Life insurers struggle but young firm bucks trend
Caught in a crunch of households having to pay more for their house insurance and a national focus on paying down debt, life insurance companies are struggling to get sales growth.
Figures released by industry body the Financial Services Council (FSC) show total annual in-force premiums - the combined premiums paid by all policy-holders - for ordinary term life insurance rose just 2 per cent in the past quarter.
Even with fast-growing life insurer Partners Life included, the life insurance industry is increasing annual premiums only through inflation-indexing on the contracts it has sold to the public.
The FSC figures show that, in the three months to the end of September, the annual premiums in force on term life insurance policies had risen from $933.32 mil lion to $952.85m.
But, once $22.59m of "contractual premiums changes" - largely rises in cover levels designed to keep cover in pace with inflation - the industry actually recorded negative term life sales.
The FSC figures record modest growth in trauma and income -protection insurance annual premiums after contractual changes are taken into account, but the figures also give an insight into the rising fortunes of Partners Life.
Partners Life, which was set up in late 2010 but did not start selling policies until last year, has been growing rapidly, partly as a result of poaching business off its larger rivals.
Its recipe for success has been to offer policies that are at least as good as those of rivals, while wooing insurance advisers, through whom it sells its policies, with attractive commissions.
Before the FSC's September- quarter sales statistics, its sales were excluded from the numbers because FSC refused to let Partners Life join up to its club of life insurers. Partners Life believes it was a move orchestrated by encumbent insurers keen to limit its growth.
The June-quarter FSC statistics show total term life premium (excluding group business) as being $920.16m. But once Partners Life is factored in, the number jumps to $933.32m, implying that at the end of June Partners had $13.17m of annual premium on its books then.
Similarly, the difference in trauma and income-protection insurance numbers suggests Partners Life has $7.72m of trauma premium in place at that date, and $5.415m of income-protection premium.
Partners Life chief executive Naomi Ballantyne said that across all insurance policy types the company had about $33m of in-force premiums in place at the end of June.