Reserve Bank critical of life insurance

It has released an overview of the sector which highlights the relatively low levels of coverage in this country, high commission rates and low claims rates.

New Zealand insurers were more profitable than peers in many developed OECD countries, the Reserve Bank said.

Bancassurers were the most profitable with the lowest expenses while life insurers distributing via advisers, 43% of the market, were less profitable. Those selling direct were the least profitable.

They also had high costs, driven by high commission rates, soft commissions, policy replacement activity and a lack of scale.