Christchurch Earthquake: 63 Life Insurance Claims, Over $12.5m Paid Out
Thursday 26 May 11 2:02pm
Speaking at the Life Brokers Association annual conference today, new ISI Chief Executive Peter Neilson confirmed the industry had paid out more than $12.5m in death claims as a direct result of the Christchurch earthquake.
The latest industry report, for the quarter ended 31 March 2011, confirmed the life insurance industry had been impacted in two ways following the February earthquake in Christchurch; with total death claims rising over the quarter, and in-force premium growth less than half the previous quarter.
In total, ISI members received and paid out on 63 individual life insurance claims as a result of the 22 February earthquake, worth a combined $12.527m and representing an average payment of $199,000 per claim.
ISI Chief Executive Peter Neilson says that while an insurance pay out can never compensate for the loss of a loved one, it can provide a degree of financial security for families who lost a family member. He says the response from the entire industry to the tragedy included looking for ways to process claims quickly and compassionately.
As well as death claims, there were also claims accepted for redundancy (180), income protection (16) and trauma or total permanent disability (2), with payments expected to be in excess of $1m once they have been finalised (these policies typically make regular payments rather than provide a single lump sum).
“Following the tragic events in Christchurch, there can be no doubt that the life insurance industry is able to provide financial protection to New Zealand families in such times,” says Mr Neilson. “There seems to be a perception amongst some people that insurers look for ways to avoid paying any claims – the 63 payments our members have made since February proves that this is simply not true.”
While the number of death claims rose 3.2% over the 31 March 2011 quarter, the level of in-force premium growth was only up 1.0% (up $18m to $1.8bn). It was the lowest quarterly result since March 2009 ($3.5m) and the second lowest quarterly result in the last three years.
Of thirteen separate product categories, only seven recorded positive in-force premium growth, including the three largest categories: term life (1.5%), income replacement (0.9%) and trauma (2.3%).
Peter Neilson says the result was not unexpected. “When you have such a massive disaster in New Zealand’s second largest city, combined with reducing real incomes, it is inevitable that this will have an impact on sales growth,” explains Mr Neilson.
“Hopefully the February earthquake will help more people to realise that life insurance can be an important part of their family’s financial protection, and that they can trust their life insurer will be there for their family when tragedy strikes.”