OnePath's new business declines, Sovereign's surges

The ANZ Bank-owned OnePath's new business in the individual term, trauma, replacement income and lump sum disablement product categories fell to $5.6 million in the three months ended December, or 13.7% of total new business in the quarter.

That's down from the $6.7 million it collected in the September quarter, 14.8% of the total, and $8.5 million, or 20.2% of the total, in the December quarter of 2010. It's also OnePath's weakest quarter since June 2010.

The figures cover only those companies which are members of the Insurance Savings and Insurance Industry Association (ISI) and account for about 80% of the insurance industry, according to chief executive Peter Neilson.

OnePath is still bringing in the second highest amount of new business but less than half that of Sovereign which collected $12.4 million in the December quarter, or 30.1% of the total.

Sovereign's share of new business in the September quarter was 26.4% and was only 24.3% in the December quarter of 2010.

AMP, which now includes AXA, attracted the third highest share of new business at 11.3%, up from 10.6% in the September quarter and 8.9% in the December 2010 quarter although the actual amount collected fell to $4.65 million from $4.76 million in the September quarter.

AIA had a strong December quarter, increasing its share of new business to 9.2% from 7.4% in the September quarter, while Fidelity had a rather weak one, its share dropping to 7.8% compared with 10.7% in the September quarter.

Tower's December quarter was also weak, its share of new business falling to 4.4% from 6.9% in the September quarter and the actual amounts it collected falling to $1.8 million from $3.1 million. Cigna had a strong December quarter, its share rising to 3.1% from 2.7% in September.

OnePath's surrender rate at 16.1% for calendar 2012 was the highest in the industry behind only Kiwibank's at 18.4% - Kiwibank's share of new business in the December quarter was just 1.4%, unchanged from the September quarter.

By contrast, Sovereign's surrender rate was well below the industry average of 11.1% for 2012 at 9.9%.

Comments from our readers

On 5 March 2012 at 1:39 pm Amused said:

Ironic indeed that Peter Neilson and his chums at the ISI declined Partners Life membership of the association last year (remind me what the real reason was for this decision again?)and now Partners are incredibly successful and taking all this business off OnePath. Without the inclusion of Partners Life the above new business stats are misleading. Peter I suggest you go cap in hand to Naomi to see if she still wants to join your association. Not having the newest life insurance provider as a member is an embarrassment to you when it’s clear advisers are recognising the superior benefits of placing their clients with Partners for cover.

On 5 March 2012 at 3:51 pm Andrew said:

I wonder how much 'New Business' Partners life is doing that isn't churned Onepath business?

On 5 March 2012 at 5:53 pm Paul said:

Is it churn if the client is moving to a better product? I think not.

On 5 March 2012 at 8:50 pm Just curious said:

Andrew is the Onepath one we lost to Sovereign last week churning or is there a different name for it if Partners Life aren't involved?

On 6 March 2012 at 10:37 am Dirty Harry said:

Is there a standard definition of “Churn”? The phrase seems to have taken on the attributes that also apply to the term “boy-racer” – IE overused, undefined, conveniently broad while also somehow non-applicable to anyone using the term. Like on this site. Churn seems to be something everyone says everyone else does.

“Placing' clients with a "better" product is a subjective thing. Often the product and the price are pretty close, but fiddle with the quotes a little, pick up on a point of difference or two and sell the hell out it and sure, it is miles better. We all know how to dress a recommendation to favour one insurer over another, but the difference as I see it is when an adviser re - places clients from one insurer to another on a regular basis.

Every adviser is entitled to a reasonable payment for their work and placing a new client into a new policy following a robust review and proper handling of the processing is not unjustified (after all I am not in business to enhance, alter and maintain another adviser’s book!). Doing it all again a few years later with the same client rather than altering an existing policy in your own book is where I draw the line.

The statistics suggest that there are people who follow Naomi like she is some sort of Pied Piper. First Sovnet, then Club, and now Partners. What are the odds Naomi will still own her latest project three years from now?

