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Latest life insurance sales stats

[Updated]  The latest life insurance statistics show that OnePath has done well, Partners is slowing, AMP is having problems and Sovereign still remains number one.

Friday, June 7th 2013, 10:12AM 12 Comments

by Susan Edmunds

Correction

The original story had an error relating to Pinnacle and Kiwi Insurance lapses. Across the 4 categories of Term, Trauma, RI and LSD Pinnacle new business was $195,000 which was 22% higher than lapses of $160,000. Kiwi Insurance lapses of $354,000 were 2.8 times higher than new business.

New annual premium income for all risk products was the highest for any March quarter in the last five years, according to the latest Financial Services Council statistics. March is historically the slowest quarter.

Total new API stood at $46.876 million in the March 2013 quarter, 15% higher than the same period last year.  It follows a December quarter that was 22% up on the year before.

Overall, the volume of annual premiums in force in March 2013 was $2 billion, fractionally up on December 2012 and 6.5% up on the same time last year. Partners Life was not included in the March 2012 return – when it is removed from the 2013 calculation, premiums had increased 3.9% over the year.

Lapses outweighed new business in the quarter but total PI ended up 1.1% higher because of contractual premium increases of 1.6%.

A quirk of reporting meant some unusual results from Fidelity Life.

Fidelity had been reporting the number of people insured in previous periods, rather than the number of contracts in place.

When that was adjusted to fall into line with the other insurers, the number of Fidelity risk term products reported in the March quarter was more than 220,000, compared to the 57,000 reported in December. But the average value of its premiums dropped from more than $900 to $259, the lowest on the table.

Sovereign dominates the insurance market with a 30% market share. It was followed by AMP with 19% and Asteron with 10%.

AMP’s lapses were four times the value of its new business. For trauma products, AMP wrote 6% of new business but accounted for 18% of lapses, and wrote only 5% of new income replacement business but accounted for 18% of lapses.

Despite only having been in business a relatively short time, Partners Life has secured 3% of the market and it increased its new PI by 12% through the March quarter. That is down from the December quarter’s 21% and September’s 31%, which suggests growth may be slowing.

Partners wrote 3829 new risk term contracts in the quarter, down from 5000 in December.  Its share of new term risk business dropped to 11 per cent from 14 per cent in the previous two quarters.

OnePath also had a good quarter in March, with the second-highest dollar value of new business written, behind Sovereign, and the second-highest percentage increase, behind Partners.

Total income replacement business was well down on the previous two quarters, at $9.1 million compared to more than $11 million in December and September. But it grew by 8.6% over the year and lump sum disablement grew by 11.9%, as measured by annual premiums in force.

OnePath wrote the most income replacement business, at just over 22%. It was followed by Sovereign. Its new business was worth more than $2 million.

AMP appears to be slowing markedly – after reporting 83% growth in the year ended March 2012, it reported growth of just 4% to March 2013.

AIA, which reported an extremely high level of lapses in the December 2012 quarter due to a one-off event, is back to more normal levels.

There was $120 million in death benefits paid in the March quarter.

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Comments from our readers

On 7 June 2013 at 2:09 pm Wazza said:
I would be interested to know if both Sovereign and also those of Onepath percentages include business generated by their banking affiliations, where if so would skew both new business and market share outcomes somewhat.
On 7 June 2013 at 2:31 pm Amused said:
Just what I was thinking Wazza.
On 7 June 2013 at 2:53 pm shane said:
Go pinnacle!!
On 7 June 2013 at 4:02 pm Dirty Harry said:
Why wazza? They have multiple distribution channels. So what? Sovereign is doing web based stuff too, and Asteron underwrites some of that dreadful AA stuff. Pinnacle's numbers probably include adviser assisted sales too. AMP's numbers include AXA. So your point is....?

The real story here is AMP,Pinnacle, and Kiwi. And I would like to know what is "more normal" for AIA... lapses three times new bus, or four?
On 7 June 2013 at 7:46 pm Broker said:
Pull your head in Dirty Harry! Wazza has a very fair point. We would all love to know how much business is being written by the banks. In fact, we would also like to know how much is being written by direct over the web. Simply asking for a further breakdown shouldn't be an issue. Probably unlikely to get his information, but that doesn't mean we would like to see it.
On 9 June 2013 at 1:56 pm Observer said:
AMP is the surprise. With tied agents, surprised at the lapses. Wonder if this is more about the ethical realignment of cover away from the AXA book? Wondering out aloud as to whether there is a similar pattern in the Australian Operation?
On 9 June 2013 at 3:19 pm Alison Renfrew said:
Isn't it lovely? It appears that companies that offer poor products and/or advice will fail to thrive. The results indicate that people need advice from qualified impartial advisers if the business is to remain in force. Consumers who buy insurance based on price may be such cheapskates that they ditch it really fast and no one wins. This reminds me of Paul Fyfe, former CEO of ING NZ, who said "we appreciate the business from you (impartial investment advisers) because your investments stick but when people invest directly it doesn't". Quality business comes from quality advisers.
On 10 June 2013 at 9:56 am Johnnycake said:
Dirty Harry, interesting question about AIA - what was the big one off they had? Anyone? They were once real contenders in the market but you just don't see anything from these guys anymore. Always a lot of comments about Partners Life, but I think it is AIA we should be asking questions about...
On 10 June 2013 at 12:50 pm Margie Mac said:
Apologies to Pinnacle, Kiwi our readers and to Susan. A formulaic error which I was responsible for led to Susan being given incorrect data that grossly overstated the level of lapses for Pinnacle and Kiwi. The story has now been corrected.
On 13 June 2013 at 11:07 am Majella said:
The 'one-off' at AIA was a large group scheme set up for an Iwi authority, where the Iwi paid the premium & owned the policy benefits. It was intended to become self-funding' - death claims building a premium stash - but the underwriting was too effective. Claims didn't materialised and it collapsed. $12 m of premium disappeared in one hit.
On 14 June 2013 at 11:14 am David said:
All of these statistics are meaningless really,all done with mirrors. With 2 billion of annual premium in force 60% being with AMP,Sovereign and Asteron it is not surprising that lapses of very mature term products are high.It would be interesting to know how much of the new business is recycled to get a further lump of initial commission.Policy enhancements are tweeking a little here a little there.If the industry didn't tweek to allow advisers to justify the recycling and concentrated on pricing and reduced premiums on renewal how would that effect lapse rates.
On 21 June 2013 at 12:17 pm David Whyte said:
I tend to agree with David. The only set of figures which carries some credibility is the $ in-force at the end of the last quarter/year and the $in-force at the end of the current quarter/year. On an annual basis, this is the closest you'll get to the total in-force premium income recorded in statutory financial statements.
Also, why are these stats kept secret? I was on the ISI Board for a few years, and could never justify the need for secrecy. The financial statements which are publicly available - with a little digging, I must admit - show the premium income analysis year-on-year. That's a more accurate measure of performance, so why shouldn't advisers who make recommendations, and consumers who make purchases, be able to access this information?

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