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News release: Insurers welcome establishment of Christchurch Central Development Unit

The Insurance Council says it welcomes today’s announcement by the Earthquake Minister, Hon Gerry Brownlee, that a Christchurch Central Development Unit focussing on the rebuilding of the Christchurch Central Business District (CBD) is to be established.
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Publication: ICNZ Annual Review 2011-2012

TThe past 18 months have been the most challenging period in the history of the NZ insurance industry...
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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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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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President's report

The relevance and significance of a well run insurance sector to the New Zealand economy has been understood and appreciated more than ever before in the last twelve months.

The insurance sector came through the great financial crisis relatively unscathed despite the enormous financial carnage all around it. However, the insurance industry was not without the challenges of both mother nature and human nature. During the last twelve months we have been tested as an industry on more fronts than has been the case for many years.

The issues addressed by the Insurance Council have been numerous, but dominated by two major challenges, regulation and the earthquake. The first challenge was the continuing development of comprehensive and extensive regulation of the financial services sector in New Zealand. While some areas of the financial markets are impacted more than others, we in the general insurance industry believe we have responded comprehensively to protect the interests of our customers and ensure we remain a strong and sustainable industry.

The introduction of the Insurance Prudential Supervision Bill and the Financial Advisers Act saw the Insurance Council at the forefront of lobbying and contributing to an enhanced debate on the regulatory changes underway.

However, perhaps the most significant event in the insurance history of New Zealand happened late in the calendar year. This was of course the enormously destructive earthquake, which struck Canterbury on 4 September 2010. The final cost of this earthquake is as yet unknown, but it is now clear that payments to our customers will reach into the billions of dollars. So far the response of the industry has been outstanding and right across our wider industry we have seen staff go beyond the normal scope of their responsibilities to assist our customers in recovering from this devastating event.

The Insurance Council has been at the forefront of the response, both in co-ordinating our industry and liaising with key government officials, local government and other key partners in ensuring that the insurance industry’s response is the best it could be. Colleagues in the reinsurance industry have stood behind us and our customers at all times.

The effect on the economies of both Canterbury and New Zealand will be a massive injection of international capital, which will greatly assist the recovery process. Jobs will be provided in many sectors: reconstruction, infrastructure, building, commercial and the wider economy generally. No one should underestimate the trauma and hardship of many of those affected directly by the earthquake and on behalf of the Insurance Council members I offer our deepest condolences to those families and Cantabrians affected by this devastating event.

The Insurance Council also congratulates our industry colleagues for their overwhelming response to the difficulties of our customers, in particular the loss adjusting community, brokers, reinsurers and staff of our members, many of whom had their own homes damaged by the impact of the earthquake.

The earthquake certainly has placed enormous strain on the Insurance Council at a time when a wide range of other initiatives were already underway. I would like to add a special acknowledgment to our CEO, Chris Ryan, and his team for the incredible dedication, professionalism and resilience shown throughout this unprecedented and challenging period.

The repercussions of this enormous event are already being felt in our industry; reinsurance rates are expected to harden and this is likely to flow through to general insurance premiums. It is important that the industry takes the opportunity to look at our response critically and constructively to identify areas in which we can improve further.

The Earthquake Commission has been a constant partner in the response to the Canterbury earthquake and other minor events during the reporting period. They too have felt the strain of a massive event of historical proportions and looking forward, this will be a relationship that we will be looking to streamline and enhance where possible.

Changes to Disputes Resolution saw the creation of competition to our traditional partner, the Insurance & Savings Ombudsman Scheme. The government raised again the possibility of competition for New Zealanders within the provision of workers compensation and this required a comprehensive response from the industry. As an industry we responded to the change in GST, which impacted on our customers and involved liaison with the IRD on the compliance requirements for insurers.

It is easy to forget that despite these huge challenges, the insurance industry was required to carry on its normal daily business of allowing people to rebuild their homes and lives, replace their cars and recover from floods and storms as we would do in any year. The public reaction to our industry has been generally positive and certainly there is a justified degree of pride in the industry and its ability to cope with the challenges put forward to it.

The Insurance Council has welcomed a new member in Berkley Re and also has seen changes in the combining of some companies and the inclusion of Great Lakes Insurance under the banner of Munich Re.

We have adjusted our strategic priorities within the Council to adapt to the new environment. At the same time we have carried on our responsibilities in assisting the government re-confirm international rating agencies operating in New Zealand, we carried out a successful financial services seminar on behalf of the industry, reviewed the Fair Insurance Code and responded to International Reporting Standards changes impacting on our industry.

Our traditional partners in the broking and loss adjusting communities have been invaluable in working to maintain our response to our customers. We have also renewed our relationship with the police with the re-signing of a Memorandum of Understanding and Co-operation between our two organisations. Our relationship with the government is strong, positive and moving forward in a very constructive way. As always the Insurance Council will take a position on issues, which are to the benefit of our insured customers and this will involve us in discussions with all political parties to ensure the best outcome looking to the future.

The coming year promises to be every bit as dynamic as we face the continuation of many of the challenges referred to above. Certainly the industry should prepare itself for hardening of international reinsurance rates, greater scrutiny and understanding of risk, the increased impact of climate change and the additional costs which come with a higher regulatory environment.

I would like to thank my colleagues on the Board of the Insurance Council, the staff of the Insurance Council and particularly the staff of the members of the Insurance Council who have provided their valuable time to the comprehensive work undertaken by the Standing Committees on the Council, covering all aspects of our service to our customers.

We look forward to the coming year and continued response of the insurance industry to the needs of our customers.

John Lyon
President

Insurance Council of New Zealand

 

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