Most product categories of life insurance products showed growth in the September quarter, the second quarter of growth after several quarters of decline although the Investment Savings and Insurance Industry Association (ISI) says sentiment worsened significantly in the three months.
Sunday, November 20th 2011, 12:38PM
by Jenny Ruth
The European debt crisis, falling share markets in developed countries with the exception of New Zealand, potential slowing of China’s economy, the downgrade of New Zealand’s credit rating and delays in the Christchurch rebuild are among the negatives ISI cites.
Its latest statistics showed growth in new business for term life insurance, the largest product category accounting for 48% of the total, was $25.3 million in the three months ended September, up from $24.8 million in the June quarter.
However, the September quarter growth was well below the $28.8 million growth shown in the September quarter of 2010.
New business growth in the category had dropped in both the March and December 2010 quarters.
After taking into account lapses, surrenders and cancellations, $24.7 million, and contractual premium changes, $19.1 million, in force term life insurance policies rose by $18.4 million to $872.8 million in the latest quarter.
New business growth also accelerated for replacement income and trauma policies, the next two largest categories.
Major exceptions were traditional whole life and endowment and unbundled policies which continued their long slow decline.
The ISI says whole of life and endowment policies in force fell 5.2% from September last year while unbundled policies were down 7.2% in the year.
It says in percentage terms, the only classes of business to show significant net increases in annual in force premiums were guaranteed acceptance, up 14.2% to $49.7 million, trauma, up 18.3% to $249.6 million and lump sum disablement, up 21.1% to $50.6 million.
The ISI says it is “perhaps somewhat surprising” that 16 death claims arising from the February 22 Canterbury earthquake. “It was anticipated that death claims would be settled promptly but that income benefits could continue for some time, depending on the nature of the claim and policy terms,” it says.
Only one of the three companies which paid these death claims reported any reinsurance recovery.
Four companies reported paying income protection claims payments relating to 14 lives during the September quarter and only one, Cigna, reported seven payments of Trauma claims, bringing the total so far resulting from the quake to 13.
Three companies paid redundancy claims on a total of 144 lives, down from 220 in the June quarter.
