Sovereign insurance

Update on the Sovereign Insurance sale

New Zealand's largest insurance company, Sovereign (of which Velocity Financial supports), has been sold with the new buyer being AIA. 

 

This sale will be finalised mid next year. Sovereign's history to become New Zealand largest insurer has involved amalgamating 27 companies (I think that's the number) into one big one. So this is another step in that process of a smaller insurer being absorbed into an even larger company.

 

What does this mean for you?

 

All existing policies and conditions will be honoured as they are legal binding contracts. In the insurance land, this purchase is viewed as a good thing with improvements for clients to come.

 

We will certainly be keeping all existing Sovereign clients up to speed.

Are you a Sovereign client? 

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Graham explains what the top-level changes at Sovereign mean for clients.

You may have heard, or not (if you prefer the entertainment sections of Stuff.co.nz rather than the business section), that there are changes afoot at Sovereign. 

 

Sovereign is New Zealand's largest life insurer. It also has a mortgage product. Both Sovereign and ASB are owned by Commonwealth Bank of Australia or CBA. 

 

CBA has signaled the possible divestment of its life insurance businesses in New Zealand and Australia is basically being driven by the increase in compliance for insurance sales in Australia and that compliance is coming to New Zealand.

 

In a nutshell, banks have changed their minds and now no longer want to own insurance companies.

 

What does that mean for those of us who are Sovereign Insurance clients? Basically, nothing.

 

It’s business as usual for Sovereign and, if they are sold, then the new owner, by contract law, must honour all the existing policies that Sovereign holds. In fact, new owners could bring some innovation and new ideas. 

 

If you want more information and/or if you think it’s time for a review of your existing cover, please contact us.  

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.