Insurance continues to support New Zealanders

New Zealanders were paid more than $300 million in insurance claims in the September quarter of last year, a small drop on the quarter before.

But claims have risen significantly from the December quarter of 2022, when less than $275m was paid.

The Financial Services Council releases data quarterly showing the level of insurance in the New Zealand market, and the amount being paid in claims.

In September 2023, it said there were 4.1 million life insurance covers in place, for an estimated 5.27 million residents in New Zealand.

About $3.14 billion was being paid in annual life insurance premiums.

Term and accidental death policies were creating the most premium income, at $1.552 billion a year. That was followed by trauma polices, at $621 million and income protection at $494m.

The FSC said since 2011 there had been significant growth in trauma insurance.

“Accidental death is still the biggest product but has had limited fluctuation over time. On the other hand, traditional and credit insurance have been decreasing.”

It said since 2020 there had been little variation in channel split. About 60% of insurance policies came from advisers, just over 20% from banks and the rest was split between direct sales and group business.

“The number of covers from group share of the total has increased, taking over from those coming from banks.”

More men than women had personal insurance, the FSC said.

The FSC’s research has previously found that as many as 70% New Zealanders remained underinsured.

About 90% said they would be financially affected if they lost their jobs and 80% would struggle to support their families if they were in an accident that resulted in permanent disability.

But only 11% of respondents to its survey reported having income protection insurance, 14% had total and permanent disability insurance, and 18% had cover for trauma or critical illness.

Outgoing Financial Services Council chief executive Richard Klipin said at the time that many New Zealanders were experiencing a cost of living crunch.

“Many haven’t lived through a recession or severe financial shock before and will be looking for support as they face these challenges for the first time,” he said.

“While it’s understandable some are, and should be, prioritising immediate needs, the latest findings are cause for alarm and reflect the importance of long-term thinking when it comes to our finances.”