New Zealand's professional association representing the interests of insurance brokers, risk managers and consumers.
IBANZ gives strength and support to members enabling them to better meet their challenges and opportunities.
We achieve this through staying involved with government activity and legislative reform impacting the insurance industry, and more specifically fire and general brokers and their clients.
We focus on providing high quality presenters who speak on a variety of fire, general and business topics under our Continuing Professional Development (CPD) offering to support members deepen their knowledge and broaden their skills.
The IBANZ Code of Professional Conduct provides the public with assurance that members act in a professional and ethical manner. It includes a disciplinary and complaints committee to review concerns that may arise.
Ph: 09 306 1732
www.ibanz.co.nz
That was 2024, looking forward to 2025
As 2024 draws to a close, it's a great time to reflect on our progress over the past 24 months and anticipate the future of the insurance industry. This edition of CoverNote features insights from four industry leaders as they reflect on the past and predict the next 12 months.
Given that New Zealand ranks ninth among countries most affected by natural disasters, it's crucial for our industry to highlight the extensive coverage and capacity we offer our customers. While the media often focuses on the rare instances when insurance issues arise, the vast majority of claims are processed smoothly.
Throughout 2024, the Financial Markets Authority (FMA) has been notably active. It's encouraging to see that both the FMA and brokerages have used these experiences as learning opportunities. The Monitoring Insights report released by the FMA earlier this year is essential reading for anyone managing a brokerage.
We also extend our heartfelt congratulations to the recipients of the IBANZ Honorary Life Membership for their significant contributions to IBANZ and the broader industry. Insurance often goes unrecognised for its vital role in society and the economy, so it's wonderful to celebrate the achievements and dedication of our community members.
As we approach the holiday season, we hope you all take the time to relax and enjoy a well-deserved break. May your Christmas and New Year be filled with joy, peace, and happiness.
Thank you once again for your commitment to your clients and brokerages. We look forward to another fantastic (and hopefully calm) year ahead.
and
IBANZ enquiries should be made to: Melanie Gorham, Chief Executive, IBANZ. Email: mel@ibanz.co.nz IBANZ National Office located at: Unit 4D, 2B William Pickering Drive, Rosedale, Auckland 0632 PO Box 302504, North Harbour, Auckland 0751 Telephone 09-306-1732. Website: www.ibanz.co.nz
Gallagher Insurance signs on as major sponsor for New Zealand Open
Gallagher Insurance has been named as one of the major sponsors for the upcoming New Zealand Open after serving as a supporting sponsor earlier this year.
Gallagher said that after witnessing the positive impact of the tournament to the local community in Central Otago and Queenstown, it has agreed to increase its support for the event next year.
Gallagher Insurance chief executive Carl O’Shea said the firm was pleased to extend its support for the event.
“The New Zealand Open is an incredible event, and one we are proud to support. As well as hosting at the Open, there is great engagement with the local community providing real opportunity to celebrate the region and golf,” said O’Shea. “Gallagher Insurance and the sport of golf both embody the values of integrity, perseverance and achievement. We are excited to contribute to the growth of this event that engages with the local region and much of New Zealand.”
“Having a sponsor agree to step up to the next level shows we are having the right impact nationally and internationally. Gallagher Insurance’s partnership is a boost to the tournament’s profile and helps us reinforce our commitment to the region and the golfing landscape in New Zealand,” said New Zealand Open chairman John Hart. “We really enjoyed working with Carl and his team this year and are excited to build on this positive relationship over the coming years.”
As part of Gallagher Insurance’s extended sponsorship for the event, the insurer will be giving one golfer an opportunity to win a full membership together with coaching sessions at their local club, up to the value of $2,000.
The 104th New Zealand Open will take place at Millbrook near Arrowtown from 27 February to 2 March 2025.
Future Fusion: Merging tech and tradition for broking success
Grand Hyatt Tokyo, Japan, August 2024
The 2024 PSC Connect Conference held at the Grand Hyatt Tokyo in Japan brought together our brokers and employees from Australia and New Zealand, as well as key suppliers, insurers and agency partners for a dynamic and inspiring three-day event.
Economic trends and technological innovation took centre stage, with presentations from IQumulate, Elantis and Javln exploring strategies to manage financial stress for our clients, and how integrating cutting-edge platforms like Javln and Apex can enhance client outcomes.
Those who attended gained valuable insights from Ando, Vero, Dual, Market Lane and Emergence that will help brokers elevate their expertise and service delivery, while immersive teamwork exercises highlighted the power of collaboration. Extensive discussions on cybersecurity underscored its critical importance in the evolving landscape, as well as technology’s pivotal role in streamlining underwriting and advancing broker education.
A panel discussion on the subject of technology in underwriting delved into AI’s role in insurance broking and the importance of collaboration between brokers and insurers as this new technology is introduced.
