New Zealand Insurance Market Performance mid 2018

There is no doubt that the cost of insured losses caused by natural catastrophes, accidents and other incidents is increasing rapidly. These trends are not spikes that are expected to diminish, fluctuating up and down. The claim costs evidence a steady increase over a period of time to the extent that some insurers must address their pricing to keep their products sustainable.

The performance of New Zealand based insurers is recorded each year by the Insurance Council of New Zealand (ICNZ).  For the year ended 2017 the accumulated margin is negative $4.30 per $100; the insurers are losing $4.30 every time a client pays $100 of premium. A small profit was achieved in 2016 and in 2015 the ICNZ figures show a break-even position. These results are after insurers have recovered funds available from reinsurers and paid their operating costs. Overall this is not a sustainable position.

Increasing premiums is just one mechanism that insurers can use, which we are experiencing now. The other method, which we expect to see in the future, is a restriction on some covers. Wider cover may be offered but only for an additional premium.

 

Market Conditions affecting some commercial covers

Liability Products – Influences on Liability premiums are a little different from other types of insurance. Liability insurance is often referred to as ‘long tail’ because claims are usually not immediately apparent and once they are notified to the insurer, the settlement of a legal issue can be protracted by its nature and because of Court processes.

New insurers have entered the Liability sector during the last three years, some of these offering new Liability products to help generate fresh streams of income for insurers. These are good influences for insurance buyers because it adds competition and better products to the market.

However legal remedies are becoming more frequent in New Zealand therefore insurers are drawn into more litigation, ultimately paying the associated legal expenses and settlements.

Potential fines are substantially higher than they were a few years ago. Apart from the obvious flow-on effect that claim payments will be more, the larger fine motivates defendants to adopt a more determined position which increases the legal expenses and potentially the amount paid by insurers.

Never-the-less the overall result has been a stable premium position for Liability accounts with good claim records, notably this does not include financial advisers, valuers, property advisers and others who provide forecasts of a financial nature. Premium increases are evident for high risk industries although these are generally less onerous than the increases being applied in the property market.

Motor – Motor premiums continue to be determined by claim performance and there is evidence across the market that the position is deteriorating rapidly. A large and well managed fleet with a clean claim record will attract positive attention from insurers but this is likely to do no more that hold the expiring premium. However placement is often influenced by the availability of cover for the related property insurance when it becomes necessary to compromise for a better overall outcome.

The overall country average increase for Motor accounts is 14%.

 

Market Conditions affecting some domestic covers

The influences on Domestic products are similar to those being experienced for commercial property. House insurance is the most significantly affected because this is the portfolio where the Canterbury and Kaikoura earthquake claims, weather related claims and methamphetamine contamination has been so significant.

Premiums began to increase from mid-2017, particularly those in seismic regions and for rental properties. It is more difficult to predict where weather related claims will occur next. This unpredictability may be attributable to global warming and the rapid change of weather patterns.

The overall country average increase over 12 months is 12.5% however this will increase as the latest premium increases take effect. There are already extreme increases of up to 50% in some parts of New Zealand. Examples of premiums increases for residential rentals in Christchurch and Wellington are up by as much as 45% and by up to 25% in other regions.

Increases for Domestic products are likely to continue throughout 2018 and 2019 as insurers recover their portfolios to a more sustainable position.

Purchasing Domestic insurance is complex. It is not as simple as some online sellers suggest. We believe the changes impacting Domestic products and the addition of technology (for example, e-bikes, drones, entertainment and other electronic products, and AirBnB) increases the importance for house owners to receive sound advice from professional brokers.

Direct insurance providers, using call centres and bank intermediaries, may not be suitably experienced or have access to a range of products to help insurance buyers.

Strategies for Insurance Buyers

‘Information hungry’ has been a phrase often attributed to insurers in recent years. Provision of full and accurate information to insurers about commercial and domestic assets, revenue exposure and the measures being taken to mitigate risks has never been as important as it is today.

It’s more important than ever to start the renewal review as early as possible.  For most commercial clients this means a preliminary meeting with your broker at least three months before the renewal date and for domestic clients at least one month before renewal date. This will provide adequate time to gather the necessary underwriting information, compile it into a presentable form to the insurer and sufficient time to consider any coverage changes that are being imposed or any options available to reduce the cost of insurance.

Therefore if you are an insurance buyer there should be three things on your mind: first select a professional insurance broker, second ‘provide reliable information’ and third ‘start early’. This will put you in the best position to make decisions in what is currently an awkward insurance market but by early 2019 may become extremely difficult.

Contact one of experts to make sure you’ve got the right cover for you.


