Cautionary advice on under-insurance – SME’s and Trustees
- Directors, officers, trustees and others could be fined for not arranging and maintaining adequate insurance cover;
- The levels of under-insurance in New Zealand in both the domestic and commercial sectors are alarmingly high;
- Being under insured is nearly as bad as being uninsured;
- Critical failures include not insuring your business and its assets for the correct replacement value and failing to anticipate how long it will take to get your business back up and running;
- Be realistic about potential recovery costs so that you don’t end up paying the cost of being under-insured;
- Allow for incidental costs such as architect’s or engineers fees. Also include an allowance for the cost of demolishing the remains of damaged buildings or plant and clearing the site of debris: the expense involved in clearing up can exceed demolition costs;
- There is anecdotal evidence of an increase in the incidence of fraud and theft. Liability is also a critical area to regularly review;
- Few businesses have internet liability cover – do you know what your employees are emailing?
Think ahead, not short term.
Thorners have vast experience in all insurance matters and provide advice New Zealand – contact us today to discuss your situation.
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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
