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OnePath's share of new business falls as lapses soar

OnePath Life has seen a sharp drop in its share of new life insurance business in the September quarter and its rate of lapses, surrenders and cancellations is the highest in the market with the exception of Kiwibank.

Tuesday, November 22nd 2011, 6:37PM 20 Comments

by Jenny Ruth

The latest Investment Savings and Insurance Industry Association (ISI) figures show OnePath's new business in the individual term, trauma, replacement income and lump sum disablement product categories fell to $6.7 million in the three months ended September or 14.8% of the total new business in those product categories.

That's down from $6.9 million, or 16% of the total, in the June quarter and down from $8.5 million, or 17.7%, in the September quarter last year.

OnePath is still bringing in the second highest amount of new business behind Sovereign.

Its surrender rate in the latest quarter was 18.5% on an annualised basis, up from 15.8% in the June quarter, and below only Kiwibank's 20.6% rate - Kiwibank's new business in the quarter was just $0.6 million, or 1.4% of the total.

By contrast, market leader Sovereign had the lowest annualised surrender rate of 10%, unchanged from the June quarter. Sovereign's $11.9 million in new business in the September quarter accounted for 26.4% of the total. While that's down from the $12.4 million, or 28.7%, in the June quarter, it's up from $8.9 million, or 18.5%, in the September quarter last year.

Second largest player AMP and AXA combined saw their share of new business ease to $4.8 million, or 10.6% of the total, from $5.1 million, or 11.7%, in the June quarter and from $15.4 million, or 19.4%, in September last year.

The combined AMP/AXA annualised surrender rate stood at 11.9% in September.

Fidelity had a strong September quarter, raking in $4.8 million in new business, 10.7% of the total, up from $2.6 million, or 6%, in the June quarter and $4.7 million, or 9.7%, in the September quarter last year.

Fidelity's annualised surrender rates was 13.2% in the September quarter, up from $11.5% in the June quarter.

AIA's share of new business at 7.4% in the September quarter was an improvement on its 6.8% share in the June quarter and 6.2% in the September quarter last year but down from 9.9% in the December 2010 and March 2011 quarters.

Westpac's 7.6% share of new business in the September quarter was down from 8% in the June quarter but well up from 5.3% in the September quarter last year.

« Registered but unable to give insurance adviceNew life insurance business grew in Sept quarter »

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Comments from our readers

On 22 November 2011 at 10:09 pm billy the broker said:
I wonder where all the new stuff is going Naomi??
On 23 November 2011 at 8:56 am Paul said:
What about Partners Life?
On 23 November 2011 at 12:46 pm Vinnie said:
Hmmm Billy - I wonder indeed? Do you think it could be going down Hurstmere Road perhaps?
On 23 November 2011 at 3:55 pm Vinnie said:
Paul - Partners Life application was rejected by the ISI - therefore no information. Refer Good Returns article on June 2nd.
On 23 November 2011 at 10:21 pm jonny adviser said:
The ISI chairman (until 2 months ago) said the ISI risk stats had the integrity of the Zimbabwean election results at his employers Cook Island offshore (he was said quoting another MD)

What happened to the 800lb gorilla.

Looks like a monkey
On 24 November 2011 at 10:42 am Broker said:
so 22.5% of new business going to Partners...sounds about right...
On 24 November 2011 at 11:49 am PB said:
Congratulations to the advisor's who 'strategically aligned the policies from Sovereign to Onepath and now to Partners. Certainly a great business strategy to keep income levels up. Not sure about the ethics
On 24 November 2011 at 12:01 pm Coach said:
In light of these figures I will now reconsider my offer to buy Partners Life in 2016.
On 24 November 2011 at 1:18 pm Sceptic said:
This REALLY should have the FMA and any other Government body interested in looking after the interests of the General Public starting to look. There is a very nasty whiff of hypocrisy emanating from Hurstmere Road, I heard on the grapevine that Jeremy personally delivered 30 twisted proposals from his company to Naomi that been sent to his company by mistake; they were meant to be going to Partners Life. It leaves a very sour taste in the mouth to anyone interested in the long term well being of this industry.
On 24 November 2011 at 2:15 pm Craig said:
Its great to see some analysis on the ISI figures - keep it up. Maybe you could do some deeper analysis with an objective analyst to supplement. I for one believe that OnePath has navigated well through the last year with the massive disruptions that Naomi's departure caused (staff jumping ship, rumours and advisers pulling customers) Good on the team there for staying focused as it would not have been easy. The industry needs competition and quality underwriters of which they are one. They look well placed to fight out with AMP/AXA for the number 2 position. That can only be a good thing for advisers and customers - lets drop our focus on PartnersLife as they live by feasting on advisers churning their books - I would rather we talked about how we can grow the market by bringing in new customers and markets
On 24 November 2011 at 7:57 pm Adam said:
You reap what you sow. Buying business from Newpark only has one outcome...As Sovereign found and now OnePath are finding out... Funny thing though - Newpark are still getting the love from OnePath - talk about desperate times, desperate measures!
It's just so incredibly stupid that Partners Life believe their outcome will be any different. When will they all wake up and smell the (Gannon scented) roses???
On 24 November 2011 at 8:20 pm dp said:
I agree with you Craig, take a bow OnePath staff, and I will watch with interest what will happen in a few years time. The recent OnePath roadshow highlighted their need to change, and change they are, again i watch with interest what will happen.
Take a bow OnePath, you have made a big call but your focus on persistency is one I am watching as I think the entire industry should reward for this.
Keep your heads up high OnePath, also we need to realise that their year end was in the last three months, so a big clean up of lapses was also strategic.
On 25 November 2011 at 11:57 am Service your clients or else said:
Interesting comments....from someone who has starting working in the Auckland market it has become apparent that many clients are under serviced, under insured and have not had their portfolio reviewed for some time.

