Celebrating 25 Years of Scoop
Special: Up To 25% Off Scoop Pro Learn More

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


Mother Nature keeps the Kiwi insurance industry on its toes

Mother Nature keeps the Kiwi insurance industry on its toes

What are its top-five risks?

Like most New Zealanders, the threat of natural disasters and more earthquakes are on the minds of our nation’s insurers, closely followed by reputational risk, and strategic and operational priorities.

PwC Partner and insurance sector specialist David Lamb says, “The Christchurch earthquakes devastated more than a city and community: they continue to test the insurance industry and affect all New Zealanders from an insurance perspective.

“Insurers and specialists are now more acutely aware of New Zealand risk exposures and are concerned future catastrophic events will have a profound impact on New Zealand, especially in heavily populated and insured areas.

“The Wellington shakes provide a sober reminder,” adds Mr Lamb.

Based on the findings of PwC New Zealand’s Insurance Banana Skins 2013 survey, the threat of brand damage was also found to be a top concern of the nation’s insurers.

“Reputational risk is real and flows from the extended time it has taken to settle a number of claims in Christchurch. New Zealand’s insurance industry continues to face an unprecedented situation, and is well aware of the public feeling and mood,” says Mr Lamb.

Rounding out New Zealand’s top-five perceived risks is the industry’s slow adoption to new ways of selling their insurance products, a concern around the lack of innovation, and how to attract and retain the best people.

“One respondent told us there were ‘too many operational issues to focus on to really seriously innovate’.

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.

“Understandably, the industry’s resources have been focused on dealing with top operational priorities, increasing the risk that nice to haves fall by the wayside.

“Yet, insurers recognise they must continue innovating to improve their products and business practices. Of course, the ability to innovate comes down to having the right resources, diversity of thought, and getting and keeping good people,” says Mr Lamb.

The survey found a marked difference between global concerns and our local industry’s reality.

“New Zealand insurers agree with just three of the top-10 risks ranked by their global counterparts. Yet, it’s important the nation’s insurers stay mindful of global concerns,” adds Mr Lamb.

Regulatory risk emerged as a clear leader in many major markets, but was ranked number 12 in New Zealand.

“Global insurers are worried rules governing issues such as solvency and market conduct could swamp the industry with costs and compliance problems. Then, why are New Zealand’s insurers optimistic about their preparedness in this area?” asks Mr Lamb.

“One thought is that New Zealand is still in a state of infancy in terms of adopting insurance regulation, and it’s very early days in terms of our industry being actively regulated. That is not to say the threat of more intense regulation could not increase, especially if more resources and focus is applied by the New Zealand Government.”

“As we face a future where we will need to rely on global insurers to provide the cover we need, the same global concerns will impact us all in New Zealand,” concludes Mr Lamb.

Global – Top-5 risks 2013
(2011 ranking in brackets)

New Zealand – Top-5 risks 2013
(2011 ranking in brackets)

1. Regulation (1)
2. Investment performance (4)
3. Macro-economic environment (3)
4. Business practices (18)
5. Natural catastrophes (5)
1. Natural catastrophes (3)
2. Reputation (9)
3. Distribution channels (5)
4. Innovation (-)
5. Human resources (7)

- Ends -

© 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.