Premiums for trauma insurance jumped to $181 million from $156 million in the past year, and echo figures in the biannual AIG Life Matters survey out earlier this month. Some 31% of 1000 respondents to the AIG survey had taken up a trauma policy in this year's report, compared to 15% in 2007 and 9% in 2005.

People are cutting back on their full-coverage in favour of policies like trauma, and "are starting to use the public health system for anything that's critical," said Mike Loftus, AIG's head of marketing. "We're seeing three core products: life, TPD (total permanent disability) and trauma" that people are turning too, he said.

Risk insurance products remained the most popular premiums in the ISI data, and President Vance Arkinstall said trauma continued to be "a very appealing option" as it allowed people diagnosed with a terminal illness to access an advance payment and put their affairs in order.

In June, Arkinstall said trauma policies had seen a rapid rise, and predicted it to be an area of growth for the industry.

While both Arkinstall and Loftus agree the country's worst recession in 30 years has helped spark interest amongst people to find the right level of coverage, Arkinstall points out there is still a worrying trend of underinsurance in New Zealand.
"Even with the current strong growth of life insurance, New Zealand by global standards suffers from underinsurance" and has one of the lowest levels of penetration among developed nations, he said.