Insurance sector exodus picked

Charles Anderson, chief executive of insurance company Sovereign, says complying with the new rules will be costly. Photo / Steven McNicholl

One in five people could leave the insurance industry this year because of adviser regulation changes, the head of the country's largest life insurer, Sovereign, says.

Charles Anderson, who joined the ASB Bank-owned company six months ago, says some countries have seen up to 40 per cent of their workforce leave through new regulation but he doesn't believe it will be as bad here.

"I think it will be more like 20 to 30 per cent. That could have a short-term effect on the market but the slack will be picked up quickly."

Anderson should know. He has worked for one of the world's largest life insurers, Aviva, managing a business which spanned from India to China to Singapore and Hong Kong.

This year is one of the biggest for the insurance sector - not only does it face tax increases on new life policies from July, all of its salespeople must get up to scratch to become registered financial advisers under new regulation due to come in by December.

Anderson admits it's not an ideal situation but is stoic about it.

"Would we have liked to be dealing with both things ideally? Not really. But we have to accept that is what has happened."

Given the criticism financial services have faced over the last few years he says anything that will increase the public's confidence in the industry has got to be a good thing.

But it is a costly exercise. Those in the market will have to spend more on complying with the new rules.

Last week Sovereign announced plans to spend around $1 million on training its 1800 sales people.

Anderson estimates regulation changes will cost it around $2 million to $3 million this year, which will mean profit growth is likely to be non-existent across the industry, he says.

The tax changes to life insurance are also expected to hit the consumer in the pocket.

Anderson admits it's an emotive issue for the public but says in reality the cost increases are similar to the cost of a cup of coffee every week.

"We would have preferred not to have increased premiums. It's not great," he says. "We are mindful of affordability."

Despite knowing about the pressure on the industry Anderson wasn't fazed by the job, although he did turn it down to start with, But when Anderson found out it was in New Zealand he quickly changed his mind.

"It is true I love New Zealand and love what New Zealand offers in terms of lifestyle. Would I have taken this job if it was in another part of the world? No," he says.

Leaving the UK wasn't a big deal for him. He had spent eight years living in Singapore and had only been back for two months when he got the call.

Anderson said the Sovereign role allowed him to live in a part of the world he really liked, for a company where he could add relevant experience.

Sovereign is the biggest player in the life insurance market in New Zealand with around 30 per cent of the market.

But that doesn't mean the company can sit on its laurels.

"We aspire to continue to be the biggest player. We are much stronger than all our competitors and would expect to pick up business from them."


Charles Anderson

* Chief executive, Sovereign New Zealand.

* Age: 55.

* Qualifications: Maths degree from Birmingham University and MBA from the University of London.

* Work: Has worked in retail and international banking in the UK, America and the Channel Islands. Worked at Lloyds as a sales director for Black Horse Life. He has since worked for Norwich Union and after setting up a bank in the UK became involved in distribution through other banks and strategic partners.

He moved to Asia to to head up Aviva's financial services division and ran six businesses across India, China, Hong Kong, Singapore, Malaysia and Taiwan.

Before joining Sovereign he was based in the UK running his own consultancy and working for a non-for-profit organisation in China and India.

* Family: Partner Mary and two adult children.

* Hobbies: Competing in Ironmans, fly-fishing, tennis, squash, golf and gardening.