be alarmed by these figures if you were a suit in their head offices.
On 23 May 2011 at 11:20 am Reap what you sow said:
If Sovereign didn't bite the hands that fed it, this would not have been the case. Their excuse of Not supporting adviser groups led to them loosing the edge they used to have. Perhaps "Reap what you sow" played its role, and perhaps they will now change their attitude towards supporting Adviser groups… A “Big Brother” and “Holier than thou” attitude DOESN’T work in Aotearoa!!!!
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