Availability of new Insurance
16 Nov 2016
The Insurance Council of New Zealand advised today that insurers are working hard to minimise any disruption to the availability of insurance for people putting offers in on houses.
Following the 14 November 2016 earthquakes, there has been some disruption to the availability of insurance for people seeking new or increased insurance cover.
Globally it is typical after a significant natural disaster for insurers to place a widespread embargo on new business or requests to increase existing cover.
Tim Grafton Insurance Council Chief Executive said “That can narrow down very quickly as the concentration of losses is established, but in the worst hit areas this will take longer depending on the settling down of seismic activity.”
“In the interim, our advice to people who are in the process of buying a new property where settlement is subject to insurance and finance, is to check with the vendor’s insurer to see if they will provide cover as that is a common solution”, he said.
In the Canterbury earthquakes, insurers supported the housing market by initially coming back on risk fairly quickly but then as more seismic events occurred it took longer to return to business-as-usual. In the 2013 Seddon earthquakes, this embargo generally lasted a couple of months.
The reason for insurers to be cautious is to minimise additional losses in order to meet reinsurers needs and keep insurance affordable for all. Insurers need to make prudent decisions to minimise the risks they take on in an uncertain environment.
Each insurer will have a different approach depending on their appetite for risk, so people should shop around.
The Insurance Council’s advice on a 3-step approach:
- Contact your own insurer first
- Contact the vendor’s insurer
- Shop around.
- ICNZ Media Release