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Browse the 1966 Encyclopaedia of New Zealand
Graphic: An Encyclopaedia of New Zealand 1966.


This information was published in 1966 in An Encyclopaedia of New Zealand, edited by A. H. McLintock. It has not been corrected and will not be updated.

Up-to-date information can be found elsewhere in Te Ara.




Insurance is an old, well established, and expanding business in New Zealand and, as figures quoted later demonstrate clearly, is of major importance in the national financial structure. Some features of the New Zealand insurance scene of particular interest include earthquake and war damage insurance, the activities of the State offices, and the role of New Zealand domiciled companies in international business.

Life assurance which, in common with fire and accident insurance, has a century-old history in New Zealand is conducted by 18 offices in this country, of which four are purely New Zealand institutions. The statutory provisions affecting their operations are largely contained in three Acts: the Life Insurance Act 1908, the Inalienable Life Annuities Act 1910, and the Government Life Insurance Act 1953. Any association, other than a friendly society which issues policies or grants annuities on human life in New Zealand, comes within the scope of these Acts.

Growth of life assurance has been steady and at times has verged on the spectacular, even after allowance is made for population increases and the decline in the value of money. Over the decade 1950–51 to 1959–60 in particular, ordinary life assurance business expanded appreciably, partly as a result of innovations introduced by the companies and partly for other reasons. Excluding annuities, the average sum assured per policy, for example, climbed from £759 to £1,621; the number of new policies increased from 60,731 to 96,582; and the number of policies in force from 688,444 to 1,125,624. The expansion continued in 1960–61 when the number of policies rose to 1,185,323. The growing demand for ordinary life assurance has not, however, been shared by industrial assurance for which there has been a long-term decline. In this class of insurance, which is conducted by five of the life offices, the premiums are payable at shorter intervals than three months and the policies must contain only such conditions as have been approved by the Governor-General in Council. Policies issued in 1960–61 numbered 20,312, which was about 35 per cent less than the number in 1950–51. The total sum assured in 1960–61 was not quite £43 million, a low figure when compared with £1,096 million for ordinary life assurance.

Innovations introduced by the life offices in recent years have included the provision of new contracts such as term and mortgage protection assurance, low premium – low bonus tables, and higher non-medical limits. Other factors which have also contributed to the growth in the average sum assured and in premium income, have been higher personal incomes, growing recognition of the advantages of assurance as a method of contractual saving, and the taxation concession in respect of premium payments. Yet another contributory factor has been the relatively high level of death duties. The taxation concession allows a deduction by way of special exemption of the lesser of £250 or 20 per cent of income for premiums on policies on the taxpayer's own life, expressed for his own benefit or for the benefit of his wife or children.

Despite, however, the substantial increases in the average sum assured per head of population over recent years, it is argued by some people that New Zealanders are still considerably underinsured. The argument is mainly based on the view that the average person should carry the equivalent in life assurance of well over one year's annual income. While many individuals undoubtedly achieve this aim, overall figures indicate that the average person – an admittedly elusive figure – does not. For example, in 1960–61 private income was over £1,200 million, whereas the total sum assured under ordinary life policies was under £1,100 million. Whether people will be prepared to pay a greater relative proportion of their incomes in premiums associated with a 10 per cent or higher increase in the total sum assured is, however, doubtful.

Life assurance, as a form of saving, competes not only with other forms but also with consumption expenditure and the total amount an individual carries in assurance policies depends upon a complex of factors, many of a highly personal nature. A relative increase in life insurance premiums could occur if people choose to spend less and save more but, in the absence of additional special incentives or of a marked change in economic conditions, it does not seem very likely that consumption spending will fall relative to incomes and saving rise. Also, in considering the possibility of relative increases in life assurance, it must be recognised that, as compared with other countries, the ownership of life policies in relation to income is absolutely high in New Zealand. Only in Canada and the United States is it higher.


Robert John Familton, M.COM., Economist, Reserve Bank, Wellington.

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