Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Q+A: Aviva CEO Mark Wilson interviewed by Corin Dann

Insurance giant Aviva CEO Mark Wilson – climate change priced in.

‘And there's still doubters on climate change. I find that bizarre because the science is compelling.’

‘Factors in the UK, for example, the worst three floods in the last 100 years are 2012, 2014, 2015. The worst I can find in New Zealand in recorded history are three of the last five years. Now, I think that's a problem. And it is a sign of climate change. The science is compelling, and we price it in. But it's not just about paying out, it's about prevention, it's about infrastructure, it's about what can the government and companies like us and business and New Zealanders do to protect us, protect the people, protect the economy when bad stuff happens?’

When asked about the housing bubble, Mr Wilson said, ‘the issue is if you continue to see that growth. I don't think you're going to continue to see the same growth in housing prices. And I don't think that's a bad thing.’

Mr Wilson also told Corin Dann that New Zealand may not be the first to sign a free trade deal with the UK but the chance of getting a deal early is high.

‘I think you might not be the first, but New Zealand, the chance of a free trade deal early I think is very high. I think it'll be good for both countries, and I think our percentage of trade to the UK will go up.’

Please find the full transcript attached.

Q+A, 9-10am Sundays on TVNZ 1 and one hour later on TVNZ 1 + 1. Repeated Sunday evening at 11:35pm. Streamed live atwww.tvnz.co.nz

Thanks to the support from NZ On Air.

Q+A is on Facebook, http://www.facebook.com/NZQandA#!/NZQandA and on Twitter, http://twitter.com/#!/NZQandA

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.


Q + A 2017
Episode 5
MARK WILSON
Interviewed by Corin Dann.

MARK I think it is the core role of a CEO, and I think too many companies and too many politicians, and too much of the media as well, think way too short-term. My view is business can do a lot of good or bad. In Asia, I saw both the unacceptable face of capitalism and the fact that business has been the biggest force of good in history. In China alone in the last 15 years, it took 680 million people out of poverty. So business is there to do good. The role of business isn't to make money. That's a critical and important part of it. The role of business is to have a social profit as well. And they're not mutually exclusive. And the more that businesspeople wake up and say, 'I'm there to think long term, I'm there to do good and I'm there to make money'... Make no mistake, I'm a capitalist, but I'm a capitalist with a social conscience. And you really need both of those things. I mean, climate change and sustainability —a company like us has huge investment assets. We've got about $800 billion Kiwi. Now, we have to think long term because our assets have got long-term liabilities, and so— Call it enlightened self-interest, if you like, but we have to think long term. That's what we're there for.

CORIN So what does that mean, though? The nuts and bolts for an insurance company like yours, climate change, does it mean in future that you just simply won't cover events such as floods we're seeing at the moment in New Zealand? We're seeing more frequent floods. Does it mean big changes for insurers?

MARK Well, it means changes, but we're there as an insurance company when there are floods and earthquakes. That's what we're there to do. But you have to price the risks. Factors in the UK, for example, the worst three floods in the last 100 years are 2012, 2014, 2015. The worst I can find in New Zealand in recorded history are three of the last five years. Now, I think that's a problem. And it is a sign of climate change. The science is compelling, and we price it in. But it's not just about paying out, it's about prevention, it's about infrastructure, it's about what can the government and companies like us and business and New Zealanders do to protect us, protect the people, protect the economy when bad stuff happens? That's what we do. That's our job.

CORIN Should part of it be simply telling people or rating their properties that if you're in a flood zone or if you're right by the coast you will have to pay higher premiums or we won't insure you? Should there be a rating, almost, on that?

MARK Well, there is in lots of places around the world. We've mapped every inch of the UK, for example. In New Zealand we don't have that same data. But we need to tell people, and we shouldn't be building on flood plains. But it's about infrastructure as well. New Zealand does have an
issue with infrastructure. The government, I know, has a big plan over the next 10 years on infrastructure and there are issues to fund that. But I think there's an easy answer. I think you've got NZ$40 billion in KiwiSaver now. Let's force investors to keep some of that onshore and have public-private partnerships and grow the debt markets and grow the equity markets. KiwiSaver is this massive pool of money that we should be using for the good of New Zealand, and it can also get excellent returns while you're doing that.