The Warriors and Runacres visit Edmonton Primary School

Local Runacres Insurance broker, Sam Marett, accompanied Vodafone Warriors team members to Edmonton Primary School on Friday, 25 May. Sam and the Warriors crew visited the Te Atatu South school to bring the children an interactive, fun and educational presentation about health and fitness, the Warriors and of course to hand over lots of pressies.

 

Whilst at the school, a special family were also acknowledged for their contribution to the school and were given a Warriors family extravaganza gift pack sponsored by Runacres Insurance. The pack included family tickets to a game with VIP passes to meet their favourite player post-match, a chance to run the match ball on field at the start of the game, as well as a super cool Warriors home jersey and a limited edition football, signed by the team.

 

“Seeing the joy on all the kids faces when they set eyes on the players was really so awesome. I’m so glad we were able to be there, get caught up in the excitement and bring the kids a fun Friday afternoon’s entertainment,” said Sam.

 

The family extravaganza pack was purchased on auction in support of KidsCan by Runacres Managing Director David Crick. David immediately decided that he wanted to share the pack with a deserving family who would truly appreciate the experience.

 

David commented: “It’s always great to support a worthy cause like KidsCan. It was even better when we are able to pay it forward and share this awesome prize with a fantastic family who not only love the team and rugby league but do so much to support their school and local community.”

Left: Sam Marett with Scott and Kasey McCamish and Warriors players Nathaniel Roache and Leivaha Pulu
Right: Edmonton Primary School getting behind the Warriors


Young Guns 2018: Runacres Insurance brokers named industry’s rising stars

We’re pleased to advise that two Runacres Insurance brokers have been recognised in the inaugural Insurance Business Young Guns Index.

As published by Insurance Business 24 April 2018

The insurance industry of the future will demand high calibre, highly skilled leaders able to cope with the ever-increasing pace of change. Who will step up to the plate? For the first time, Insurance Business recognises several impressive young professionals making their mark in the New Zealand insurance industry.  Download a copy to learn more about these rising stars, poised to become tomorrow’s leaders.

Runacres Insurance young professionals making their mark

Congratulations to our rising stars Charlotte Langridge and Charlotte Wilkins.

 

CHARLOTTE LANGRIDGE
Insurance broker
Age: 28

As a broker servicing a book of commercial clients in the fire and general market, Charlotte Langridge maintains existing relationships while also growing her portfolio.

She was also able to demonstrate her dedication to the industry and commitment to self-improvement when she completed both the level 4 and level 5 New Zealand Certificates in Financial Services within one 12-month period.
As a member of the Young Insurance Professionals, Langridge regularly advocates for the younger generation and supports those who are new to the industry. Already, she has been a mentor to other young colleagues and is currently exploring ways in which she can promote insurance as a career in secondary schools, universities and other groups and institutions.

“Charlotte is an intelligent articulate young person who impresses with her actions rather than words,” said Allan Silcock, general manager of administration at Runacres. “I have no doubt that Charlotte will rise to the top and be a leader at some point in the future.”

 

 

CHARLOTTE WILKINS
Domestic insurance broker
Age: 24

 

 

Maintaining a portfolio of domestic clients for all their insurance requirements, as well as developing new business around the Christchurch & Canterbury Area, Charlotte Wilkins has become an integral part of the Runacres team.

Targeting growth of over 100 per cent in the next 12 months, Wilkins has already significantly improved communications with existing clients and has excelled when it comes to cross selling products.

“Charlotte has impressed me with her dedication to the role and is always looking for ways of developing the portfolio and negotiates promptly and efficiently for all her clients with the relevant insurers,” said David Crick, CEO and managing director at Runacres.
“She is a very talented and career focused broker and an integral part of the Runacres team.”

 


Runacres Insurance broker and young mum proves you can do it all

Runacres Insurance, Christchurch broker Alarice Whale was recently interviewed by Insurance Business on how she juggles full-time motherhood and full-time broking. As published in Insurance Business 18 April 2018

Alarice is used to juggling multiple tasks. Not only is she a mother to three under three, but she provides broking support at Runacres for the firm’s seniors while studying for a diploma in insurance broking. Her goal is to take on her own book in the near future.

“Working a job full-time with a baby and two toddlers is not for the faint of heart but it’s definitely not impossible either,” Whale says.

What the best part of the job?
There’s a lot to love about the job but my top two parts would be the lasting relationships you build with your clients and others in the insurance community, and the never ending opportunities to learn. With the insurance industry constantly evolving it’s not the place to rest on your laurels so for someone like me, who likes to keep busy, it’s a perfect match!

What challenges you?
The most challenging part of the job, or rather time of the year, is the mammoth month of March. The financial year-end brings with it a rush of meetings, phone calls and paperwork. There’s definitely an air of excitement in the office on that final day of March when you know the madness is almost over for another year.