One of the conference highlights was Australian newsreader and award-winning journalist Tracey Spicer’s thought-provoking presentation on the transformative role of artificial intelligence. Tracey examined AI’s potential biases, its implications for employment, and the need for ethical practices and workforce reskilling. Attendees left with a stronger understanding of the opportunities and challenges AI presents for the insurance sector.
During our free time between conference sessions, PSC employees and brokers had the chance to try activities like Sumo wrestling and Samurai sword fighting, as well as street kart racing and exploring Planet Labs. The evenings were spent enjoying fabulous Japanese cuisine and entertainment.
The conference also celebrated key milestones and achievements, including service awards and accolades for 'Rising Star' Chelsea Harkin, 'Member Broker of the Year' Kirsty Young, and 'High Achiever' Fraser Stainton.
The event proved to be a resounding success, equipping brokers with the tools, insights and inspiration to thrive in an ever-evolving industry.
We look forward to next year’s conference and the continued growth of PSC Connect.
Dave Penfold with Award winners Kirsty Young, Fraser Stainton and Chelsea Harkin
Recognising massive contributions to the industry
Six insurance industry identities, who have contributed greatly to IBANZ and the New Zealand industry, have been recognised recently with IBANZ Honorary Life Memberships.
The people are Angus McCullough, Bruce Oughton, Jo Mason, Paul Munton and Roger Abel. An Honorary Life Membership has also been bestowed posthumously upon Max Marsh who sadly passed away in July this year. Honorary Life Memberships are granted to past or present members where the IBANZ Board considers a member worthy because of their position, experience and overall contribution to the insurance industry.
Angus McCullough
Angus McCullough is Head of Commercial Risk Solutions at Aon New Zealand. He’s been in the industry 28 years, starting with State Insurance before moving to the broker sector with Aon. He has held various roles at Aon and is now a member of their New Zealand executive team. Angus has served two stints as a IBANZ board member, having a particular focus on regulatory change and the impact it has on the broking industry, prior to the inception of the Regulatory Affairs sub-committee (RAC), which now includes legal and technical representatives from various IBANZ members. Over a number of years Angus participated in working groups, engaging with DIA, FMA and Chapman Tripp. focused on the introduction of FSLAA. Angus is a current IBANZ board member and joint Vice President (2023-2024). Angus continues to make a huge contribution to the IBANZ board and the industry.
Bruce Oughton
Bruce Oughton has had a remarkable 50-year career in the New Zealand insurance industry. A staunch supporter of IBANZ, Bruce has consistently encouraged membership and facilitated valuable interactions by inviting IBANZ CEOs to present at Allied/Steadfast conferences. His career spans across organisations such as NZI, FAI and QBE, the insurance subsidiary of Fisher & Paykel Finance, before joining the broking industry in 2007. Bruce’s leadership was instrumental in developing the Allied network into a robust 31-member broker network. With Bruce’s guidance, the network flourished and expanded under the Steadfast name, showcasing his unparalleled ability to foster strong, prosperous and sustainable relationships among brokers and insurers. Bruce led Steadfast in New Zealand from its inception in 2014 until his retirement in 2022. His legacy of leadership, innovation and collaboration continues to inspire and shape the future of the insurance industry.
Roger Abel
Roger Abel is a visionary leader who has made exceptional contributions to the insurance industry. His leadership and commitment to developing professionals makes him a deserving candidate for the Honorary Life Membership of IBANZ. Roger has been a dedicated member of the IBANZ Board since 2013, demonstrating unwavering commitment to the development and growth of the insurance sector. Throughout his career, he has employed, grown and mentored numerous insurance professionals, ensuring clients receive the best broker representation. Roger has been Managing Director of Rothbury Insurance Brokers for over 30 years, since February 1992. He began his financial services career in 1987. Just five years later he became a 50% shareholder in Rothbury. Under his leadership, Rothbury has grown from a team of three in 1992, to over 500 in 2024. Roger has also formed partnerships and consolidated various broking and underwriting businesses, supporting many business owner exit strategies while maintaining options in the market and continuity of service to clients. Roger’s visionary leadership has also been evident in championing the SCTP solution, which has significantly enhanced client experience and industry standards. Roger's genuine interest in people and commerce has driven him to seek opportunities and beneficial changes. His emphasis on culture, technology and net promoter scores has significantly impacted the Rothbury business and its relevance to clients.
