More than $1 billion claims paid each year for personal insurance
New Zealanders have received more than $1 billion a year in personal insurance claims for each of the last five years
according to figures released today by the Financial Services Council (FSC).
FSC CEO Peter Neilson said the $1.133 billion a year payout in the year ended 30 June 2015 included life and income
protection insurance (see table on next page).
Mr Neilson said the personal insurance claims paid out by the insurance industry had been consistently over $1 billion a
year for each of the last five years since first surpassing the $1 billion mark with a payout of $1.009 billion in the
year ending 30 June 2011.
The FSC’s latest figures also show income protection insurance, including trauma (individual and group), replacement
income (individual and group), lump sum disablement, credit, and life – death and disablement – group, is growing
strongly. Annual premiums are up 44% from 659.1 million as at June 2010 to $948.8 million as at June 2015. However, even
with this increase, according to FSC research around three quarters of New Zealand house-holds’ incomes are not insured
against a serious illness.
Mr Neilson said FSC is currently completing a survey of New Zealanders that will give bench mark information on which
insurances families hold and the current uptake of income protection insurance.
“Our earlier research showed many New Zealanders still think their chances of being off work with a long term illness is
less than for accident. The reality is they are much more likely to be off work for six months or more after a serious
illness than as the result of an accident.
“The ability to earn an income over a lifetime is usually a person’s most valuable asset. For most of us it is worth
more than the family home yet it is insured far less than homes, home contents or cars.”
The FSC plans to hold a conference later in the year to present the findings of this research. Interested parties
including journalists, healthcare organisations, government departments and patient advocacy groups will be invited to
attend and the conference will also be open to the general public.
Payouts for the various types of personal insurance over the year to 30 June 2015 were:
Personal Insurance typeBenefit Payments
($millions for year to 30.6.15)DefinitionLifeTerm$430.1Life insurance without a savings component. It includes mortgage repayment insurance but excludes consumer credit
insurance (see Credit Insurance below).Whole Life & Endowment$197.9Traditional ‘bundled’ life insurance policies with combined savings and risk cover and benefits payable on death or, for
endowment, on a specified date. Total benefits are reported here.Unbundled$16.7Policies in which the savings component is explicitly identified and the return on savings is reported to the
policyholder periodically. Only risk benefits associated with unbundled policies are reported here.Guaranteed Acceptance$15.2A similar benefit type to Term but is reported separately. It refers to policies with minimal underwriting tests which
usually have a return of premiums if death occurs in early years, possibly with full benefits payable on death by
accident. Funeral plans are a common Guaranteed Acceptance product.Accidental Death$1.1Refers to either stand-alone or rider benefits where a separate premium can be identified.Income ProtectionTrauma$140.9Benefits provide for a one-off cash sum to be paid upon diagnosis of certain specified illnesses or medical events such
as heart attack, cancer and stroke. These benefits may be rider benefits to the main policy or benefits that are sold on
a stand-alone basis.Trauma – Group$3.1Group means schemes with multiple memberships that are sold as one policy. Replacement Income$109.1A regular income benefit paid on disablement, as opposed to a lump sum benefit.Replacement Income – Group$18.6Group means schemes with multiple memberships that are sold as one policy. Medical$95.9Insurance coverage for medical and surgical expenses associated with an income protection policy. This insurance can
either reimburse the insured or pay the care provider directly.Life – Death & Disablement – Group$66.2Group means schemes with multiple memberships that are sold as one policy. Annuities$14.8The insurer makes a series of future payments to a buyer (annuitant) in exchange for the immediate payment of a lump sum
(single-payment annuity).Lump Sum Disablement$14.3Includes both Permanent and Temporary Total Disablement.Credit Insurance$9.6Includes covers from credit card balances, personal loans and similar insurances but excludes mortgage-related and
similar covers which are reported in the Term category.Total$1,133.6
A more detailed breakdown of these statistics can be downloaded from www.fsc.org.nz