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Why are New Zealanders so underinsured? (Image: Getty)
Why are New Zealanders so underinsured? (Image: Getty)

PartnersMay 16, 2022

The problem with New Zealand’s protection gap

Why are New Zealanders so underinsured? (Image: Getty)
Why are New Zealanders so underinsured? (Image: Getty)

A recent report suggests New Zealanders are under-insured by hundreds of billions of dollars. Sharron Botica from AIA New Zealand explains why it’s so important to make up the shortfall.

If you were suddenly unable to work, how long could you keep up your lifestyle? Do you have a mortgage to pay? Kids to take care of? What about if you passed away – would your family be financially taken care of?

These questions are understandably hard to think about. They’re confronting, and for many people, especially those with families and children to care for, seriously considering the outcomes of these scenarios can impose a huge mental load. 

But the alternative – not considering them at all – is costing New Zealanders millions of dollars every year. In insurance, we talk about the protection gap – the shortfall that households would experience if the main earner was unable to continue work. A protection gap can occur when a person doesn’t have insurance, or when someone doesn’t have enough insurance cover.

In 2020, New Zealand’s protection gap was reported at around $670b. The report found two thirds of New Zealand households had a protection gap. And it’s expected to grow over the following decade. 

Insurance helps to support you when you’re out of work (Image: Tina Tiller)

Both aspects of that gap – how it’s happened and how we can close it – are complex.  

While car insurance, home insurance and contents insurance are considered essential for so many, there’s a disconnect that happens when it comes to insurance covering our less-tangible assets. But why don’t we value our own lives, and our essential incomes, as we do our cars?

That’s a question insurers around the world have been asking as the global protection gap also grows. 


AIA wants to help New Zealanders begin their insurance journey by offering simple and affordable insurance cover. By launching three new basic, digital-only plans, they believe they can help more New Zealanders get better protected.


Customer insight work carried out by AIA has told us that people often feel protected against death, illness and other physical circumstances because they feel they can lean on whānau and community to help out. But this isn’t always realistic, and it can be a dangerous mistake that could leave that support network severely and unexpectedly cost-laden.

According to a Financial Services Council NZ report from 2020, 71% of New Zealanders are under-insured when it comes to life insurance. A similar study from 2011 found that 54% were under-insured in this same category – that drastic rise is cause for concern. 

The 2020 report described a “mismatch between the reality of the risk of death, accidents and illness in New Zealand compared with the ‘money smart’ solution to assess, manage, pool and offset the risks, and protect against them”. Basically, this means we drastically underestimate how much financial pressure is created when a household loses half of its income.

Many New Zealanders also wrongly perceive what adequate levels of cover are, according to the report. So even for those who are insured, when the worst happens and they have to claim on their policy, they’ll receive far less than they realistically need.

In 2018, the retirement commissioner Diane Maxwell said the New Zealand “she’ll be right” attitude could be playing a part. That attitude has major consequences and leaves your loved ones to carry a heavy burden. “When something bad happens you want to be looking after your people and your wellbeing, not stressing about how much money you’re going to need to repair the damage,” she said.  

While relying on savings is a common plan in case of a significant event causing a loss of income – the proverbial “rainy day fund” – you need to have savings to use. Data from Stats NZ showed New Zealanders typically don’t have great savings, with just 0.4% of income being saved over the quarter ending March last year.

There’s also the assumption that ACC will protect people against medical costs or time off work. But while they do help in many situations – in the case of accidental injury, they’ll cover up to 80% of lost income – there is a longer list of things they do not cover. Most crucial is the loss of income from being out of work due to illness, something not covered at all by ACC.

We know that insurance can be a costly undertaking. Once you add up the car, home, contents, life, and health cover it can feel like a large cost. And for many people, long-term spending isn’t considered as important as their immediate needs. Until it’s too late.  

So how do we start to close that protection gap? We make insurance more affordable, easier to access, and provide information so people feel empowered to make insurance decisions for themselves. Closing the gap is about getting people to understand the importance of insurance, and about addressing the disconnect between how much cover people think they need and how much they actually do. 

Shifting the focus of insurance from a luxury for those with extra disposable income, to a necessary expense to protect our own incomes is key. 

Not closing the gap could mean thousands more New Zealanders face financial hardship at a time when they need support the most. We need to make sure that when those situations arise, those affected can take the time they need to recover with the financial security to do so comfortably.

