The Annual Insurance Industry Review 2006 - 07

President's report

Rieny Marck
President, ICNZ

The insurance industry is critical to the effective operation of a modern economy and provides protection for most every aspect of New Zealand life.

The many issues and challenges presenting themselves to the insurance industry during 2006 have not diminished. The Insurance Council has once again had a very successful year and many of its achievements are included in this report. However, there are a few aspects I would like to highlight.

One of the key areas that we addressed during 2006 was disaster preparedness, particularly relating to both weather events and earthquake within New Zealand. New Zealand avoided the worst extremes that we saw from flooding during recent years, with a relatively benign flooding environment during 2006. We did however see one of the most damaging snowstorms in the history of our industry. During the middle of the year, a snowstorm virtually closed down the central South Island and caused over $50 million in insurance claims. This was yet another reminder of the devastation that can be caused by weather events, and highlights the need to be prepared including adequate insurance protection.

The insurance industry has a critical role in identifying, assessing and promoting effective risk mitigation and management of disaster risks, not only weather-related, but also from earthquake. This is an area in which the Insurance Council will be continuing to work with government, local authorities and the New Zealand public.

The threat of flooding
remains high. As a nation
we must be able to
recover through the use
of insurance.

The Insurance Council has been heavily involved in the regulatory area, both in the government's moves to rewrite the regulations surrounding intermediaries in the financial service sector and also the Review of Financial Products and Providers (RFPP). I would like to thank all members of the Insurance Council who offered their senior staff to the regulatory committee which produced a comprehensive submission into the RFPP. Ideally, this process will result in a set of regulatory standards which address prudential requirements, ensuring appropriate market conduct while minimising compliance costs and protecting the rights of policyholders.

In addition to the RFPP review, we have provided submissions on a wide range of vital issues relative to the insurance industry and the Insurance Council has continued to play an important role in legislative and political debate.

During the year the insurance industry commissioned an extensive survey on the issues of under and non-insurance. This survey confirmed that a significant number of New Zealanders are significantly underinsured or not insured at all. This group includes young people, certain ethnic groups, and the rural community who generally have significantly higher rates of non and under-insurance. We will be looking at ways to encourage more protection for these groups.

Clearly a major reason why insurance is perceived to be too expensive is a result of the number of taxes applied by government. This was confirmed by our survey. When people buy insurance they currently are paying premiums for the Earthquake Commission cover, a tax for the Fire Service, as well as GST. The case the Insurance Council has put to government is that underinsurance for New Zealand is a serious problem because of affordability, but not because of the price of insurance itself.

It is imperative for the industry to attract, retain and develop a quality workforce and build a strong employment brand. I am therefore pleased to note that the Council has significantly raised its profile in terms of educating the industry, including our colleagues in the wider insurance industry, through an extensive programme of seminars and education programmes aimed at raising standards throughout the industry. The General Insurance launch in 2006 was also a positive initiative well supported by younger members of the insurance community.

Another important role of the Insurance Council is to build public awareness of the vital role played by the insurance industry. As a high profile representative of the industry the Council successfully represents and promotes the industry at multiple conferences and seminars, often with speaking engagements, which provide opportunities to communicate key issues and develop contacts on industry-related matters. Similarly, the Insurance Council has become a preferred source of comment for the media on any insurance-related topics. This facilitates proactive positive coverage of the industry, its issues and initiatives, as well as providing responses to problems or events of public interest.

In an industry continuing to evolve, we have seen further changes, mergers and acquisitions within the market. These continuing changes have been reflected within the Board of the Insurance Council. I would like to thank all those members who assisted in contributing to the work of the Insurance Council through their representation on the Board, and also on the extensive network of Council committees.

Insurance claims
against the cost of
crime have risen to
over twenty million
dollars a month.

Our relationships with industry colleagues continue to be critically important. I would like to acknowledge the extensive assistance provided to Insurance Council members by the IBANZ Board and membership, also our colleagues in loss adjusting, the legal profession, fire engineering and all the other contributors. My thanks also to the Insurance Ombudsman and her team for the excellent complaints resolution services they provide to customers of Insurance Council members.

Finally, I would like to thank the staff of the Insurance Council for their tremendous efforts during the year and for the outstanding service they deliver to members and indeed to the insurance profession generally. On this note, my congratulations to Chris Ryan on receiving life membership of ANZIIF in recognition of his service and contribution.

The Council is well recognised, well funded, and well positioned to move forward into 2007. The last year has been a challenging but very rewarding year for me as President of the Insurance Council, and I look forward to being part of the ongoing contribution the Insurance Council makes to our business, our community and our nation during 2007.

Rieny Marck
President

Insurance Council of New Zealand

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