AIA regional boss relishes prospects for 'under-insured' NZ
"Amusing that the insurance industry makes life insurance sound like a 'need to have'. Nothing quite like insuring for the inevitable!"Featured comment
BUSINESSDESK: AIA Group regional managing director Gordon Watson is upbeat on the prospects for the insurer's New Zealand business, saying the level of under-insurance means there are plenty of growth opportunities.
Hong Kong-based Mr Watson has been in New Zealand during a whistle-stop tour of the countries he is responsible for and is "really bullish" on the local business, given the lack of Kiwis with life insurance.
New Zealand has followed the rest of Asia, which, excluding Japan, is under-insured by some $US40 trillion. About 1.35 million lives were covered by insurance as at September 30, down 0.8% from a year earlier, Health Funds Association of New Zealand figures show.
"The penetration rate as a percentage of GDP is exceedingly low in the New Zealand market," Mr Watson told BusinessDesk. "To me, the pie in New Zealand at the moment is very small – it's all about growing the pie, not stealing from competitors."
AIA's New Zealand business accounts for less than 1% of the global insurer, which was listed on the Hong Kong Stock Exchange in October 2010 as part of insurer American International Group's efforts to repay the US federal government's $US$82.3 billion bailout package.
The stock last traded at $HK30.90 a share and has rallied 27% this year, valuing the insurer at $US48.02 billion.
The New Zealand market needs a bit of work in explaining to the public what services they need, but has "great opportunities to grow", Mr Watson says.
"People are looking for an all-in-one type programme. They want something simple, easy to understand, and they do like comprehensive insurance. If we just listened to what customers want we would only sell savings products."
Mr Watson says one of the biggest gaps in the local market is in protection products, and AIA New Zealand will target those under-insured areas.
"We're assertive in terms of getting the products out there as fast we can for what the New Zealand people need. But we're not aggressive in just buying market share. That would be foolish."
AIA New Zealand, the trading name for American International Assurance Co (Bermuda), made a loss of $11.3 million in the 12 months ended November 30 last year on net premium revenue of $50.6 million, statements lodged with the Companies Office show.
Though the insurer posted a bottom-line loss, revenue grew in the year, and earnings were eroded by a $25.3 million increase in policyholder liabilities.
Mr Watson says the spate of natural disasters throughout the region, including the Canterbury earthquakes, Japanese earthquake and tsunami, and Australian floods, has raised awareness of the need for cover, but that has not immediately fed into increased uptake.
"People don't wake up in the morning and think 'well, I think I'm going to go out and buy that life insurance'."