New Zealand Insurance Report Q4 2011
Includes 3 FREE quarterly updates
The most pressing issue is the magnitude of the claims costs relating to the September 2010, February 2011 and June 2011 earthquakes in and around Christchurch. Premium growth in both segments is sluggish, partly because of the squeeze on real income. Although their assets under management are small, at NZD8.5bn at the end of June 2011, the KiwiSaver schemes have been growing very quickly.
New Zealand’s insurance sector would stand out as being unusual even in the absence of the effects of the earthquake on February 22 2011 in Christchurch. This was the second of three earthquakes in the area in less than a year. The others occurred on September 4 2010 and June 13 2011.
The competitive landscape is dominated by the local subsidiaries of Australian firms, whose corporate histories typically reflect past deal making in Australia (and, to a lesser extent, multinationals such as AIA or Zurich). Both segments are underdeveloped by most metrics. This is because the government has provided insurance cover for many risks. The Earthquake Commission covers the first NZD100,000 of damage to houses from earthquakes and other disasters. (The commission also covers home contents, to a specified limit). The Accident Compensation Corporation (ACC) covers many medical expenses, rehabilitation and loss of income (within limits). Traditionally, New Zealanders have regarded the universal old age pension as adequate for their retirement income.
In the life segment, three main trends stand out. First, premium growth has been particularly sluggish, perhaps as a result of constrained real income. Second, a part of the problem, which has been recognised by the Investment Savings and Insurance Association (ISI), is lack of customer understanding and awareness. Third, the KiwiSaver schemes, which are managed by insurance companies but which cannot really be considered to be a part of the life segment, have been growing rapidly. We believe life density will still be low by the standards of developed countries at the end of the forecast period.
In the non-life segment, the main challenge is control of costs. The Earthquake Commission has been unable to obtain multi-year reinsurance cover following the earthquakes in Christchurch. Various direct insurers believe they can pass on higher reinsurance costs to their clients. The ACC has made significant progress in reducing the time over which claimants can draw on its resources. These developments appear to be taking place at a time that non-life premiums are growing very slowly, which reflects a general lack of confidence among New Zealand households and businesses.
The most pressing issue is the magnitude of the claims costs relating to the September 2010, February 2011 and June 2011 earthquakes in and around Christchurch. Premium growth in both segments is sluggish, partly because of the squeeze on real income. Although their assets under management are small, at NZD8.5bn at the end of June 2011, the KiwiSaver schemes have been growing very quickly.
New Zealand’s insurance sector would stand out as being unusual even in the absence of the effects of the earthquake on February 22 2011 in Christchurch. This was the second of three earthquakes in the area in less than a year. The others occurred on September 4 2010 and June 13 2011.
The competitive landscape is dominated by the local subsidiaries of Australian firms, whose corporate histories typically reflect past deal making in Australia (and, to a lesser extent, multinationals such as AIA or Zurich). Both segments are underdeveloped by most metrics. This is because the government has provided insurance cover for many risks. The Earthquake Commission covers the first NZD100,000 of damage to houses from earthquakes and other disasters. (The commission also covers home contents, to a specified limit). The Accident Compensation Corporation (ACC) covers many medical expenses, rehabilitation and loss of income (within limits). Traditionally, New Zealanders have regarded the universal old age pension as adequate for their retirement income.
In the life segment, three main trends stand out. First, premium growth has been particularly sluggish, perhaps as a result of constrained real income. Second, a part of the problem, which has been recognised by the Investment Savings and Insurance Association (ISI), is lack of customer understanding and awareness. Third, the KiwiSaver schemes, which are managed by insurance companies but which cannot really be considered to be a part of the life segment, have been growing rapidly. We believe life density will still be low by the standards of developed countries at the end of the forecast period.
In the non-life segment, the main challenge is control of costs. The Earthquake Commission has been unable to obtain multi-year reinsurance cover following the earthquakes in Christchurch. Various direct insurers believe they can pass on higher reinsurance costs to their clients. The ACC has made significant progress in reducing the time over which claimants can draw on its resources. These developments appear to be taking place at a time that non-life premiums are growing very slowly, which reflects a general lack of confidence among New Zealand households and businesses.
Contents
Executive SummaryTable: Total Premiums, 2008-2015
Key Insights And Key Risks
SWOT Analysis
New Zealand Insurance Industry SWOT
New Zealand Political SWOT
New Zealand Economic SWOT
New Zealand Business Environment SWOT
Life Sector
Asia Pacific Life Sector Overview
Table: Asia Pacific Life Premiums, 2008-2015 (US$mn)
New Zealand Life Sector Update
Life Industry Forecast Scenario
Table: Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Sector Key Drivers – Demographics 2008-2015
Non-Life Sector
Asia Pacific Market Non-Life Sector Overview
Table: Asia Pacific Non-Life Premiums, 2008-2015 (US$mn)
New Zealand Non-Life Sector Update
Non-Life Industry Forecast Scenario
Table: Non-Life Premiums, 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: New Zealand Economic Activity, 2008-2015
Political Stability Overview
Epidemiology
Table: Insurance Sector Key Drivers – Disability-Adjusted Life Years, 2005-2015
Insurance Risk/Reward Ratings
Table: New Zealand’s Insurance Risk/Reward Ratings
Table: Asia Pacific Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In New Zealand’s Insurance Sector
Table: Gross Written Premiums And Estimated Market Shares, June 30 2009-2010
Earthquake Commission
Accident Compensation Corporation
Table: ACC Accounts
Health Funds
Other Asset Pools
Company Profiles
Local Company Profiles
AMI
Farmers Mutual Group
Regional Company Profiles
Allianz
AMP
Asteron
AXA
Chartis
IAG
Tower
Vero
Zurich
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators Skip to top