CORIN Should some of that money in infrastructure be used, though, for flood protection or for mitigating the impacts of increased weather events?

MARK Yes, so flood protection. How about education on it as well, on climate, on sustainability? So flood protection, flood defences, the right roading, the right building. There's so much you can do both for floods and earthquakes, and New Zealand does have to step up there. When I see what's happening in Europe and other parts of the world, we aren't so good, but I know there's plans underway so we can get there. We're far from finished.

CORIN Do you worry that we've got a U.S. president in Donald Trump who seems to be rolling back on climate change? That there's always going to be still a political debate about whether to do anything about it?

MARK Well, when Columbus set off to prove the world was flat, there were many doubters. And there's still doubters on climate change. I find that bizarre because the science is compelling. The fact that mankind can do something to fix it is also pretty clear. But to me it's not just about climate change. What about poverty? What about equality? What about the oceans? And it is business' role to be good ancestors. So the decisions that people like me and other businesspeople make, they should be measured on what people say in 20 years' time — Did we do the right thing? I want to be a good ancestor. And it's not just climate; it's a much broader sustainability that we really have to get real. And I think we're making part of it. Paula Bennett's doing some great things on climate. I think we're making progress there. I think her brief should be expanded. I know she's got a lot to do, but her brief should be expanded. Make it a sustainability ministry, Minister of Sustainability as well, where climate is part of the problem, but it's not the entire problem.

CORIN We've seen a massive asset bubble and it's caused huge problems with housing in New Zealand. From an insurer's perspective, does that create enormous problems, that you've got people buying houses and then all of a sudden within a year they're worth $200,000 or $300,000 more and they have to try and insure them?

MARK It's been an extraordinary bubble not just in New Zealand but many western countries. The housing problem is not unique. It's an issue right round the world. UK, U.S. And if it gets out of hand it can create a big credit problem. That's something the Government and Reserve Bank are focused on — and the banks here are focused on. And I think they're pretty careful about what they do with lending. The problem is— The issue probably isn't so much where it is at the moment, the issue
is if you continue to see that growth. I don't think you're going to continue to see the same growth in housing prices. And I don't think that's a bad thing. But I think it's really a supply issue. And we're in an election year now, I want to see what the policies are going to come out on the supply issue of the housing and see what happens. The other issue we have globally, of course, is we've been in low rates now for a decade of low rates. It's inevitable rates are going to go up. If something cannot go on forever, it will stop. And low rates cannot go on forever. So as rates go up, how will consumers react? How will house prices react? How will other commodity prices react? And anyone that says they really know, well, they have a better crystal ball than I do.

CORIN The Brexit is another interesting issue from your perspective. Do we really believe that New Zealand will be at the front of the queue of a free trade deal with the UK? Should we get our hopes up?

MARK It's interesting. I thought the UK should stay. I was a 'remainer'. I think that now we've decided to exit in the UK, we should. And I think New Zealand's in an interesting position. In the '50s, our trade was— about two-thirds of our trade was to the UK. Then now it's less than 4% of our trade's with the UK. They are friends of ours, they are very close to us culturally, they like New Zealand. We're almost cousins, I guess. I think you might not be the first, but New Zealand, the chance of a free trade deal early I think is very high. I think it'll be good for both countries, and I think our percentage of trade to the UK will go up. So Brexit's going to be complicated for the UK, it's going to be uncertain, but there's a lot of opportunities both for the UK and New Zealand if we can use them.

CORIN Mark, finally, what's next for you? You talk about being a transformational type of leader who comes in and fixes companies. I understand you've done a good job with your current company. Is there another move for you? Are you thinking of coming back to New Zealand? What's next on the horizon?

MARK I think I've got a fair bit to do where I am at the moment. The company has gone pretty well. We probably had our best year ever last year, and shareholders seem pretty happy. But I want to turn it into more of a digital company, more of a giant tech company. And the UK is the right place to do that; I’m very happy there. But I love New Zealand, and Corin at some stage I'll be back.

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.