Jo Mason
Jo Mason is a pioneer in the New Zealand insurance industry. She was the first female to hold a senior role at a large broker network and has enjoyed a lengthy and impressive leadership career. In governance Jo was an IBANZ Board Member and also part of the remuneration committee from January 2018 until August this year. She has also served on the ANZIIF Member Advisory Board (NZ) and as a ANZIIF Board Member (2017-2022), ANZIIF Women’s Council Member (2013-2018), and IAG Group Diversity Working Party New Zealand Representative 2010-2011. Jo’s career started at NZI (1985-2004) followed by a stint in Australia with Allianz (2006-2007). She returned to NZI as GM for sales and distribution in 2007, then becoming GM, Corporate, Niche and Facilities, a role she had from 2010 to 2015, playing a role in the acquisition of Lumley General Insurance. During that period Jo was also instrumental in mobilising NZI staff around New Zealand in disaster recovery and risk mitigation immediately following the Canterbury earthquakes. NZI was awarded a special award for claims response at the Insurance Brokers Association NZ (IBANZ) Awards 2011. Jo rejoined Allianz in Australia in 2015 and 2016 before returning to New Zealand to become CEO at NZbrokers Management Limited in 2016. This is the position she still holds today. Jo has been described as ‘a highly motivated leader who enjoys pursuing and achieving ambitious goals’.
Paul Munton
Paul Munton is a prominent figure and leader in the insurance industry. Paul serves on the board of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and chairs the ANZIIF New Zealand Member Advisory Board. Through these positions, he has contributed significantly to the advancement of professional education and industry collaboration. Paul is Executive GM of Broking Branches at Rothbury Insurance Brokers, an organisation he joined in 2015. During his career spanning three decades, Paul has held key leadership positions across broking, underwriting, corporate insurance and reinsurance businesses. His professional journey includes senior roles at organisations such as Lumley Insurance, Aon, Swiss Re and EIG-Ansvar. Munton’s leadership at Rothbury has been instrumental in expanding their branch network and ensuring operational growth. His focus on delivering a client-centric service culture has been a hallmark of his career. Paul Munton is widely recognised for his expertise and is highly respected across the industry for his contributions to both business growth and professional development initiatives.
Max Marsh, who sadly passed away in July this year, has been posthumously awarded an Honorary Life Membership of IBANZ. This recognises a contribution to the industry spanning 50 years. As well as being a leader in the New Zealand insurance industry, Max made a huge contribution to the broker organisations IIAA and IBANZ. He served the industry as a committee member of IIAA which went on to become IBANZ. Max organised many successful conferences and events during his tenure. In recent times, and as part of his commitment to ‘give back’, he contributed under a pseudonym to the Brokers Blog for a large broker network. In 2015 he was recognised with Crombie Lockwood’s pinnacle company ‘Legend’ award and in 2017 with an ANZIIF Lifetime Achievement Award. Max started his insurance career with Marsh in London where he gained valuable experience in the wider world of insurance. When he returned back home he worked for NZI, then Hickson and Raven Insurance Brokers which he went on to purchase, then forming a partnership with Norm Main and rebranding to Main Marsh in 1990. Access, Cornerstone and Main Marsh merged later to form ACM Insurance Brokers, later becoming ACM Ahlers when Paul Ahlers joined the company. That business ($100m GWP/100 staff/10 locations) was sold to Crombie Lockwood in 2012. Max worked on for Crombie Lockwood as a branch then regional leader for five years through to his retirement in 2017. Described as ‘ruthlessly efficient and always looking for a better way’, to many Max was much more than a business mentor; he cared about his employees and their families and was a staunch advocate for personal well-being and development. Max was respected by all in the industry which was demonstrated by there being standing room only at his funeral held on the North Shore in Auckland.
Max Marsh
FULL LIST OF IBANZ HONORARY LIFE MEMBERS
2024 – Max Marsh (posthumously); Roger Abel; Jo Mason; Angus McCullough; Paul Munton; Bruce Oughton: 2023 – Duane Duggan; Tony Bridgman; Ruth Steele: 2022 – David Crawford; Nick Cressey; Tony Butson: 2021 – Jason Smith; Craig Buckle; Allan Daly: 2016 – Richard Russell: 2011 – Guy Harvie: 2009 – Alan Morris, Murray Hall: 2005 – Colin Crombie; Don Grayson; Graeme Robertson: From CIBNZ – Pat Samson; John Richardson; Murray Hogan; Don Harrow; David Harrison; Denis Adam.
That was 2024. What’s in store for 2025?
For this year-end issue of CoverNote we talk to four industry leaders about the year that was 2024 and what the new year 2025 has in store for the industry.
Kris Faafoi is CEO of the Insurance Council of New Zealand. Grant Milne is MD of the ICIB BROKERWEB Group. Andy Croy in GM Distribution for NZ at QBE. Neil Cousins is CEO of Steadfast and the current president of IBANZ, the industry body for Insurance Brokers that publishes this fine magazine.
We put these questions to them during November.
If you were to describe the year 2024 for your organisation in one or two sentences, what would that be?
