New Financial Services research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 01/01/2014 -- As of late 2013, the outlook for both of the major segments of New Zealand's insurance sector is uninspiring. The socialisation of risk through the EQC and the ACC is a key reason why insurance has been and will remain underdeveloped by most metrics. The economic environment is not particularly favourable, at a time that the life insurers (in particular) need to do more to educate consumers about the benefits of insurance. Nevertheless, the sector has clear strengths, and coped very well in the aftermath of the second (and main) earthquake in Christchurch two years ago. Many of the leading life insurance companies are benefiting from the expansion of the KiwiSaver system - even though the KiwiSaver products do not include an insurance component.
Key Insights And Key Risks
By most metrics, the insurance sector in New Zealand remains underdeveloped in late 2013. This is partly because of the socialisation of risk through the Earthquake Commission (EQC) and the Accident Compensation Corporation (ACC), in the non-life (property and casualty) and life segments respectively. The EQC demonstrated its effectiveness in the wake of the main Christchurch earthquake of February 22, 2011. The Accident Compensation Corporation has been actively introducing reforms and changes to resolve its long-term funding issues.
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However, there are other challenges. These include a fairly sluggish economy, a general absence of consumer confidence and the maturity of many of the main non-life lines. Non-life companies have been able to pass on costs of higher reinsurance premiums to their customers. Overall, though, non-life premiums are growing at single-digit rates. There is no obvious catalyst for this to change.
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