Financial crisis sparks new rush for life insurance

Life insurers are benefiting from the financial crisis, with a 9.5% increase in total premiums over the past year to September 30.

Total premiums for in force life insurance policies increased to $1.512 billion compared with $1.381 billion over that time, statistics from the Investment Savings & Insurance Association show.

ISI chairman Vance Arkinstall said that in difficult times people looked for the “safety, security and the peace of mind that life insurance provides.”

New policy sales rose particularly strongly in the September quarter, with premiums for new individual risk policies up 21.7% to $51.78 million. The market share leaders for the quarter were Sovereign (31% market share), ING (13.4%) and Westpac Life (8.6%).

Leading life insurer Sovereign retained its overall market share position for the year. Sovereign holds 29.6% of the market with Axa in second place on 14.1%, AMP on 13.7%, and Asteron Life on 8.2%.

During the year life insurers paid out more than $860 million in benefits.

But Mr Arkinstall said life insurance tax reviews contained in the latest government Tax Bill could see new policy premiums rise between 20% and 30%.

“With the current financial crisis and New Zealand’s long standing underinsurance record this seems totally the wrong time to be planning such a move,” Mr Arkinstall says.