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Kiwis can't see need for insurance: Research

An “it won’t happen to me” mentality is a barrier to New Zealanders even considering life insurance, says Sovereign’s chief officer of strategy and planning, Darrin Bull.

Monday, June 22nd 2015, 6:00AM 1 Comment

It has conducted research that shows 40% of New Zealanders do not have any kind of life insurance., including life insurance, trauma and income protection.

Only 16% are thinking about getting it in future.

It said New Zealand had the third-lowest penetration of insurance among the OECD countries. Only Greece and Mexico have less personal insurance.

Bull said New Zealand’s market penetration stood at 0.9%, compared to the OECD average of 5%.

The main life triggers for taking out life insurance included planning for the future (40%), having children (36%), marriage or permanent relationship (25%) and buying a house for the first time (24%).

The main reasons for not having life insurance is a belief that it is not relevant to their life stage (38%) and that life insurance isn’t necessary (22%).

"As an insurer we are raising this because we see the impact of underinsurance every day when New Zealanders are faced with an impossible decision, such as not being able to have the time off work to recover fully because they can't afford to keep paying their home loan,” he said.

"We are trying to encourage every New Zealander to have a plan for their finances if the worst happens."

Sovereign is offering $10,000 in cover for six months via its Facebook page. Bull said: “We wanted to find an innovative way to address the issue of underinsurance in the risk segment specifically, which is one of the reasons why we have done the Facebook campaign.”

Tags: Sovereign

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Comments from our readers

On 25 June 2015 at 12:57 pm Mike Naylor said:
As we explained in the FSC report, insurance penetration is a faulty statistic to use in NZ, as NZ's figure is misleadingly low. Darrin Bull should be aware of this, so is misleading the public with this statement.

It is also not valid to examine the gross % of NZers who have particular types of insurance unless you collect enough information from your survey respondents to ascertain if they actually need the cover. 40% of kiwis may not need life cover because they are single, or elderly or too low income. Sovereign needs to outline how they compared coverage with need. The stated reasons for no insurance - 'not necessary' may be true or may be a customer illusion, and we can't tell without details.

Under-insurance is a serious issue and Sovereign needs to do a professional job of analyzing it.

Is this report publicly available so the methodology can be checked?

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