There’s too many firms selling medical and life insurance in New Zealand says a former Fidelity Life executive who is concerned corporate giants such as Amazon and Google are circling, preparing to disrupt the industry.
Speaking during last week’s FSC’s Generations conference, Financial Services Executive Don Allerston said there is an element of saturation in the market when it comes to insurance.
“There are 17 medical and life insurance companies listed on one [New Zealand] website,” he said (see below). “There are just 2.3 million people aged between 25 and 65 in the country so straight away I see oversupply.
“And while New Zealand’s spirit is one of entrepreneurship, and businesses have done so well, I question 17 firms serving an island nation such as ours. The answer is not two, but I don’t believe it is 17 either.”
While conceding his view may be seen as controversial, Allerston told the conference’s online audience and fellow panelists – which included Cigna Life’s CEO Gail Costa – that the industry needs to move away from “…sunset strategies that keep us where we are right now”.
He said the New Zealand insurance industry needs to move into a space where it can consider adopting a progressive mindsets for its current customers as well as the “…customers we aspire to serve”.
“Because if we don’t there will be partnerships and non-traditional competitors that will step into that space,” he said. “And before we know it we’ll be wondering ‘who moved the cheese’ (referencing the book for people faced with change).
“We can look to the likes of Google, Facebook, and online retailer Amazon, all of whom are making moves into the risk space. Amazon is securing a licence in India and is already distributing insurance-based products there.”
The industry needs to think a little more broadly and set strategies ten years down stream…
Pointing to the levels of public trust placed companies such as Amazon (in the top 10 trusted brands in a recent US survey and now selling motor insurance) Allerston said companies with strong distribution channels should be recognised as competitors.
“I wonder what those trust barometers look like when Amazon is compared with where trust has sat historically with insurers?” he said.
“The industry needs to think a little more broadly and set strategies ten years down stream that will allow us to face into those and be responsible for the customers that we serve now, as well as those segments of society that we do not want to abandon and that we wish to serve.”
I question 17 firms serving an island nation such as ours…
Allerston also highlighted New Zealand’s diversity saying that in Auckland alone there are more than 150 ethnicities present and more than 150 languages spoken across the city.
“And that is huge,” he said. “That lends itself to different thinking and product structure, solutions from different territories.”
Allerston suggested that migrants are arriving in New Zealand and looking for more advanced products that are common-place in their home-land but which are not available here.
“That allows us to point toward innovation and real value in the product offerings,” he said.
“I would like to see the industry move from a systems and procedures perspective to interactions, touch-points and experiences.
“If we are to deliver a sustainable industry, one we can all be proud of, that feels to me a cornerstone that we need to build on.”
Life and Health Insurers in New Zealand
- Accuro
- AIA
- AMP
- Asteron Life
- BNZ Life
- Cigna
- Co-Operative Life
- Fidelity Life
- Kiwi Insurance
- Momentum Life
- nib
- Partners Life
- Pinnacle Life
- Southern Cross
- Southern Cross Life Insurance
- UniMed
- Westpac Life
This week’s poll
Are there too many insurance companies in New Zealand?
- No (54%)
- Yes (43%)
- Not sure (4%)
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