Customers to get swift and certain resolution from changes
Customers to get swift and certain resolution from home insurance changes
Insurance industry changes to home cover will mean customers will get swift and certain resolution in the event of a significant claim, says AA Insurance.
AA Insurance will be one of the first New Zealand insurers to start selling home insurance based on the rebuild value, rather than the floor area of a property. The rebuild value is known as ‘Sum Insured’, and is the cost to rebuild a home to the same size with similar materials at today’s rates.
From 16 December 2012, AA Insurance will only offer new home insurance policies based on a Sum Insured value provided by the customer, while home insurance policies for existing AA Insurance customers will automatically change to a Sum Insured policy when their policy renews from 1 July 2013.
With a Sum Insured policy the customer will be in control of establishing the value of their home and keeping it up-to-date, should they make any improvements or extensions.
“The move to Sum Insured is largely a result of the learnings from the earthquakes in Canterbury, which have changed the face of insurance in New Zealand,” says Suzanne Wolton, Head of Customer Relations, AA Insurance.
“This is really about providing swift and certain resolution, and managing future affordability for our customers,” says Suzanne. “The key learning from the earthquakes is that after a large scale event our customers most want certainty surrounding resolution from their insurance – to know what is covered, and to be able to get on with their lives as quickly as possible. By moving from square metres to Sum Insured, our customers will know upfront the most their insurer will spend to rebuild their home, in the event it does need to be rebuilt. They will also know they are paying the right price to insure their property, and that the specifics of their home have been taken into account.”
AA Insurance’s reinsurers – the companies that insure AA Insurance and other insurance companies against extremely large losses – are also looking for more certainty with the cover they provide and want to understand the most that will be spent to rebuild properties in New Zealand after a large scale event or natural disaster that triggers the use of reinsurance.
“It is pretty obvious to insurers that going forward, we need to know much more about a home than just its size and location. Often, two homes of different sizes can cost vastly different amounts to rebuild,” says Suzanne.
“The earthquakes have had a fundamental impact on the affordability of insurance for our customers. Over the last two years, we’ve seen reinsurance premiums and EQC levies rise in the hundreds of percent. Sum Insured allows our reinsurers to calculate with confidence the appropriate premium we need to pay for our reinsurance cover. Our policies are changing as part of what is likely to be an industry wide shift that will help ensure that the average Kiwi can afford to insure their home.
“The majority of our existing customers shouldn’t notice any difference in the cost of their premiums simply from the change to Sum Insured, unless they decide to increase or decrease their Sum Insured and then we can help recalculate the price. In some cases the premium may change but only because it will now more accurately reflect any valuable improvements and materials used in your home.”
What do customers need to do?
If customers are taking out a new policy with AA Insurance, they’ll need to provide an up-to-date estimate of their home’s rebuild value. There are some simple ways to do this. One way is to use an online building calculator such as those that have been in use for many years overseas and are now available in New Zealand. These calculators enable details of the home to be entered before providing a general estimate of the rebuild cost to work from. Another way is for customers to provide their own valuation by their quantity surveyor, valuer or builder.
However if they’re an existing AA Insurance home insurance customer, from 1 July 2013 they’ll need to check their renewal policy to approve the Sum Insured figure. An estimated Sum Insured figure will be automatically generated based on the existing policy for the customer to review, and will be adjusted each year to include inflation and general increases in rebuilding costs.
If their policy was renewed before 1 July 2013, customers can either wait until the following year for renewal, or change their policy over to the new Sum Insured at their discretion.
About AA Insurance
AA Insurance was launched in 1994 and is a joint venture between New Zealand Automobile Association and Suncorp.
AA Insurance employs around 580 staff servicing more than 280,000 customers and manages over 500,000 policies covering motor, home and contents insurance.
AA Insurance was named as New Zealand’s best workplace at the 2011 JRA Best Workplaces Survey, winning the overall award and the large company category. From 2008 to 2012 AA Insurance has consistently been a finalist.
AA Insurance was also named winner of the 2012 New Zealand Insurance Industry Awards for Direct Insurance Company of the Year, as well as voted Most Trusted Insurer by New Zealanders in the Insurance Providers category of the 2012 Reader’s Digest Most Trusted Brands survey, conducted by Catalyst Research.
AA Insurance Limited has an A+ (Strong) Insurer Financial Strength Rating given by Standard and Poor’s (Australia) Pty Ltd. For further information visit www.aainsurance.co.nz.
AA Insurance is proud to support youth charity Blue Light as its principle corporate sponsor.