The cost of the Christchurch earthquake for the life insurance industry has been put at $NZ12.5 million ($9.5 million).

New Zealand life insurance companies received 63 claims as a result of the February earthquake, with an average payout of $NZ199,000 ($152,000) per claim, according to the Investment Savings and Insurance Association (ISI).

As well as death claims, there were also claims for redundancy (180), income protection (16) and trauma or total permanent disability (two), with payments expected to be in excess of $NZ1 million ($764,155).

ISI CEO Peter Neilson says the NZ life industry has looked at ways of dealing with earthquake-related claims more quickly.

“Following the tragic events in Christchurch, there can be no doubt that the life insurance industry is able to provide financial protection to NZ families in such times,” Mr Neilson told the Life Brokers Association conference in Wellington last week.

“There seems to be a perception among 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.”

The ISI’s latest industry report for the first quarter this year confirmed the impact the Christchurch earthquake has had on claims and premiums.

Total death claims rose 3.2% during the quarter while inforce premium growth was only 1% – up $NZ18 million ($13.7 million) to $NZ1.8 billion ($1.37 billion). 

Mr Neilson says of 13 separate product categories, only seven recorded positive inforce premium growth, including the three largest categories: term life (1.5%), income replacement (0.9%) and trauma (2.3%).

“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,” he said.

“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.”