Download - Insurance Council of New Zealand

More documents

Recommendations

Info

“Over the past 18 months the relevance of insurance has been proven, time and time again. Not just with individuals, but also in terms of facilitating social and economic recovery. We should never underestimate the part we play in helping New Zealand to move forward” Rebuilding and recovery therefore represents a huge challenge for the New Zealand insurance industry, for Canterbury communities, and for the whole country. The facts are stark. 185 people died, 100,000 homes damaged and 7,000 homes “Red Zoned“. In the CBD, 3,000 of 5,000 businesses displaced, 1,400 buildings demolished, one hundred and twenty four kilometres of water mains and three hundred kilometres of sewer pipes damaged. 2 The community lost 635 rest home beds, 19 community pharmacies and 5 general practices. More than 50% of the residential roading network required repair and 12 schools, or parts of schools, had to be relocated. New Zealand as a nation has been shocked, but the insurance sector has not only responded remarkably well to this historic event, it continues to respond to its customers’ requirements despite the fact that we have now experienced over 10,000 aftershocks since the initial earthquake in September 2010. We are in the third calendar year of aftershocks. As President of the Insurance Council, I would like to pay a tribute to all those in the insurance sector who have responded to an event almost unimaginable in insurance terms for a country the size of New Zealand. Insurance losses currently sit in the order of $20 billion. They are likely to continue rising.
“Cantabrians and New Zealanders have been courageous, resilient, patient and strong. We understand and share many of their current frustrations, and as an industry are committed to doing all we can to help make progress.” The impact of the earthquakes is that there has been a fundamental and permanent shift in the insurance market. The way in which earthquake risks are insured has changed forever. An example of this is the approach to older buildings, particularly those with unreinforced masonry, which are now more difficult to insure for replacement cover throughout New Zealand. Many risks will be unable to attract full insurance cover, and this development will require collective dialogue between banks, government, insurers and business groups, to ensure that economic growth continues in earthquake prone regions. A major challenge going forward is to find a good balance between building standards and cost effectiveness. Excessive standards will lead to restricted development, whereas inadequate standards will simply perpetuate the challenges we have faced in Canterbury where many buildings and houses have been shown to have inadequate foundations or design for the conditions. The cost of insurance has risen dramatically and is likely to continue increasing as the costs of the earthquake claims rise. Residential properties have not been impacted as severely as Commercial but, in general, insurers are charging significantly more, and the Earthquake Commission levy tripled from 1 February 2012. Most insurers appear to be moving away from percentage of loss deductibles to percentage of insured value deductibles for earthquake, and the levels of deductibles on many commercial properties have risen. The impact on the cost and availability of reinsurance is major. Catastrophe reinsurers around the world have experienced an abnormally costly 2011 with significant floods in Brisbane, the Canterbury earthquakes, Japan’s tsunami and earthquake, and the Thai floods. The catastrophe reinsurance modellers are likely to begin to review their models for New Zealand risk in the next year or two. This could see a further round of earthquake insurance cost increases. 3 There will be other changes which will impact the market as we learn the lessons from Canterbury. These include issues of under-insurance, open-ended covers, outdated valuations, insufficient Business Interruption indemnity periods and insufficient business continuity planning. We, as an industry, will be looking to our broker colleagues to assist us in the Insurance Council highlighting the increased need for scrutiny in these areas. Despite the challenges of the earthquake, the Insurance Council and the insurance industry have been required to carry out their normal daily work. In New Zealand the Insurance Council has again been leading the debate on insurance and has continued creating a better understanding of the economic and social value of our industry to a successful New Zealand. The Council has maintained a strong and positive relationship with the government throughout the catastrophe recovery period, and also has seen its relationship with the Opposition, particularly local Canterbury MPs, built to a very positive level. Where there are clear differences of opinion between the government and the Council, we have sought to engage constructively in expressing our concerns. However, looking towards the remainder of 2012 and beyond, we will continue to build and maintain a strong, constructive and open relationship with the government on issues of wider concern to our members, and also in the continued recovery of the Canterbury region.
Page 1 and 2: www.icnz.org.nz Insurance Council R
Page 3: President’s Report New Zealand Tr
Page 7 and 8: One of the most impressive aspects
Page 9 and 10: Chief Executive’s Report The resp
Page 11: 9 We Remember We remember those who
Page 14 and 15: education, and inner city retail we
Page 17 and 18: safety reasons on the Christchurch
Page 19 and 20: Profound changes will come from the
Page 21 and 22: Marine Hull and Cargo 12 months to
Page 23 and 24: The Insurance Council of New Zealan

Download - Insurance Council of New Zealand

Create successful ePaper yourself

Delete template?

Save as template?