New Zealand’s life insurance market is stagnating and its primary market – parents with children who own homes with a mortgage – is shrinking, research has revealed.
The study, carried out by New Zealand Institute of Economic Research (NZIER) and commissioned by life insurer Sovereign, also showed Kiwis were more likely to insure their house, health, contents and cars than they were to want to protect their lives.
The findings of the study showed that revenue for the life insurance industry is only growing because existing policyholders are ageing and premiums have risen with inflation, rather than because more people were taking out new policies.
Economist Mr Mike Henson, who undertook the research, said: “The number of policies seems to have been static since about the beginning of 2013.” The average premium for both new and lapsed policies seems to be lower than the average premium for existing policies.”
Mr Henson said this suggested new customers and those who had dropped their insurance were more price sensitive than a shrinking core group of existing policyholders.
More people renting rather than buying their homes
The research also found the group of people typically targeted by insurance - families with a mortgage - was shrinking while the number of people renting was on the rise.
Mr Laurence Kubiak, Chief Executive of NZIER, said that the report findings suggest an increasingly varied dwelling model in New Zealand, the impact of which has diversified the life insurance market and changed traditional entry points.
“The traditional prime life insurance market, house owners with dependents and a mortgage, now represent just 30% of households in New Zealand. The biggest and fastest growing group by household type is those in rented accommodation – with this shift some of the traditional triggers for when people think about life insurance and how it fits into their lives have been removed,” he said.