nib New Zealand delivered a strong inaugural full year contribution to the Group result despite the significant investment undertaken during the 2014 financial year to successfully transition and rebrand the business.
nib acquired TOWER Medical in November 2012 and therefore the 2014 financial year results are not directly comparable to the 2013 financial year, which was only a seven month result. Nevertheless, we were pleased with the $7.4 million in operating profit nib New Zealand contributed to the Group, especially given the large investment being made in modernising and growing the business. The 2014 financial year operating profit benefited from a lower than forecast claims experience.
The focus for the year was upon transitioning, integration and business building.
nib New Zealand operates as a wholly owned subsidiary of nib holdings with its own Board of Directors and executive team. Progress during the year was prodigious and included:
- The recruitment of a new executive management team.
- The migration of all IT and operational systems such as claims processing, call centre and HR systems from TOWER.
- Total business rebranding to nib New Zealand.
- The development and market launch of a suite of direct-to-consumer (DTC) products. This is now our biggest sales channel (in terms of policies), accounting for 40.6% of all sales in the reporting period (FY14 policyholder sales of 10,513).
- A new distribution partnership with Fidelity Life, New Zealand’s third-largest life insurer, to sell a bundled health and life insurance product.
While launching our DTC strategy has been a key priority for the business, enhancing the relationship we have with financial advisors and further growing the advisor channel has also been a strong focus. In February, nib launched a new range of advisor-only products, which were the first of their type ever offered in New Zealand. The product range has received a top “5-star” rating from an independent insurance rating house.
Lapse, both at an industry level and for nib New Zealand, remains problematic. Prior to acquiring the business in 2012, nib New Zealand’s lapse rate was double the industry average at more than 10%.
nib is attempting to play a role in growing market participation and its share of the market, especially by positioning itself as a “challenger” brand and investing in growth. While the New Zealand economy is robust, there are concerns about the current heavy reliance on the public healthcare system and we are excited about our sales prospects across all distribution channels.