A perception NZ’s insurance industry lacks competition is “curious”, a senior executive told the NZILA conference.

Lumley GM Lumley Business Solutions Toni Ferrier said the market responded to changes in the environment. New entrants, offshore underwriters and capital providers had entered the market. “The market takes care of any gaps that exist. Is the market functioning effectively? Yes. Sometimes there’s excess capacity. There’s no right number of insurers; the market will tell us.”

QBE’s General Manager NZ Operations Ross Chapman agreed. “It’s not a problem. Yes there’s been a reduction in underwriters through mergers and acquisitions, but we operate in a global market. Some of our biggest competitors are in Australia, London and Singapore.” Youi and Chubb had applied for licences in NZ. “I don’t see the market shrinking that much.”

Vero NZ chief risk officer Nigel Edmiston said there was “aggression” in the marketplace and other insurers reacted on price and product, so having fewer underwriters, particularly with the IAG-Lumley merger, was “not an issue”.

He noted, though, 50% of the NZ market was government owned, through the Earthquake Commission and the Accident Compensation Commission.

Panel chair ICNZ’s Samson Samasoni asked panelists about the impact of NZ’s regulatory framework. Mr Chapman said the current regime was relatively light, but that would change. Now that NZ’s Reserve Bank had ensured all insurers were licensed it would move to the monitoring phase. “They are taking a lot of advice from APRA and the APRA model is over-the-top regulation. Compliance will become a bigger part of our role.”

Mr Edmiston said NZ had “nothing like APRA”, nor Australia’s DOFI legislation that protected the domestic market. It was “easy” for offshore insurers to operate in NZ.

On offshoring claims, Mr Chapman said QBE had established a back-office operation in Manila and NZ claims “went live” the week before the conference. It was staffed by graduates who were “keen to learn and speak good English”. It had been “very positive so far” and service levels were improving. “There will be more of this. We are getting consistency and driving some cost savings.”

Ms Ferrier said IAG did not currently offshore claims and it was not being considered in the short term. Since the Canterbury quakes the underwriter was “insourcing” more claims because capabilities and skills had improved and NZ may process some Australian claims. “Customer views will ultimately decide how successful or otherwise those models are,” she said.

Mr Edmiston said Suncorp offshored “a lot of banking, but not claims, as far as I’m aware”. Staff retention was not an issue, Suncorp was ensuring challenging careers were available and upskilling.

Mr Samasoni questioned whether the industry did enough to promote the employee value proposition. “The short answer is no,” Mr Chapman said. “We must do it individually and collectively.” The industry needed to do more to train leaders of the future.

Ms Ferrier said no one saw insurance as “a sexy, exciting industry but, once people are in it they understand the diversity. We don’t sell that story to young people or those at universities”. As a university law graduate she had no idea insurance was a viable option. “We must position ourselves differently at the starting block.”

Mr Edmiston agreed. “The insurance industry has never done a good job in selling itself as a career. It’s been good to a lot of us, and not just financially. There are opportunities to work overseas. I am now the chief risk officer and developing new skills that are transferable. There are a lot of new, exciting career challenges as the industry changes and we have a new regulatory regime in NZ.”

He agreed the challenge was retaining good people, not just attracting new blood. Vero had begun implementing three-day weeks for those who wanted to stay in the industry but reduce their hours.

In the Q&A session, a Massey University representative criticised the industry’s lack of cultural and ethnic diversity. The lack of diversity among conference delegates contrasted with participants in a typical university lecture.

Ms Ferrier also identified there was a low percentage of women on boards across New Zealand.

Asked about the industry’s reputation in the aftermath of the Canterbury quakes, Mr Chapman said the industry had become “a whipping boy” and there were “a lot of prejudices”. Mr Edmiston said media coverage was “not always fair”. “We have a lot of stakeholders to work with. We probably didn’t do a bad job, faced with a unique set of circumstances.”

Ms Ferrier said “the dinner party test” identified the industry had suffered damage and “people don’t know the facts”. But, regardless, “we have no problem filling vacancies”.

“Are people proud to say they work for an insurer? To me, that’s the true test. Our people are proud of what they do and making a difference in people’s lives, especially in Canterbury.”

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