If you could change one thing about the industry – what would it be?
Portrayal of brokers as purely sales people. While there may be the odd broker out there selling on price alone, the vast majority of brokers are looking at the bigger picture. Brokers are risk managers and advisers first and foremost and can be an invaluable asset to a business. Securing competitive premiums is just one of the strings to the bow.

Do you feel prepared for the financial law regime changes?
Almost! I’ve done some reading and will also be attending the IBANZ webinar in May, which will explain all the regulatory changes including the additional duties the regulation involves and what disclosure, licensing and professional development requirements will look like moving forward.

Do you think the FMA has done enough to prepare advisers for these changes?
The changes have been talked about for some time now and information is readily available. I feel the FMA have played their part and it’s up to us now to get informed and take the appropriate action. Part of your role as an adviser is to ensure you keep yourself abreast of what’s happening in the industry, particularly in relation to the laws and regulations.

Do you think there is a diversity issue in the industry?
I’m aware diversity and inclusion are areas that need to be worked on in every industry and insurance is no exception to that. However, my personal experience in the industry has been very positive. I’ve had the pleasure of working with people from a variety of backgrounds and cultures and with strong female role models such as NZbrokers chief executive Jo Mason.

Insurance is seen as a grudge purchase. How do you change this perception for your clients, how do you educate them on the need for insurance?
I think it helps to put the cost into perspective by sharing claims stories with clients. Skipping insurance protection is a false economy when you stand to lose something that you can’t afford to replace. An insurance bill pales in comparison to the costs you would face if you had to defend a legal liability claim or the cost to refurnish your entire home after a flood.

Do you think advisers will still be relevant in five years?
Even more so than they are now. There are new risks constantly emerging. Risks like cyberattacks, terrorism, and last but by no means least, climate change. An adviser can provide relevant, expert guidance and help clients navigate the increasingly murky waters of risk management.

What do you think is the number one threat to the industry?
Insurance and reinsurance are an integral part of the global economy, so I don’t see a threat to the industry as such but there are changes coming that will reshape the insurance landscape as we know it. I think robo-advice (personalised digital advice) will bring about the biggest change.


Runacres Insurance finalists in NZ Insurance Industry Awards

Runacres Insurance have been announced as finalists in the sixth annual ANZIIF New Zealand Insurance Industry awards.

Each year the New Zealand Insurance Industry Awards recognise excellence and achievement by the top performing individuals and businesses in the industry. 2017 will mark the 6th year of the awards.

The Runacres Insurance team has been named finalists in two awards categories: Young Insurance Professionals Employer of the year, as well as Charlotte Langridge as Young insurance professional of the year.

” Young people are important to Runacres because they bring a unique dynamic to the team, adding enthusiasm and relevance through this energy” said Managing Director David Crick.

“It is no coincidence that the increase of young people in the business has coincided with our steady growth; their contribution to the team has helped drive our success.

Our young professionals are keen to learn, whilst understanding our team values and fit well in our culture that fosters team work. We believe this is important for future-proofing both our business as well as the Insurance industry in New Zealand” Crick concluded.

The winners will be announced at the awards ceremony on November 16, at SkyCity Auckland.

 


Property Insurance Costs Tipped to Rise

The cost of insuring some buildings could rise by more than 50 percent in just three months according to new figures from insurance brokers.

David Crick managing director of Runacres Insurance (formerly Runacres & Associates) says the cost increase is likely to be disproportionately larger for lower value dwellings.

“Immediately following the Christchurch earthquakes in 2010 and 2011, we saw insurance costs jump by up to five times higher than the year prior. However, over the past 12-18 months we have seen a sustained drop in the cost to insure as insurers looked to grow their client base and new competitors entered the market.

“We expect that trend to change in 2017 and 2018 with the impact of increased taxes on insurance and the influence of other market forces coming through such as the Kaikoura earthquakes and limited supply of cover from some insurers,” says Crick.

Jo Mason CEO of NZbrokers, the country’s largest insurance brokerage collective says  competitive changes in the market, the rising cost of cover for methamphetamine damage in tenanted buildings, as well as increases in EQC and the Fire Service Levies will see the cost to insure some properties increase by up to 56 percent according to her organisation’s analysis.

“If we take the example of a 1970’s farm house occupied by a farm worker with a replacement value of $230,000 which cost $944 to insure eight months ago, this will rise to $1478 in November – an increase of 56%,”

“While the fire service and EQC are essential factors in managing the risk of home ownership, it’s a real concern to see that this increase is going to hit many of those in lower value housing disproportionately higher,” says Mason.

She says while the sharp increase in the cost to insure a building may be off-putting to some, the cost of not being adequately insured could be far higher.

“All too often we have seen disaster strike, with devastating consequences for those who are under-insured or not insured at all. My advice to commercial property owners and homeowners is to talk to their broker about making sure you have the right level of cover with the right sums insured,” she says.