Continued aftershocks in Christchurch could have long term effects on the insurability of New Zealand
Media release
Christchurch insurance rebuilds $NZ10 billion and rising
15 June 2011
The Insurance Council is warning that the continued aftershocks in Christchurch could have long term effects on the insurability of New Zealand.
The insurance industry has indicated that the continued aftershocks in Canterbury are being viewed with increasing concern by reinsurers and international insurers. The aftershocks raise the level of risk seen in New Zealand and may have a significant impact on insurance and reinsurance policies in the future.
The impact may see increases in premiums and excesses, or even a questioning of the level of insurability for earthquakes that New Zealand receives.
The insurance industry stands firmly behind the people of Canterbury and is currently mustering all resources to cope with the increased and additional influx of claims being received as a result of Monday’s additional earthquakes.
The insurance industry says that many buildings already under repair were again destroyed by the aftershock and this will require a further approach by insurers through their builders to the insured parties, to ensure that buildings are repaired. But earthquake protection will now be set internationally. New Zealand’s earthquake insurance future will be decided by reinsurers’ in boardrooms on the other side of the world.
The insurance industry is now gearing up and expects to pay at least $NZ10 billion into the Canterbury economy and the rebuilding of Canterbury and Christchurch generally. However, over a hundred extra commercial buildings were destroyed in the latest quakes and costs will rise.
The Insurance Council members express their empathy with the people of Christchurch and assure them that the insurance industry will stand behind them to rebuild the community better and brighter than it has ever been.
A number of insurance offices were closed briefly to allow staff to return home to comfort family and children affected by the aftershocks and the industry has indicated that the impact on its staff, like the rest of the Canterbury community, has been profound in a psychological level.
The insurance industry however, says that the future is now being re-assessed by reinsurers and insurers and there are likely to be long term and significant changes to insurance in New Zealand when it comes to the writing of policies and covering of risks like earthquake.
Click here to read related latest article published on Sutff.co.nz – 15/6/11.
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House, Contents and Motor Vehicle Premiums on the rise….?!
Striking the balance between affordability for customers and the insurers ongoing ability to pay claims sits at the heart of financial management of business. Therefore premiums are regularly reviewed to ensure they’re priced in accordance with the level of risk insured, yet remain affordable for customers.
Two things have become increasingly apparent for insurance companies in recent months. One is the importance of having a strong financial position with access to capital, and the other is the importance of having a comprehensive reinsurance programme in place to cover the very high cost of natural disasters. If lacking in either of these areas, insurance companies are putting their customers at risk.
The impact of the recent catastrophic events we’ve seen, both locally and globally, has meant the cost of reinsurance cover has increased substantially for all types of natural disasters, and we are already incurring this increase.
Recent speculation in the media has suggested premium rises as high as 50% could be expected. For the majority of our customers, we believe the overall increase you receive will be significantly less than that amount.
Thorners is committed to ensuring the risk covered is rated correctly and we ask for your continued support as we make these necessary adjustments.
Please don’t hesitate to contact us if you have any questions about these increases.
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Click here to email Thorners or Call Us on (04) 528 8088
Income protection costs more for ladies
Women pay more than twice as much for income protection insurance as men because they make more claims for mental health and stress-related conditions, say insurance companies.
As the insurance industry reports a big rise in the number of New Zealanders taking out income protection policies, premium schedules show women pay significantly more for the products.
For example, a 35-year-old non-smoking man insuring a $65,000 annual income will pay $39 a month for an AIG Life IP policy. A 35-year-old woman with the same profile will pay almost $85.
Premiums go up with age for both sexes, but the disparity remains – at 50 the man will pay $129 a month whereas the woman will pay $270. AIG said it had always been the case that women made more stress-related claims. These claims were expensive, hence the difference in pricing.
In the most recent study to date which was undertaken in 2002, 30 per cent of claims made by New Zealand women on their income protection insurance were for mental/nervous conditions. For men that figure was 16 per cent. There was no reason to believe the trend had changed, and more recent studies in Australia showed a similar breakdown.
For men the major cause of claims was accidents but women did not make many accident claims.
Mental health and stress-related claims tended to run for much longer and were harder to terminate, and so this was built in to the pricing.
“You can see when a leg is well and somebody can go back to work.
“I can’t really tell if you’re not depressed any more.”
Insurance companies simply looked at where they were incurring the most claims and did not necessarily try to explain the trends. “It really all comes down to what an actuary thinks the expected claims are going to be.”
Why women would make more stress or mental health-related claims at work does not appear to have been well researched so far. Investment Savings and Insurance Association chief executive Vance Arkinstall said he was not aware of the disparity.
A spokeswoman for insurer ING said its income protection premiums were higher for women, but this was because women made more claims across the board.
The Attitude NZ survey released this year by research company Perceptive found that women reported higher levels of stress than men in all areas including saving ability, retirement security, job security, quality of life and health and well-being.
Auckland University associate professor of economics, Susan St John, said the private insurance industry differentiated by gender because it was allowed to and it was easy, not because there were necessarily two risk groups.
If there were a unisex pool of insured people the risk would be spread. “In this case the risk discrimination is simply by gender, which is a crude risk discriminator.”
A survey of 1000 New Zealanders released last week by AIG Life showed 23 per cent have income protection insurance, compared with 13 per cent two years ago.
If you are looking for sound life insurance advice, contact Denis Thorner on 0274 575 190 or email denis@thorner.co.nz Denis provides advice to clients New Zealand wide.
Click here to view our disclosure statement.
Denis Thorner recently won the Best Trade/Service Business Award at the 2009 Upper Hutt Business Excellence Awards, he belongs to the PAA and is a life long member of MDRT
Click here to view our disclosure statement.
Click here to email Thorners or Call Us on (04) 528 8088
