The Insurance Council of New Zealand says that contrary to some reports the insurance industry acted fast and early to actively support its customers facing increased financial hardship.
“Since March, our members have ensured they are fully open for business and have worked to keep New Zealanders and their assets protected by easing the financial pressures they faced.” says Tim Grafton, Insurance Council of New Zealand Chief Executive.
“Also, in March we announced a set of ten core principles that our members pledged to use to guide their individual response, putting customers and suppliers at the very heart this.
Mr Grafton says the industry is acutely aware of the pressure COVID-19 is placing on Kiwis, especially since the country entered Alert Level 4.
“Operating within the 10 principles our members have each implemented a range of measures suited to supporting the changing needs and challenges being faced by their individual customers and suppliers.”
While measures differ for insurer to insurer according to the needs of each customer, they include:
- Deferral of premium payments
- Changes to terms resulting in different premium levels
- Changes to excesses to reduce premium levels
- Extending credit terms to brokers out to 120 days so they can extend the same terms to the end customer, which means the insurer goes on risk for four months without premium income.
- Extending policies and benefits that have expired, for example extending the dollar cap or timeframe on the insurance funded alternative accommodation allowance if a house is being repaired.
- Exercising flexibility around lapsed WOFs and Vehicle registrations during the lockdown when they can’t be renewed but allowing insurance to remain in place.
- Paying suppliers within 5-15 days to help with cash-flows instead of the standard 20th of the next month
- Adjusting terms for large commercial fleets that are laid up resulting in different premiums
- Offering broader motor premium reduction measures reflecting the reduced use of vehicles
- Continuing cover for vacant properties including construction sites
- Extending policies for businesses that are now working from home.
However, Mr Grafton stresses that while some risks have changed due to the Level 4 restrictions, risks haven’t disappeared.
“While motor collision claims are certainly down, vehicles are still subject to risks even when parked such as theft, vandalism and even severe weather like the Timaru hailstorm which damaged thousands of vehicles late last year causing tens of millions of dollars of damage.
“Similarly, it’s wrong to think that house insurance risks decrease with everyone at home. Actually, many risks increase, half of all fires start in the kitchen which are definitely being used more, and the risks of property damage also go up.”
Mr Grafton says that the extensive steps to support customers have been done at a time when insurers themselves are coming under financial pressure.
“All these measures have been done when insurers income has also been heavily hit by the collapse in equities, record low interest rates and little new business, looming business closures. This is matched with the higher levels of solvency we must maintain above any other business to meet regulatory and policyholder obligations.”
He says it is critical that each insurer responds in a way that is most appropriate for their customers and for them to maintain solvency.
“In this way, our members can balance the needs of those in genuine hardship with their obligation to be there for all its policyholders should the worse happen which it has done several times in recent years – the earthquake in Christchurch last week or the flooding in Wellington this week are timely reminders.”
ICNZ and its members urge any customer that finds themselves facing financial hardship to contact their insurer or broker who will be able to work with them to find the best options to meet their individual circumstances and needs.