Insurance boosts NZ living standards

Media release

28 August 2013

Insurance boosts NZ living standards

The major challenge facing the insurance industry is to demonstrate the value it provides.

New Zealand’s economic growth, quality of national infrastructure and ability to withstand financial crises all depend on a profitable insurance sector, Vero Chief Executive Gary Dransfield told a business group in Wellington today.

Speaking at a Trans Tasman Business Circle lunch, Mr Dransfield said the insurance industry was “indisputably a major contributor to higher living standards”.

“What we have failed to do is make that case and measure our performance in a way that is clear and understood,” he said.

Up to $30billion of insurance money will flow into Canterbury during the earthquake recovery. That is about 15 percent of the New Zealand gross domestic product and a massive saving to government and taxpayer, he said.

“The annual value of the asset protection provided by insurers is also massive. Vero provides over $215billion worth of fire and household insurance protection for customers across New Zealand.

“That is the equivalent of the entire gross domestic product of New Zealand,” Mr Dransfield said.

Changes were needed to ensure New Zealand had a sustainable general insurance industry.

“Insurance company productivity needs to improve to ensure premiums remain at affordable levels. For media enquiries please contact Vasantha Naidoo on 027 480 4380 or Ron Burke on 027 512 3669

“Premiums also need to better reflect the risks covered,” he said.

In discussing Christchurch, Mr Dransfield said Vero had completed around 60 percent of the 20,000 commercial and domestic claims from the earthquakes.

It had also paid out over $2.2 billion in claims – or well over 20 times what the company earned in profit for the current year.

“Today there is more realism on the part of government agencies about the duration of the recovery and the efficiency of private insurers in claims management.

“We can improve efficiency in Christchurch and in any future crises.

“That will require common claims management processes; agreement on apportionment methods and increased involvement of private insurers in claims management,” Mr Dransfield said.

Vero had recently put to government and reinsurers suggestions about the management by private insurers of all aspects of selected shared-property claims.

“We see this as a way to more quickly manage claims affecting thousands of people in Christchurch.

“It would also be a useful pilot for the type of innovative thinking needed for any future natural disasters in New Zealand,” Mr Dransfield said.

Ends

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