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How good are NZ insurance products?

Just what does our insurance market look like compared to the rest of the world? Actually pretty darn good, but here is a comparison on a number of measures.

Wednesday, June 4th 2014, 9:11AM 2 Comments

by Russell Hutchinson

Choice: We provide excellent choice to consumers. Obviously we have fewer insurers than some of the very large markets, but given our size the number is impressive. it is often literally more when you take into account regional variations. In the US, for example, on a state by state basis, you may have fewer companies to choose from than you do here.

Product: The scope of the different features and benefits is incredible. I have shared our product development situation with product managers in the UK and they are often surprised at the features we have available. Of course, there are features they offer that we do no, but we were not expecting the reverse. This applies particularly in Trauma cover, Income Protection, and Business Insurance. One example we have here is the common practice of passing back policy improvements – that’s rare in the UK. Another example is Business Income Protection cover – our features and options are the equal of the Australian environment, according to a product manager recently back from reviewing products with Australian colleagues.

Non-medical limits: News from several re-insurers shows that our non-medical limits, along with Australia’s, are much higher than the US and UK limits. That means it is easier for our clients to obtain cover without too much hassle in the form of examinations or blood tests.

Technology: This was a surprise to me – our online services are also the equal of many markets we would expect to be ahead, and ahead of some we would expect to be behind. AM Best’s Asia-Pacific Weekly, for example, highlighted that the online services available in Singaporeare only just emerging. Once again we have a rich and diverse market for systems, tools, online services, and marketing online.

Pricing: Of course, the run of play isn’t all one way. Some aspects of our market are not as good as the others. One is the uptake of life insurance across the population, and the premium spend on a per-head basis. But even here the detailed picture is worth investigating: although our spend per capita is only about one fifth of the industrialised world that we like to think of as our ‘peer group’, it is growing faster than their rate – so we are on a convergence path. Also, most of our underperformance is from the large proportion of our population with no cover.

Obviously, in detail, the picture is more complex, and specific areas of outperformance or underperformance can be found in many places. But overall we have an industry with many good features and advantages.

« People don’t like talking about dyingWhat you actually said, versus what the client heard you say »

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Comments from our readers

On 7 June 2014 at 12:54 pm Cyril said:
We have leading edge policy wordings compared to any other country in the world. My concern for the public of N. Z. is the standard of advice given as to which insurer to use for a particular clients situation.

In my many many years in the market place I can see very few cases where indemnity income cover should be offered if the client is able to get agreed value cover or even better, a loss of earnings contract.

TPD cover is still not fully understood by many advisers and sadly by many BDM's. The area of the financial strength of the insurer, the long term future of the insurer is also overlooked by many advisers, supported by there aggregator, to chase higher commission, overseas trips and other freebies. Sadly the now not so new regulations have not really changed anything to the better for the public. We still churn- everyone including banks, AFA's and RFA's. Great policy wordings yes but any other changes??????????????????
On 10 June 2014 at 1:06 pm Rainmaker said:
The pass back feature is a very expensive option that is not fully understood. Like all options the cost is not fully understood until there is a claims blow-out.

In particular changes around the wording with regards to stress claim benefit term limitations can be more costly than the new business they bring in.

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