Like most (male) lawyers, I have any number of navy and grey suits.

And tradition dictates that those suits are worn when PR photos are taken. But my World Cup suit is the one of which I am most proud (for obvious reasons) and showing it to readers seems an apt way to sign off from Resolve. The 2014 NZILA conference, Wellington by the Sea, on September 11 and 12 will mark the end of my NZILA presidency and thus my president’s column.

I have been president for the past seven years and a change is long overdue. I am thrilled that NZILA continues to grow and move from strength to strength. In short, it has prospered despite me being president, largely due to the on-going efforts of committee members and the enthusiasm of other supporters. Thank you to everyone for their assistance.

Proof of NZILA’s strength is that the 2014 annual conference is a sell-out six weeks before kick off. Sponsors are clamouring to support the event and attendees have enrolled early to secure a spot. That is in part due to the excellent learning opportunities but also due to the high-calibre social program. NZILA conferences are nothing if not fun!

 

Change and challenge

The last seven years have been ones of considerable change and challenge for the New Zealand insurance market; not least because of the earthquakes. They led to the government bailout of AMI Insurance; the withdrawal of China Taiping Insurance (and others) from the NZ market; a move away from domestic replacement cover based on square meterage to fixed sums insured; greatly increased deductibles (particularly for commercial entities); and so much more.

At a personal level, almost everyone has worked in a much more stressful workplace environment with a greatly enhanced workload. Not only were the sums of money involved much larger than previously, the rules kept changing as government agencies reacted to the crisis they faced over time. And for those living in Christchurch, in many instances the increased workload came on top of personal tragedy. For many, it has been a long, hard slog.

But one of the positive consequences of the earthquakes is that there is now a greater level of technical expertise within the NZ insurance industry. Insurers, brokers, adjusters and lawyers all have had to consider issues that had not arisen previously or on such a grand scale. Some might add the courts to this list, as NZ insurance cases become increasingly prevalent.

Insureds too have a better understanding of how to analyse the risks they face and the insurance required to safeguard them against those risks. Rising premiums have made insureds aware of their ability to hold higher levels of deductible.

Insureds now are keener to buy into the insurance process and have a more complete understanding of their cover. This has helped, not hindered, the NZ market.

Sadly though, the reluctance of home and contents insureds to accurately assess for themselves the cost of rebuilding their homes following a total loss has been disappointing. More than 80% of insureds simply accept the sum nominated by their insurer. That will inevitably lead to tears (and worse) for some in the future.

But not all is doom and gloom. With change comes opportunity. IAG’s acquisition of Lumley seemingly has encouraged others to consider establishing in NZ. Over the last few months the Reserve Bank has granted licences to Chubb and Youi to conduct insurance business in NZ.

There are rumours of other insurers also considering starting businesses in NZ and it will be interesting to see who sets up in the future. The hope is that more insurers will lead to a more dynamic, competitive market for NZ policyholders but there are benefits for the market even if only niche players set up in specialist markets.

 

Thanks

Thank you to those of you who have taken the time to read my column over the years. I hope I have given AILA members, in particular, some understanding of what has gone on in the NZ insurance market. I look forward to renewing acquaintances with my many AILA colleagues at the Hamilton Island Shifting Sands conference soon. Let the festivities begin.

 

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