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Challenging year

18 Dec 2017

This year has presented significant challenges for insurers, ICNZ chief executive Tim Grafton noted when reflecting on 2017 which has seen extreme weather events such as Edgecumbe and the aftermath of the November 2016 Kaikoura earthquake rattle the industry.'

“This year has been the most expensive year for insurance claims for extreme weather events, costing $243 million,” he explained. “In terms of Kaikoura, insurers have done an outstanding job under the new model where they have been managing and settling claims for the Earthquake Commission (EQC), as well as claims that go straight to the insurer.'

“At the end of this year, we’ll have settled somewhere in the order of 85% or more of the Kaikoura residential claims. It’s a model that’s worked far better than the Canterbury situation, and we believe it’s one that should apply for the future.'

“With Edgecumbe claims we’ll have 90% settled by the end of this year as well. So, in terms of responding to major catastrophe events and major weather events, it’s been a very challenging year but it’s also been a year where the insurance industry can hold its head high. It has dealt with all the pressures that came (its way) and has delivered to moving to settlements for the vast majority of claimants.”'

“I think it’s been a proud year for the insurance sector in terms of how its dealt with those issues,” Grafton added.'

What on the agenda for 2018?
Grafton said there are a number of issues ICNZ would be focusing on in 2018. It will be a busy year, and a significant focus, to address the unresolved claims in Canterbury, including the government enquiry into EQC.

There are also a lot of regulatory and legislative matters to focus on:

  • The Financial Services Legislation Amendment (FSLA) Bill will focus on the conduct and competency of financial advisers.
  • RBNZ’s review of the Insurance (Prudential Supervision) Act will continue into all of 2018 and 2019, and ICNZ will be engaging on that.
  • There are a range of complexities involved in The Fire and Emergency Levy calculations and how that’s applied. ICNZ will try to simplify this for its members, and make it easy to comply with those regulations when they come into effect in 2019.
  • Ensuring there is sufficient time (for members) to be able to change IT systems in order to be ready and compliant when the new regime comes into effect will be a key priority for ICNZ.
    ICNZ’s review into its own Fair Insurance Code – the code ICNZ members comply with, and the review will be a big project in 2018.
  • ICNZ would like greater certainty from the Treasury’s review of the Earthquake Commission Act on arrangements between the two bodies should another event, such as Kaikoura, occur.

“This year has been a year, and next year I think in particular will be a year too, where there will be an increased focus on the implications of new technology in the regulatory area,” Grafton said.

“Robo-advice (digital) is an aspect of it, but also what comes along with AI and sophisticated data analysis, issues around permissions to use data, and not use data in inappropriate ways and privacy issues – all of those things that will be part of the regulator’s view, and issues that we need to address to maintain (market) trust and confidence, which is really important for us.

“It’s always a top priority ensuring that NZ has trust and confidence in insurance.”He added that 2018 would continue to be a year in which ICNZ would focus on working on risk reduction and resilience with local government, academics and researchers, as well as addressing the issue of underinsurance.

Working with brokers in 2018
Grafton said he encouraged closer, constructive working arrangements between underwriters (providers) and financial advisers because strong relationships are always good for the sector, and customers.

“If we can work together, which we are doing, on issues such as the Fire and Emergency Levy regulations and also look at issues where there is significant under insurance, whether that’s with cyber insurance among SMEs or in other areas, we’ll build good strong working relationships,” he said.

 

 - Insurance News

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