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News release: Christchurch insurance rebuilds $NZ10 billion and rising

The Insurance Council is warning that the continued aftershocks in Christchurch could have long term effects on the insurability of New Zealand.
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News release: EQC and insurers seeking clarity on insurance payments

The Earthquake Commission (EQC) and the Insurance Council have agreed to ask the High Court to make a ruling on complex questions of coverage arising from the two major Canterbury earthquakes and their aftershocks
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News release: 'P' Lab

Reduce the chances of your property becoming a 'P' Lab
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Canterbury earthquake

The largest single insurance event in the history of New Zealand
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New Fair Insurance code

The obligations for both you and your insurer.
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Natural disaster costs

See historical damage figures »»

President's report

The past year has been one of the more dramatic in the history of banking and insurance. It will have a long lasting impact on the way customers, regulators and professionals approach these industries for years, if not decades, to come. New Zealand is not immune to this.

The Global Financial Crisis has had a significant impact on our industry, and the financial world generally, with New Zealand and Australia weathering the crisis better than most. As a consequence we can now look forward to a new and exciting period for the insurance industry around the world and here in New Zealand.

In New Zealand the Insurance Council has again been leading the debate on insurance, and has been active in creating a better understanding of the economic and social value of our industry to a successful New Zealand nation.

Our relationship with the new government is positive,and seen as very important by our Board. Where there are clear issues of difference between the Council and the government, we will seek to engage constructively and express our concerns. Looking toward 2010 and beyond, we will continue to build and maintain a strong,constructive and open relationship with the government on the issues of concern to members.

The year 2009 provided a range of results for general insurers against the background of continuing and fundamental change in the economic, political and regulatory environment in New Zealand. This, combined with the impact of developments in technology and commerce, saw some members flourish, but that was not always the norm.

While the year saw some hardening of premium rates,general insurance remains good value for money when considering the benefits afforded and the underlying drivers of our business. Low margins and sluggish growths aw underwriting returns deteriorate under pressure from the increasing cost of claims and reinsurance, particularly weather-related.

A firming of commercial insurance rates began during 2009 and has carried through to 2010. Significant claims for Commercial, Motor, Marine and Material Damage, also emerged in 2009. A disturbing trend was the increasing claims for fire in both Commercial and Domestic properties. Personal insurance rates also moved up in 2009. Notwithstanding these influences, the financial strength of the industry and protection provided to policyholders remains strong.

The Council's Strategic and Business Plan identifies priorities and actions in our three core businesses of Representation, Knowledge Management and Industry Regulation. I am pleased to report the Insurance Council Executive continued to deliver on the objectives of the Strategic Plan.

Considerable effort has been directed to liaison with related organisations. Constructive and regular dialogue has continued with the New Zealand Fire Service, particularly on budgetary and financial management issues. Regrettably,we have not seen any advances in resolving our concern with the funding of the Fire Service. Discussions on this issue have been held with the Minister, and there is hope action will be taken. This will continue to be a strong focus for the Council in coming years.

A very constructive and beneficial relationship has been maintained with New Zealand Police. The Council has supported a number of Police initiatives, particularly the commitment by the Police of additional resources to the area of burglary and car theft. Their activities are showing positive results and are to be commended.

Liaison with the insurance brokers has been maintained and enhanced. Our relationship with brokers is critically important to the work of the Insurance Council, and we are keen to build on that relationship with joint initiatives in the coming year, and increase dialogue between our two industry bodies.

The Council has also contributed to changes in the Insurance & Savings Ombudsman scheme. The Financial Service Providers Act requires the scheme to be approved by the Minister of Consumer Affairs, which has triggered extensive work on adapting a successful scheme to continue delivering a high quality of service to the industry and its customers.

The Disputes Tribunal provides another avenue for resolution of consumer issues in personal insurance matters. Divergence in the practices of different insurers in representing their clients, and the rights of insurers to be present and participate at hearings, are just two matters we are working on that have arisen from our working relationship with the Tribunal.

In the area of regulation the Council has been extensively tested to cope with the deluge of legislation and regulation coming out of the Review of Financial Products and Providers. A wide range of submissions and responses to government initiatives have been prepared by the Insurance Council and I would refer to the Notable Activities list on the page opposite for a full view of the range of work undertaken by the Insurance Council during 2009.

Sustainability continues to be a component of the Insurance Council's work. Members recognise that their primary purpose, to pay all genuine claims and provide insurance to the community at an affordable cost, is affected by environmental and social factors ranging from climate change to crime. In turn, our own members'business impacts on the community, the environment and the wider economy.

The Insurance Council has agreed that the future will see an improved focus on reducing risk; fewer risks mean customers can avoid unnecessary hardship, and we can provide insurance at an affordable cost.

The impact of weather has become an increasing concern for the insurance industry. Weather-related disasters represented nineteen of the top twenty insurance losses in New Zealand since 1968. Flooding, by far the most significant cause of damage, is responsible for seventy percent of all weather-related losses. Climate change,however, means that historical records become less relevant in determining future risk. We see the Insurance Council as working with the New Zealand community to raise awareness in the community, and with our business partners, about how climate change is more than just an insurance issue, but about sustainable communities and economy.

On behalf of all members I would like to express our thanks and appreciation to our Chief Executive Chris Ryan and other Council staff for the very professional,enthusiastic and committed way they have gone about ensuring that the role and objectives of the Council are realised. In particular can I thank the industry members who have contributed to our work through participation on the Board, committees and working groups. Without these committed supporters we would not have the Council achievements that we do.

One of the most impressive aspects of our Council is the considerable goodwill and commitment to the development of our industry that exists toward and between our members. While operating day to day on a fiercely competitive basis, member companies readily commit staff and resources to the furtherance of the collective interest. We should also ensure that the spirit of co-operation continues. Once again this has been evidenced through the work and success of our committee structure. All committees have developed and worked to individual business plans, and again I thank all those involved for their immense contribution.

I am indebted to my fellow directors for their support in the governance activities of the Council. Change in the membership of the Board in recent years seems to be the inevitable consequence of the structural change that occurs within our member organisations.

Looking to the future, the blurring of traditional boundaries between participants in financial markets will continue to present challenges to the Council. Our activities must remain relevant to the varied and broadened interests of current and potential members, while at the same time providing a value proposition that is seen as a suitable return on members' investment in the Council. Your Board has recently addressed this matter and developed an outline of initiatives. These, combined with the impeccable reputation of the Insurance Council and our focussed strategy and strong financial position, should ensure a positive and progressive future.

Ian Foy
President

Insurance Council of New Zealand

 

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