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AIA Slashes Term Life Rates

News Release 1/3

28th July 2006

AIA Slashes Term Life Rates

Insurance Giant Tackles Kiwi Underinsurance in Major Business Overhaul

American International Assurance New Zealand (AIA) has slashed its term life rates by up to 19 per cent for some key customer groups in a move designed to shake up the country’s insurance market.

The global insurance giant, one of New Zealand’s fastest growing life insurers, has revamped its business following the AIA LifeMatters Survey published in December last year which showed that three quarters of New Zealanders are trapped in a vicious cycle of debt and underinsurance leaving their families exposed to the risks of financial hardship if a wage-earner dies or is too ill to work.

Announcing a raft of new initiatives to a meeting of independent financial advisers in Auckland last night (27th July) Nick Scarlett, AIA Chief Executive said: `We’ve listened to the market, we’ve done the research and now we’ve done something about it. For term life, over the last six months we have looked at over 50,000 rates variations and have been able to reduce premiums by up to 19 per cent in some key market segments.’

The AIA revamp has focussed on three distinct demographics;

1) Young, active, consumer focused, trend setters. The 2005 AIA LifeMatters Survey found that the biggest inhibitor to buying insurance for the under 35’s was the lack of funds. AIA’s term Life rates have dropped by up to 18 per cent for this age group. A 30 year old woman buying $150,000 term life cover could see her rates drop by up to 18 per cent. A 35 year old man buying $250,000 term life cover could see his rates drop by up to 11 per cent.

2) Families with young children. The 2005 AIA Life Matters Survey found that having more children was a motivator for purchasing insurance. AIA life cover premiums for non-smoking Dads, aged around 40 could decrease by up to 14 per cent; while there have been decreases of up to 18 per cent for Mums of a similar age as well.

3) The over 45’s - business owners and professionals. AIA has targeted the larger sums assured and rates have decreased in the over $500,000 life cover category by up to five per cent for the over 45’s. The amount of any reduction will vary depending on the degree of risk.

In announcing these rate reductions, Mr. Scarlett also said in some cases small increases in premiums had been made.

The 2005 AIA LifeMatters survey showed that 40 per cent of Kiwis would not be able to cope for more than three months if anything happened to their ability to earn a living.

The AIA research also revealed that almost half of all New Zealanders have absolutely no cover on their lives or their health (i.e.: life, medical, income protection or critical illness insurance) and only a quarter are confident that their level of cover would be sufficient to look after their family in the event of death or serious illness.

The research found that of those that do have insurance just over 37 per cent have basic life insurance, 33 per cent have medical insurance, and 13 per cent have income protection insurance, while only nine per cent have critical illness cover.

Nick Scarlett explained: `Our survey helped raise awareness of the need for insurance cover. The new rates are designed to help people protect their families.’

AIA offers a wide range of specialist risk management products for personal and business use distributed via independent financial advisers.

ENDS

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