On a personal note, I'm not sure why I would stay with an adviser who hadn't bothered to tell me that I was paying too much for cover that actually wasn't what I needed and wasn't the best on the market. So can someone please explain to me why you all say my new adviser is 'twisting by the pool' when they are actually looking after my best interests.

On 25 November 2011 at 1:05 pm SCEPTIC said:
Well done OnePath indeed, they are fighting a battle against wholesale attacks on their book of business by predominantly Partners Life who previously when they worked at OnePath condemned such behaviour. The thing that worries me is that Partners will just sell up in a few years before all the problems start coming through and the agents responsible will likely be long gone as well. Not a good look for the Industry as a whole. As Craig suggested I think most would like to see the market grow with new clients, but pretending that churn is not occurring will not make it stop; pressure needs to be brought from every angle on Partners to stop actively or passively encouraging the practice; pretending it is not happening will not make it go away either.
On 25 November 2011 at 4:09 pm Busy Busy Busy said:
I’m a Newpark member and I’m way too busy writing new business generated from the lead programme's and the new initiatives that Newpark has in place to worry about twisting business.

Does anyone need some new people to see? I have more than I need.
On 25 November 2011 at 4:24 pm Amused said:
No surprise to read here that OnePath is losing business now. Despite the recent road show promises made their constant under resourcing will only continue. Of this I have no doubt with ANZ Bank holding the purse strings. The same old “shareholder profit first" banker’s mentality is well and truly at play now. What a crying shame as OnePath has some excellent products. Advisers will only tolerate poor service for their clients for so long especially if more efficient providers with better products have since arrived on the scene.

I agree with service your clients or else comment's above, those advisers who are happy to simply let their clients remain with providers who don't update their products etc need to start remembering at the end of the day it's all about our clients interests - not ourselves!
On 26 November 2011 at 1:31 am Raoul said:
Interesting how Partners is being vilified by some commentators for "encouraging" churn. They are doing nothing different from all the other Life Companies which pay up-front commission. I don't use them - yet, but as far as I know they do not approach other companies policyholders directly, independent advisers do that. If they receive an application for insurance they are bound, like any other company to deal with the prospective clients request in good faith. No Life Company (unless it is also the adviser) is in a position to determine whether the application by the client is in the clients best interest, that is for the client and the adviser to determine. It is us advisers who are responsible for "churning" clients to companies with better products or premiums and where this is in the clients best interests it is our legal duty to do so. While everyone has a general duty to look after the best interests of all stakeholders, advisers are not responsible for keeping clients with any particular company - their only duty is to look after the best interests of their clients.
Are commission arrangements designed to encourage advisers not to move their clients, possibly to the clients detriment, justifiable? As a client I'd be just as unhappy with an adviser who moved me only for commission reasons as one who did not move me for commission reasons.
On 26 November 2011 at 7:26 am broker said:
well said Amused.
On 29 November 2011 at 1:53 pm Dirty Harry said:
has the phrase "Churn" become to this industry what "boy racer" has become to the classic/modified car scene? An over-used and undefined emotive that describes different things to different people in different situations given different contexts?

I think so. Ask the regulators what churn is. Then ask an adviser, an industry body and an insurer. You will then have 4 different answers.

It is generally accepted that replacement business is OK. Advice processes serve to justify it, on a case-by-case basis, and by and large it suits the adviser and the client.

It is widespread, 2 - 4 year old policy replacement on a large scale that tends to be undeniable churn, and this is where Partners seem to be culpable – their offer ‘justifies’ it – they have engineered the products to rate well, price well and pay top $$. But before that OnePath, and at times AIA and Sovereign have all crossed the line at corporate level too, and some advisers who routinely seem to 'favour' one insurer or another could be alleged to have crossed as well.
On 30 November 2011 at 10:01 am Snoopy said:
To understand what churn is, have a read of the Sovnet agency agreement. Not only is it encouraged, its expected.

Commenting is closed



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