Quake: $12.5m in life insurance

Photo / Simon Baker

The life insurance industry has paid out more than $12.5 million in death claims to families who lost loved ones in the Christchurch earthquake.

Latest figures from the Investment, Savings and Insurance Association (ISI) show 63 life insurance claims, worth an average $199,000 each, were paid out as a result of the February 22 event.

A total 181 people died in the magnitude 6.3 quake.

ISI chief executive Peter Neilson told the Life Brokers Association's annual conference in Wellington today that while an insurance payout could never compensate for the loss of a loved one, it would provide a degree of financial security for families left behind.

The payouts also include 180 claims for redundancy, 16 for income protection and two for trauma or total permanent disability, totalling more than $1 million.

"There can be no doubt that the life insurance industry is able to provide financial protection to New Zealand families in such times," he said.

Neilson said the industry had worked to process the claims quickly and compassionately, despite 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," he said.

While the number of death claims rose 3.2 per cent over the March 31 quarter, the level of in force premium growth was only up 1 per cent (up 18 million to $1.8 billion).

It was the lowest quarterly result since March 2009 and the second lowest quarterly result in the last three years.

Of the 13 product categories, only seven recorded positive in-force premium growth, Neilson said.

These included the three largest categories: term life (1.5 per cent), income replacement (0.9 per cent) and trauma (2.3 per cent).
Neilson said 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.

"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."