Life insurance companies in New Zealand are battling to win over brokers following the merger of Sovereign and Colonial.
Most brokers in New Zealand run their business on the basis that they have a number one carrier which gets the majority of its business, then there is a number two carrier. When combined these two carriers get about 80 to 90 per cent of a broker’s business. The balance of business is spread around a number of other carriers.
Brokers now face a problem because many of them had used Colonial and Sovereign as their number one and two carriers and they now have to decide which of the other carriers will become their new number two.
Two of the main protagonists in the battle for brokers’ loyalty are Tower Health, and new comer Club Life.
Tower Health is the second biggest player in the health insurance market after its acquisition late last year bought AXA Health. Recently it has launched its new range of life insurance products, which includes disability, trauma and life cover.
Managing director Jim Minto says Tower Health is working to become a full-scale insurance business and it will rely on brokers for its distribution.
Club Life is a new company which is being established and run by a group of former Sovereign people.
Naomi Ballantyne, who joined Sovereign 12 years ago when the business was started, but suddenly resigned her position as chief operating officer late last year is Club Life’s chief executive.
She says the new business will be a “Sovereign Mark II” and is basing its business model on providing brokers with equity in the company and providing high quality service.
Ballantyne says rationalisation in the market has created room for a new player.
“The Sovereign and Colonial merger has resulted in a lack of choice for independent brokers,” she says. “They now effectively have only one carrier.”
