A report by Deloitte on New Zealand’s life insurance sector, to encourage further discussion among the life insurance community, has been released.
Lee-Ann du Toit, Deloitte New Zealand Actuarial and Insurance Services Partner, says the country’s life insurance industry is unique when compared to its overseas counterparts.
“For instance, existing alongside ACC, KiwiSaver and NZ Super, our life insurance offerings have been shaped by the needs of a local population that is already confident in an existing level of support from government.”
The report states there is a perception support will be provided by the Government, and this had led to a degree of underinsurance.
Deloitte’s Issues Paper also notes that Life insurance products sold in New Zealand are quite different from much of the rest of the world.
“New Zealand life insurers primarily offer risk-only products with cheaper, yearly renewable premiums which increase step-wise with age.
“In comparison, life insurers in many overseas markets offer combined savings and insurance products such as whole of life and universal life and use a level premium structure.”
Du Toit says there is also a relatively high commission ratio in New Zealand compared with Australia.
“However, this is driven by a significant portion of life insurance in Australia being distributed through mandated default insurance under group schemes attached to Superannuation, while in New Zealand, adviser distribution is more dominant.”
Click here to download the full report.