The industry is preparing for several challenges as a result of several earthquakes and an overhaul of regulation in the form of the Insurance (Prudential Supervision) Act in 2010.
However, these factors are expected to lead to a fundamental shift in the life insurance market with hopes that it will renew risk awareness among customers.
The fundamental reason for the under developed life insurance market in New Zealand is the preference for social welfare schemes for benefits that are usually just provided by life insurance companies.
The low penetration rate of the life insurance segment in New Zealand can also be assessed from the Christchurch earthquake experience, whereby many of the victims were uninsured.
The impact of the Christchurch earthquake is expected to generate renewed risk awareness among the population for life insurance products.
In addition, the country's aging population and insurers' efforts towards product development to cater to the changing needs of the consumer is expected to drive the life insurance segment growth through to 2016.
Although New Zealand's life insurance industry is not as strict as Australia's, local regulation is improving under the Reserve Bank of New Zealand.
With the introduction of the Insurance (Prudential Supervision) Act 2010 (IPSA), all insurers are required to obtain a license from the Reserve Bank of New Zealand (RBNZ) by 7 March 2012 and to obtain a full license by September 2013.
Key players operating within the New Zealand life insurance market, apart from Sovereign Assurance Company Limited, are: AMP, Asteron Life Limited, AXA New Zealand, AIA New Zealand, ACE Insurance Limited, Tower NZ, Westpac Life Insurance and CIGNA Life Insurance.
For more information on New Zealand's life insurance market, see the latest research: New Zealand Life Insurance Market Report
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