OnePath's new business declines, Sovereign's surges
OnePath, formerly ING, continued to suffer declining new life insurance business in the December quarter while market leader Sovereign's share of new business surged to its highest level since the June 2010 quarter.
Monday, March 5th 2012, 8:30AM 15 Comments
by Jenny Ruth
The ANZ Bank-owned OnePath's new business in the individual term, trauma, replacement income and lump sum disablement product categories fell to $5.6 million in the three months ended December, or 13.7% of total new business in the quarter.
That's down from the $6.7 million it collected in the September quarter, 14.8% of the total, and $8.5 million, or 20.2% of the total, in the December quarter of 2010. It's also OnePath's weakest quarter since June 2010.
The figures cover only those companies which are members of the Insurance Savings and Insurance Industry Association (ISI) and account for about 80% of the insurance industry, according to chief executive Peter Neilson.
OnePath is still bringing in the second highest amount of new business but less than half that of Sovereign which collected $12.4 million in the December quarter, or 30.1% of the total.
Sovereign's share of new business in the September quarter was 26.4% and was only 24.3% in the December quarter of 2010.
AMP, which now includes AXA, attracted the third highest share of new business at 11.3%, up from 10.6% in the September quarter and 8.9% in the December 2010 quarter although the actual amount collected fell to $4.65 million from $4.76 million in the September quarter.
AIA had a strong December quarter, increasing its share of new business to 9.2% from 7.4% in the September quarter, while Fidelity had a rather weak one, its share dropping to 7.8% compared with 10.7% in the September quarter.
Tower's December quarter was also weak, its share of new business falling to 4.4% from 6.9% in the September quarter and the actual amounts it collected falling to $1.8 million from $3.1 million. Cigna had a strong December quarter, its share rising to 3.1% from 2.7% in September.
OnePath's surrender rate at 16.1% for calendar 2012 was the highest in the industry behind only Kiwibank's at 18.4% - Kiwibank's share of new business in the December quarter was just 1.4%, unchanged from the September quarter.
By contrast, Sovereign's surrender rate was well below the industry average of 11.1% for 2012 at 9.9%.
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Comments from our readers
“Placing' clients with a "better" product is a subjective thing. Often the product and the price are pretty close, but fiddle with the quotes a little, pick up on a point of difference or two and sell the hell out it and sure, it is miles better. We all know how to dress a recommendation to favour one insurer over another, but the difference as I see it is when an adviser re - places clients from one insurer to another on a regular basis.
Every adviser is entitled to a reasonable payment for their work and placing a new client into a new policy following a robust review and proper handling of the processing is not unjustified (after all I am not in business to enhance, alter and maintain another adviser’s book!). Doing it all again a few years later with the same client rather than altering an existing policy in your own book is where I draw the line.
The statistics suggest that there are people who follow Naomi like she is some sort of Pied Piper. First Sovnet, then Club, and now Partners. What are the odds Naomi will still own her latest project three years from now?
It sure would make interesting reading to compare total industry in-force premium growth with market share changes and new sales numbers all side by side.
I would second GD's comment. Surely people have checked out partners prior to joining up.
I suppose you could use the Newpark example of encouraging advisers to re-write existing in force contracts with Partners Life. What would be remarkable was for the NewPark advisers to leave the in force business where it is and not re-write the business and forgo the opportunity to get another full commission.
You would have to be stupid to not realise the extent of churning within the NZ life insurance industry. It is a repugnant and despicable practice, which ultimately costs me and my clients more in increased term insurance rates. Those involved should be booted out of the industry. But as long as advisers believe in the tooth fairy and the nirvana of superior life cover exists in a contract other than the sold their client two years ago the rotten practice of churning will continue.
Rather than chasing up-front commissions, we should be seeking a higher trail, with no up-front. This will mean a smaller client base is required to maintain the same income, meaning ease of reviews with integrity, and better service to our clients (those people who provide us with our lifestyles).
Don't they deserve that?
And Insurance companies could help by disbanding up-front commissions.
But while the up-fronts are so high, I don't believe the companies can complain about churning!
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