To find out more and to protect your most valuable asset – you – visit the AIA website now.

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Tuhua Mutu, and a group of mountain bikers (Image: Mountain Bike Rotorua, Clint Trahan; additional design: Tina Tiller)
Tuhua Mutu, and a group of mountain bikers (Image: Mountain Bike Rotorua, Clint Trahan; additional design: Tina Tiller)

PartnersMay 13, 2022

Home Screen: How technology helped a mountain bike business stay on track

Tuhua Mutu, and a group of mountain bikers (Image: Mountain Bike Rotorua, Clint Trahan; additional design: Tina Tiller)
Tuhua Mutu, and a group of mountain bikers (Image: Mountain Bike Rotorua, Clint Trahan; additional design: Tina Tiller)

Rotorua is a world class destination for mountain bikers. But setting up a biking business in the middle of the forest was more difficult than Tuhua Mutu realised.

Tuhua Mutu (Ngāti Pikiao) believes in putting people first. The co-owner of Mountain Bike Rotorua, an adventure tourism company nestled in the iconic redwoods of Whakarewarewa Forest, first got into the adrenaline junkie space over his desire to share adventures with others. 

“I love meeting people and taking them through experiences,” he says. “It was about going through these experiences with fresh people everyday and realising ‘hey, people are cool. I want to know more about these people’.”

It was this love of people that led Mutu into a social sciences course at university, and after a few brief diversions into other industries, what drew him back to doing what he loved. “The opportunity came to launch something new in the mountain biking space in Rotorua,” he says. He launched Mountain Bike Rotorua alongside his brother Takurua, and the pair are now co-owners of the business. 

That ethos of putting people first is fully ingrained in Mountain Bike Rotorua. The business prides itself on sharing “the Māori beliefs of manaakitanga (caring for those around us), kaitiakitanga (protecting our planet and people) and whanaungatanga (creating lasting relationships with those we bring into our lives)”.

A mountain biker at Mountain Bike Rotorua (Photo: Clint Trahan)

Mutu says Rotorua is a world class tourism destination, and mountain biking is one of its premium offerings. People travel from around the world to ride the trails of the Whakarewarewa Forest. 

But building a new business in the middle of a forest wasn’t exactly easy. “When we set up, there were not a lot of services,” Mutu explains. It wasn’t just the lack of electricity – Mutu said the business initially relied on a generator – there was also the problem of phone coverage. If someone was injured or needed help when out on a bike trail, being able to get help quickly was key. Mutu says Vodafone came to the party straight away. “In 2011, smartphones were in their infancy, 3G was ‘wing and a prayer-ing it’ around the country, 4G wasn’t a thing yet. We were in the forest, we thought ‘we’re not sure how we’re going to make this work’.” 

Even a week from launching, Mutu remembers thinking: “I don’t think these services are going to be ready.” With help from their Vodafone service manager, the team managed to get all their online equipment ready just in time for the opening – equipment crucial to the safety of the park’s guests.

When Mountain Bike Rotorua first launched, Mutu was its sole permanent staff member. “I had to make sure my phone was fully charged to be able to have any sort of internet and be able to email,” he says. “We had an 0800 number set up that would always come to my phone, but we were running off a generator for the first three months. It was quite a lot to go from that to what we have now. Now we have four different locations around the forest.” 

Biking through Whakarewarewa Forest (Image: Mountain Bike Rotorua)

Service reliability is paramount for the health and safety requirements of an adventure business situated in the forest, so Mutu tested all the available providers to find the best for their unique location. That coverage has proved integral to the operation running smoothly. “Speed is one thing, but consistency is more valuable to us,” he explains. 

Since 2016, a “first response unit” of trained medics has operated a round-the-clock service in the forest, a bit like a land-based surf lifesaving operation. “Vodafone were there at the inception of that,” says Mutu. “What it required was stable, reliable service to make it happen. So that if people rang the special number they knew that someone would be on the other end and help them when they’re in need.”

Mountain Bike Rotorua has now gone from a one-staff, 30-bike operation to having dozens of full-time employees and around 200 bikes. Mutu says this could never have happened without the power of technology and good cell service and access to a strong internet connection. “Without those stable first few months and years, it’d be a cascading failure story rather than one of exponential growth.”

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