Life insurance payouts hit new $1 billion high

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For the first time ever, the life insurance industry has paid out just over $1 billion in annual benefits to policyholders.

Friday, September 2nd 2011, 7:18AM 5 Comments

Insurance Savings & Insurance Association chief executive Peter Neilson said the latest results, for the year ended June 30, 2011, provide a clear example of the value the life insurance sector provides to individuals, families and the wider New Zealand economy.

"To be able to make such a large contribution to the financial wellbeing of Kiwis is really pleasing," Neilson said.

"While the circumstances surrounding these payments are often extremely sad, our policyholders are able to use the financial support we give them to reduce debt, pay for treatment, cover for lost income, and generally make things just a little bit better."

Neilson said that while the $17 million in life, income protection and redundancy insurance claims resulting from the Christchurch earthquake had a significant part to play in the result, the total level of benefits paid had actually increased $100 million over the last year.

"This time last year we were celebrating the fact we had broken the $900 million barrier for the first time," he said.

"So to reach the $1 billion level only twelve months later is extremely satisfying."

He said anecdotal evidence suggested more New Zealanders are taking up life cover.

"No doubt the experience of the Christchurch earthquake had made more people aware of the need for insurance. The industry has also become very innovative in providing new business models to make life insurance more accessible and affordable, including online distribution."

He also said the level of benefits paid demonstrated just how large the industry had become.

"The life insurance industry is a significant contributor to the New Zealand economy. Total in-force premiums are now at $1.83 billion annually, representing around 1% of GDP. Not only is our industry providing financial support to policyholders, it is also a large employer of Kiwis and a significant investor in New Zealand business."

However, Neilson said there is still more work for the industry to do.

"We know that a considerable number of people who lost their lives in the Christchurch earthquake either had no insurance, or not enough. Our aim should be to make sure that everyone who needs cover, has it."

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