It sure would make interesting reading to compare total industry in-force premium growth with market share changes and new sales numbers all side by side.

On 6 March 2012 at 1:30 pm GD said:

Must admit to not having researched Partners Life in much detail. Can anyone enlighten me as to the capital backing, strength of balance sheet and claims track record of Partners Life? It sounds like from the comments above that advisers who previously have placed business with Onepath are now switching to Partners Life, so presumably they have compared the capital backing of Onepath and Partners Life and could give me a brief comparison?

On 6 March 2012 at 2:32 pm Broker said:

We all have our favoured insurers to deal with for whatever reason - so how we act like adults and just get on with it without commenting every five seconds on this site? It's getting a bit silly...

On 7 March 2012 at 11:14 am Dirty Harry said:

@ broker: But it's such fun! Especially when one posts a comment commenting on the comments...

I would second GD's comment. Surely people have checked out partners prior to joining up.

On 7 March 2012 at 1:56 pm andrew said:

My definition of churning "if you rewrite someones cover with a different insurer that is not churning. If someone rewrites one of your clients no matter what the reason that is churning. :)

On 8 March 2012 at 6:32 am chris said:

Surely we should concentrate on the total market and whether this is growing or not (under insurance being dealt with) and the quality of advice being given. All the comments above concern market share minutiae between the product manufacturers which is only a very small part of the picture.

On 9 March 2012 at 5:06 pm Forthright said:

I agree with Amused & Nick on one point only “the adviser should conduct annual reviews”. But come on who is kidding who? Term life is term life, simple, you die the insurance company pays. Perhaps Amused & Nick know of some remarkable differences between the main life insurance providers in NZ. I certainly have never found the need to re-write my personal or my clients term life cover after discovering some remarkable superior term life contract.

I suppose you could use the Newpark example of encouraging advisers to re-write existing in force contracts with Partners Life. What would be remarkable was for the NewPark advisers to leave the in force business where it is and not re-write the business and forgo the opportunity to get another full commission.

You would have to be stupid to not realise the extent of churning within the NZ life insurance industry. It is a repugnant and despicable practice, which ultimately costs me and my clients more in increased term insurance rates. Those involved should be booted out of the industry. But as long as advisers believe in the tooth fairy and the nirvana of superior life cover exists in a contract other than the sold their client two years ago the rotten practice of churning will continue.

On 9 March 2012 at 8:32 pm 6ftndr said:

it won't take long to sort out this issue, as soon as the FMA starts its audits it will be clear to see, then when the fines and suspensions start, I can see a time sometime in the future when this problem of churning perfectly good business for "new" perfectly good business will stop.

On 12 March 2012 at 7:53 am philip east said:

Perhaps the public have not forgotten that onepath is only ING under a different label and know how they treat their customers when things go wrong.

On 13 March 2012 at 12:42 pm billy the broker said:

Boys and Girls...let's just carry on in the playground:)

On 13 March 2012 at 2:17 pm Andy said:

Forthright - I TOTALLY agree with you, you legend. Just like mortgage interest rates, at some point in time any idiot can prove any rate/policy is the best. However with policy wordings (just like interest rates) changing almost weekly, it is most important to look outside the square; look at Financial Stability and claims history. One only has to look at the recent AMI debacle. I know it is fire and general, but the principle is the same! Could your insurance company cope with a large spontaneous hit?

Rather than chasing up-front commissions, we should be seeking a higher trail, with no up-front. This will mean a smaller client base is required to maintain the same income, meaning ease of reviews with integrity, and better service to our clients (those people who provide us with our lifestyles).

Don't they deserve that?

And Insurance companies could help by disbanding up-front commissions.
But while the up-fronts are so high, I don't believe the companies can complain about churning!

OnePath's new business declines, Sovereign's surges

OnePath, formerly ING, continued to suffer declining new life insurance business in the December quarter while market leader Sovereign's share of new business surged to its highest level since the June 2010 quarter.

Monday, March 5th 2012, 8:30AM 15 Comments

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