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Customers spooked by insurance report

Trade Me’s head of insurance says the recent Reserve Bank and Financial Markets Authority report into life insurers has shaken consumer faith in the industry.

Thursday, February 28th 2019, 10:37AM 4 Comments

The website operator released its financial result for the six months ended December 31.

While Trade Me Insurance, which offers cover for house, car and contents, had revenue up 81.3% year-on-year, LifeDirect revenue slumped 14.4%, which Trade Me said was due to softening market conditions and increasing online competition.

Overall, reported profit was $44.4 million for the site.

Head of insurance Jaime Monaghan said the company had compared the LifeDirect result to Financial Services Council statistics that showed new business growth declining 16% year-on-year in the same period.

“Still obviously going backward is not what we’re looking for but when the market is going back in terms of how fast it’s growing it puts it into perspective.”

She said the regulators’ report seemed to have put people off buying life insurance.

“The intent behind the report was good but it’s had the opposite effect, spooked the market a bit. It’s implying there’s a big problem to be solved when the results of the report show there are instances [of problems] but it’s not widespread. I feel like it made people nervous to buy insurance so people are potentially not getting what they want and need.”

She said LifeDirect made a point of highlighting the factors it thought were important for people to consider when buying insurance.

“We give people the information they need to make a decision but I’ve got a feeling people are staying away from buying life insurance as a result of that report, which is the wrong outcome.”

She said Trade Me still wanted to grow LifeDirect. “Where Trad Me is at with a new chief executive coming in and potentially a new owner, we’re not doing anything radical at this stage.”

Tags: LifeDirect

« FMA says it's not lobbying for ban on life insurance commissionsPartners tool to automate advice process »

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Comments from our readers

On 28 February 2019 at 2:29 pm Donald said:
I do wonder if TradeMe's LifeDirect should be looking at alternative reasoning for the decline by 14.4%. Within the overall insurance environment market we have on the other hand an insurer that relies predominantly on and supports fully the adviser advice process has grown significantly in market share to be #1.
On 28 February 2019 at 6:10 pm all hat, no cattle said:
Correction: the report didnt "spook the market", the market doesnt care, doesnt know and doesnt want to know. If any member of the public does have a concern though, it's becuase of the the PM and Fin Min's erroneous interpretation of the contents of said report.

But that TM result showing sales down 14.4% was for the 12 months to December, the report came out in January. So something else has "spooked" their customers. Besides, I'd love to know how much extra they spent on advertising to get that 81% increase in domestic insurance!
On 28 February 2019 at 7:53 pm Adviser1 said:
Perhaps kiwis are valuing face to face advice and going through other channels?
On 6 March 2019 at 9:53 am RS said:
Oh dear, what an obfuscation. Their trading result was "spooked" by a report released after the reporting year finished?

Perhaps the real answer is increasingly that people may like to research online, they don't tend to buy online.

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