New life insurance business dropped in March Qtr

New business in most product categories of life insurance written by Financial Services Council members fell sharply in the March quarter compared with both the previous quarter and the March quarter last year.

Thursday, May 17th 2012, 6:00AM 5 Comments

by Jenny Ruth

Partners Life also experienced a small drop in new business compared with the December quarter but still increased its market share.

The FSC figures show total new business written in the four major categories fell to $33.1 million in the March quarter, down 20% from $41.3 million in December quarter. It was down 10.6% compared with $37 million in the March quarter last year.

Partners Life's new business of $6.3 million in March was down 1.9% from December. However, its market share across the four products rose to 16% from 13.4%. Figures for the company are only available from the June quarter last year when it claimed 4.2% of the market.

The FSC figures show for a second successive quarter, lapses and surrenders in the four major categories exceeded new business - lapses totaled $41.9 million in the March quarter, about the same as in the December quarter and compared with $35.8 million.

FSC chief executive Peter Neilson says it's difficult to interpret exactly what's going on but the weakness may reflect the recessionary environment.

"Some people are not renewing policies or moving down to a lower cost policy," Neilson says.

And regulatory changes have led to a number of advisers leaving the industry, he says.

Neilson says he expects to meet Partners Life people by the end of this quarter to discuss including that company's figures in the FSC data.

"Certainly, we would like to have the statistics as comprehensive as possible," he says.

However, that depends on companies being prepared to provide information and the FSC also needs to ensure the way one company describes their policies is comparable with the categories other companies use.

And there's always a tension between wanting comprehensive information and the amount of information individual companies are prepared to disclose, he says.

Partners Life chief actuary Chris Coon says his company has "an open mind" on jointing the FSC. "We would be supportive of strategies to improve the industry," Coon says.

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Comments from our readers

On 17 May 2012 at 9:26 am Amused said:

How many times does this need to be explained to Peter Neilson and the FSC? Without the addition of Partners Life the statistical information his organisation provides now is meaningless.

On 17 May 2012 at 2:58 pm Russell Hutchinson said:

New life business always drops in the March quarter - nothing to see here.

Much less new life insurance business is written in most of January.

Even this summer was not wet enough for people to think of buying life insurance as a good alternative to all the other things they might like to do with their summer holiday.

On 18 May 2012 at 8:04 am Stephen Ladányi said:

How about some transparency from the life companies on their market share data?

On 18 May 2012 at 9:37 am David Allan said:

Life insurance gets very expensive as our clients age and after the tax changes of a couple of years ago the industry has increased premiums wantingly.This forces older people to reduce or terminate policies and in turn talk about the issue to their friends and family.The industry is losing its supporters and increasing its detractors.

On 18 May 2012 at 10:51 am Mac said:

"...life insurance written by Financial Services Council members fell sharply..."

Maybe the Council members need to do some door-to-door cold calling to increase their sales figures?