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What are the chances of meeting someone who needs help with their insurance?

Quite high. This is another way of asking, in effect, how big is the market for life insurance? We’ve done some work on this and here are the numbers:

Tuesday, May 3rd 2022, 9:23AM

by Russell Hutchinson

Start with a population estimate. As of March 2021, Statistics New Zealand reported the estimated population at about 5.1m. Who could buy insurance? Our view was to take only those in employment as a rough proxy for insurability and capacity to afford some cover. Clearly, some who are employed are uninsurable and many who are not employed are insurable and may also have the capacity to purchase cover. But these estimate errors will be small compared to the total and are likely to partially offset one another. Using working population, we also neatly avoid children and the elderly who tend not to purchase cover. This is the dominant assumption – all our other variations are less significant than this one, which gives us a starting pool of 2.75m.

On to variations: we can add some inwards migrants. In spite of MIQ, in the year to end of March 2021 we still had net migration of about 17,000, of which we assume about 90% are working age. This 15,000 added is the largest contribution to growth in the market. We then add coming of age kids – these are children turning 16 in the period. This gives about an extra 62,000 people. But after subtracting the number of people reaching retirement age – these are people turning 66 in the period it is brought back to a net gain of only about 8,000. After subtracting deaths in the in-work group of a little under 7,000.

Summing all the resulting adjustments give us a new eligible group of: 2.766m. Although the gain on the initial estimate is small, I like to think that the market is growth is significant. It will grow faster if migrations settings return to normal. Also, the increasing prevalence of people aged over 65 that are in-work will continue to expand the market – possibly by more than migration.

What proportion is insured? At some level, no matter how low, based on FSC research, only a little under two thirds have any cover. Of that group, most have too little. 37% of our working group have no cover at all. That is just over a million people. They are fit enough to work, and they earn an income. They probably have debts and loved ones.

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