The Annual Insurance Industry Review 2007 - 08

President's report

Rieny Marck
President, ICNZ

The past year has been one of significant progress for the Insurance Council as well as one presenting significant challenges for the insurance industry.

One thing has not changed, the New Zealand economy relies more significantly than ever on a sophisticated and successful insurance industry and insurance makes a vital contribution to modern society.

The Insurance Council plays an important role in communicating with consumers, the community, the industry and with government to ensure we have an environment that facilitates general insurers to deliver quality products and services which meet community and business needs in a competitive and changing market.

Over the last year the industry has experienced a range of issues, particularly regulatory changes and ongoing competition within the industry which has seen markets under pressure from falling premiums and a rising claims environment, exacerbated by more frequent extreme weather conditions and inflationary costs.

Premiums and climate change have impacted both internationally and domestically. However, despite these issues, the industry remains strongly positioned and is prepared and able to deliver the protection our customers expect. Recent weather events have meant the insurance industry has become a key participant in the ongoing dialogue on how we can cope with, and adapt to, changing weather patterns. We have continued to assist significantly in the recovery of communities from earthquakes, floods and weather-related events.

The Insurance Council has again been leading the debate on insurance, and has been active in creating a better understanding of the critical economic and social value of our industry. Maintaining a positive and proactive relationship with the government is a very important aspect in this debate. As a Council we will continue to work hard to build a strong, constructive, open relationship with the government on issues of concern to members. With a looming election in 2008, our commitment to this dialogue with government is ongoing.

One of the key features of the past year has been the work the Insurance Council has been involved in relating to the regulatory Review of Financial Products and Providers. The Insurance Council had made submissions on the first of two Bills directly relating to the insurance industry (the Financial Service Providers (Registration and Disputes Resolution) Bill, and the Financial Advisers Bill), both of which have significant implications for our customers and our companies. We have also been actively engaged with the Inland Revenue Department discussing implications of tax changes on insurance.

The competitive nature and nominal growth of our market combined with increasing costs of claims and reinsurance has pressured underwriting results as evidenced in industry returns. Both personal lines and most commercial insurance rates are beginning to firm and further movement of these rates appears likely given the economic experience and evolving risk exposures.

The Insurance Council has a very broad mandate and influence - I would like to particularly acknowledge some of the individuals and organisations who contribute to our success.

Once again, the Insurance Council's committee structure has continued to deliver great value. Those involved in the various committees make an immense contribution to the management and development of our industry.

Liaison with our key industry partners has been maintained. The continued support and close relationships with the Insurance Brokers Association of New Zealand, the Australasian Institute of Commercial Loss Adjusters, and other industry bodies, has ensured constructive debate and positive outcomes on industry issues.

The Insurance Council continues to actively support and promote the operation of the Insurance & Savings Ombudsman. This service provides consumers, who insure with Insurance Council members, with an effective and affordable complaints resolution service.

Regular meetings have been held with the New Zealand Fire Service and, although there are some ongoing issues relating to the definition of Fire Service levies and the appropriate application to insurance policies, we continue to maintain a positive dialogue as we work through these issues.

Further advances were made in claims notification and disaster planning with the Earthquake Commission and recent claims events have highlighted the need to ensure ongoing close coordination and cooperation.

The insurance industry needs to ensure it continues to attract and develop quality employees. The Insurance Council has a vital role in this area and maintains a programme of education and seminar events aimed at raising industry standards. The Insurance Council and members also work very closely with Australian and New Zealand Institute of Insurance and Finance who provide highly regarded professional development and educational services.

The past year has seen further consolidation of the industry through mergers and acquisitions. Despite the continuing consolidation of the industry, the Insurance Council attracted three new members during the year and we were very pleased to welcome Zurich, Pacific International and Simply Insurance.

I am indebted to my fellow directors for their support and I thank them for the time they contributed to the ongoing governance and development of the Insurance Council and the insurance industry.

I also especially acknowledge the outstanding work undertaken by our Chief Executive Chris Ryan and his very able staff, supported by the efforts of the membership of our various committees. Together, they have ensured the year was one of considerable achievement and, once again, our thanks go to all those involved for their contribution.

The excellent reputation of the Council has, I believe, been further enhanced this year through the researched, balanced and professional approach taken to promoting the interests of current and potential members, consumers, and the community at large. Ongoing implementation of our core strategies will continue to ensure positive and progressive outcomes.

Rieny Marck
President

Insurance Council of New Zealand

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