Monday 29th October 2012 |
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AIA Group regional managing director Gordon Watson is upbeat on the prospects for the insurer's New Zealand business, saying the level of underinsurance means there are plenty of growth opportunities.
Watson was in New Zealand last week as part of a whistle-stop tour of the country's he's responsible for, and is "really bullish" on the local business due to the lack of kiwis who have bought into life insurance.
New Zealand has followed the rest of Asia, which, excluding Japan, is underinsured by some US$40 trillion. About 1.35 million lives were covered by insurance as at Sept. 30, down 0.8 percent from a year earlier, according to Health Funds Association of New Zealand figures.
"The penetration rate as a percentage of GDP is exceedingly low in the New Zealand market," Watson told BusinessDesk. "To me the pie in New Zealand at the moment is very small - it's all about growing the pie not stealing from competitors."
AIA's New Zealand business accounts for less than 1 percent of the global insurer, which was listed on the Hong Kong Stock Exchange in October 2010 as part of insurer American International Group's efforts to repay the US federal government's US$182.3 billion bail-out package.
The stock last traded at HK$30.90 a share, and has rallied 27 percent this year, valuing the insurer at US$48.02 billion.
The New Zealand market needs a bit of work in explaining to the public what services they need, but has "great opportunities to grow," Watson said.
"People are looking for an all-in-one type programme - they want something simple, easy to understand, and they do like comprehensive" insurance, he said. "If we just listened to what customers want we would only sell savings products."
Watson said one of the biggest gaps in the local market is in protection products, and AIA New Zealand will target those underinsured markets.
"We're assertive in terms of getting the products out there as fast we can for what the New Zealand people need, but we're not aggressive in just buying market share, that would be foolish," he said.
AIA New Zealand, the trading name for American International Assurance Co (Bermuda), made a loss of $11.3 million in the 12 months ended Nov. 30 last year on net premium revenue of $50.6 million, according to statements lodged with the Companies Office.
Though the insurer posted a bottom-line loss, revenue grew in the year, and earnings were eroded by a $25.3 million increase in policyholder liabilities.
Watson said the spate of natural disasters throughout the region, including the Canterbury earthquakes, Japanese earthquake and tsunami and Australian floods, has raised awareness of the need for cover, but that hasn't immediately fed into increased uptake.
"People don't wake up in the morning and think well, I think I'm going to go out and buy that life insurance," he said.
BusinessDesk.co.nz
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