Insurance industry pays out average NZ$200,000 on 63 death claims from Christchurch earthquake
By Amanda Morrall
Human lives lost in the deadly Feb.22 Christchurch earthquake have cost the New Zealand insurance industry more than NZ$12.5 million in claims, the Investment Savings and Insurance Association has announced.
In releasing the numbers, ISI chief executive Peter Neilson said the industry aimed to dispel public perception of the insurance sector shirking responsibility by dishonouring its obligations.
"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,'' Neilson said in a prepared statement.
Despite the impression of the insurance sector creaming profits for years in the absence of a long lull in natural disasters in New Zealand, Neilson insisted revenues were modest.
He said 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 NZ$18m to NZ$1.8bn).
"It was the lowest quarterly result since March 2009 (NZ$3.5m) and the second lowest quarterly result in the last three years."
The average payout on a death claim (based on the combined NZ$12.527 million paid by the sector) was just under NZ$200,000.
While Neilson acknowledged that money was poor recompense for a lost of a life, he said it nevertheless drove home the importance of life insurance because it could provide a "degree of financial security.''
Despite lag times in residential insurance pay-outs faced by earthquake victims, (a lot of them caused by complications related to EQC) pay-outs on life insurance were prompt, said Neilson in further defence of the industry.
He said the ''response from the entire industry to the tragedy included looking for ways to process claims quickly and compassionately. ''
In addition to the death claims, the industry has also accepted 180 claims related to redundancy, 16 on income protection, and two on trauma or total permanent disability. Payments for the aforementioned were expected to be in excess of NZ$1 million once finalised.
Neilson said calculations on such policies were different because they were based on regular payments rather than lump sums.
Despite the earthquake having signaled the importance of insurance, Kiwis weren't rushing to the fore.
Of thirteen separate product categories, Neilson said only seven recorded positive in-force premium growth in the latest quarter, including the three largest categories: term life (1.5%), income replacement (0.9%) and trauma (2.3%).
He said the results were 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."
“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.”
2 Comments
Surprised no comments, the most stunning aspect to this is the average payout was just under 200K. Considering some payouts per policy will be much higher it just shows the modest level of cover people do take out. To assist a dependent with obligations and to get reestablished in life....200k typically does not cut it.
A few may have had life insurance schemes from their employer which would tend to be on the lower side. Anyway, I find it interesting that the ISI says it hopes to dispel negative public perceptions, its' pretty hard to dishonour your insurance obligations when someone dies.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.