Life insurance sales soar, as do lapses
Sales of life insurance policies have soared over the last two years and it is largely because of mortgage brokers moving into the market.
Monday, December 7th 2009, 9:17PM 
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by Jenha White
Sales of new term life, trauma, total and permanent disability and disability income policies were up 39% to 51,081 in the year to the end of September compared to two years ago according to Investment Savings and Insurance (ISI) statistics.
Fidelity Life chief executive Milton Jennings says he believes the rise is attributed to mortgage and investment brokers moving into the sector and insurance brokers making more sales.
"Insurance has never been easy to sell, insurance products have got to be sold rather than bought," he says.
The New Zealand Mortgage Brokers Association (NZMBA) chairman Darren Pratley says around 55 - 60% of NZMBA members are now actively writing insurance or referring it, compared to around 20% two years ago.
"There has been a definite shift of mortgage brokers going into insurance because mortgage brokers now understand the overview responsibility of home loan approval and they are ensuring that the debt risk their customers take on is covered through insurance."
Ron Flood, president of the Life Brokers Association, believes the recession also had a part to play in the rise of insurance sales.
He says when times are good, people don't worry as much about risk, however with the recession people started to think about job security and their finances.
"Hopefully more people will start to realise that New Zealand may be a welfare state, but we still need to look after our families with insurance."
He says New Zealand is under-insured compared to other country's because Kiwi's tend to have the "she'll be right," outlook on life.
ISI statistics also show a 41% rise in insurance policies lapsing or being cancelled compared to two years ago in the year to the end of September.
Flood says the recession has meant that some people have surrendered their policies and stopped paying premiums to help with personal cash flow and commitments.
He believes many people would also have cancelled policies with one insurance company and gone with another.
"People would also have surrendered their policies, having them rewritten as new policies contributing to the 39% increase in insurance sales."
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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