ICNZ clarifies extent of COVID-19 impact on motor insurance
22 Apr 2020
The Insurance Council of New Zealand (ICNZ) welcomes the announcement from Finity Consulting that savings on personal motor claims will amount to approximately $35 million during the four-week Level 4 period.
Tim Grafton, CE ICNZ, says the independent actuarial analysis of the situation provides a balanced view in contrast to initial speculation last week that insurers would see savings of $100 million.
The revised figure was reached by Finity’s use of historical outcomes to establish an approximate relationship between traffic volumes and collision claims frequency.
Looking at reduced traffic volumes they believe there may be up to an 80% reduction in collision claims frequency but note that this may be offset by several factors including: potentially larger claims, supply chain constraints, inflation and exchange rate impacts. They also note that other perils, such as theft, may see a smaller decrease than collision claims.
Mr Grafton says that ICNZ’s members have already moved to respond to this and to support their customers.
“We have seen a range of support offered including deferral of premium payments, changes to terms resulting in different premium levels, changes to excesses as well as some rebates of premiums.”
In their statement Finity caution that it is essential that insurers consider such support measures within the context of a weaker economic outlook, long-term financial stability and in consultation with the relevant regulatory bodies.
Mr Grafton says the industry is acutely aware of the pressure COVID-19 is placing on Kiwis and have been actively supporting their customers at a time when they too are coming under financial pressure.
“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 policyholders.”
Finity is Australia and New Zealand’s largest independent actuarial and analytics consulting firm.