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Brokers Concerned At Shrinking Insurance Market

Published: Wed 13 Nov 2002 01:16 PM
NEWS RELEASE
13 November, 2002
Brokers Concerned At Shrinking Insurance Market
New Zealand representatives of general insurance brokers, the Corporation of Insurance Brokers (CIBNZ) and the Independent Insurance Brokers Association (IIBA) are concerned that recent insurance market developments might lead to constraints in some areas of the general insurance market.
British insurance group Lumley has just announced the sale of its general insurance and financial services operations in Australia and New Zealand, and Royal & SunAlliance is floating its Australasian business in an effort to raise capital.
In addition, IAG, Insurance Australia Group, has entered into an agreement to buy Aviva plc's Australian and New Zealand general insurance businesses, CGU and NZI Insurance. IAG New Zealand trade under the State Insurance and Circle brands and they will buy NZI general insurance, if successful.
Gary Young, President of CIBNZ, says the sale amounts to New Zealand's second and third largest general insurers merging which could have an impact on the market, especially with regard to earthquake capacity.
Robert Martin, President of the IIBA agrees.
"One issue, facing commercial property owners in particular, is whether there will be enough earthquake capacity in Wellington after the sale goes through, as there is only just enough earthquake capacity there at present," he says.
While both broker organisations say they understand the motives behind insurers merging is to stay successful in a very challenging global insurance market, New Zealand has some specific risks, such as earthquake and flooding, which present some challenges for the local market.
They say the role of brokers is to take clients insurance needs to a competitive insurance market and anything that reduces capacity requires due consideration.
ENDS

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