Kris Faafoi: It’s been a rewarding year of change. Some big changes in the legislation space and readying ourselves for the new world of COFI. For ICNZ there is the obvious change of leadership with me arriving as CE and working with the team to hone in on what makes us effective, and allow the insurance sector to play its part leading and building a stronger Aotearoa.
Grant Milne: 2024 has been a year of reimagining our business with the amalgamation of our various acquisitions over the past two years. This has included defining our values, purpose and goals, and establishing our culture fit for our diverse team of professionals. It would be remiss of me to not mention that it's been a tough year for our teams, having to negotiate insurance solutions for our clients in a rigid insurance market and managing client expectations during hard economic times, all of which seems to be changing again as we come to the end of 2024!
Andy Croy: For QBE, 2024 was about adapting to and supporting our partners and customers through a rapidly changing environment. We leveraged our global capabilities and local expertise to deliver innovative business insurance solutions, ensuring our customers had the protection and service they needed.
Neil Cousins: With the hard market due to high inflation and the events in 2023, the market has seen strong growth. With the benign claims period over the past 18 months, it was just a matter of time before the calls from London started to come.
What are you most looking forward to as an organisation in the new year that is 2025?
Kris Faafoi: The ICNZ team has taken some time out to recalibrate where we can make a substantive and positive difference to the sector and New Zealand. So, thinking and influencing policy settings, debates, and discussions to keep Kiwis safe and insurance sustainable is where we are heading. New Zealand can be world-leading in many of these areas. We’re looking forward to the insurance playing a leadership role in 2025 and beyond. There is much to decide and do to reduce risk and build a strong Aotearoa. We are getting ourselves ready to play our part in that.
Grant Milne: Settling into a year as one business and moving forward with a focus on adopting AI to support efficiency around repetitive activities, and implementing our
people resilience programme which we have been piloting in parts of the business.
Andy Croy: We’re looking forward to addressing the challenges of climate change and technological disruption as opportunities to innovate and enhance our solutions. We're also excited to strengthen our partnerships with brokers and use data analytics and advanced risk modelling to offer smarter, more adaptive solutions. By continuing to develop tailored insurance products and supporting businesses' evolving needs, we aim to help our customers navigate and succeed in a complex, dynamic market.
Neil Cousins: At Steadfast, we continue to invest in our market-leading technology. We have just announced the sixth partner to join SCTP for BusinessPack and in the new year we will have some exciting news to share-regarding new products. We have recently acquired a London based Lloyds brokerage which will support our overseas placements and ease of accessing London syndicates.
Changing legislation is one of the challenges on the horizon. What involvement does ICNZ have on this process, and what are the changes you are hoping to see?
Kris Faafoi: In the climate and adaptation space ICNZ, on behalf of the insurance sector, has played an important role to lead and elevate the importance of reducing risk for New Zealand. My predecessor Tim Grafton undertook a power of work on the Contracts of Insurance Act which sees the most significant reform of legislation in this space for close to a century. We believe the new law strikes the balance of consumers having much clearer rights at critical times and allows the fundamentals of insurers to be maintained. This kind of work is core to ICNZ.
What are you hoping for, and how will this impact the industry and your business?
Grant Milne: Regulation should be embraced with a positive attitude. There are many good things that come from a regulated environment, and mostly it is about reassuring and protecting the customers we strive to build trusted relationships with. What I hope for is that it will help lift professionalism and create greater consistency across our industry. ICIB BROKERWEB is well-placed with its operation within the new regulatory framework, and we are being proactive with the development of the skills, both technical and soft skill, of our people to produce the best customer outcomes.
Kris Grant Andy Neil
Andy Croy: As the regulatory environment evolves, we hope for clearer frameworks on climate change risk, insurance affordability and pricing transparency. Given the growing severity of weather events in New Zealand, the industry will face increased scrutiny on risk assessment and pricing. We hope regulations foster innovation in risk management, enabling insurers to effectively respond to climate change while ensuring fair coverage. At QBE, we're already adapting to these changes, using global capabilities, advanced data analytics and AI to refine our pricing and risk models. We also prioritise ESG factors in our investment and underwriting decisions, aligning with sustainability regulations. While changing legislation presents challenges, it also offers an opportunity for QBE to lead in creating smarter, adaptive solutions, supporting long-term, sustainable risk management for our clients.
Neil Cousins: What we do in insurance is so important, by protecting the assets and liabilities of New Zealanders. I get concerned that we do not see ourselves in this light, and if we don’t see ourselves in this light, how will the public? As an industry, we need to up our game with regards to professionalism, transparency and quality advice, exactly as you should expect from a lawyer or accountant.
What are the key challenges facing the industry in 2025 and beyond?
Kris Faafoi: Climate adaptation, affordability and being ready for Kiwis when it matters.
What are the trends you see happening regarding capacity in the New Zealand market?
Kris Faafoi: Capacity remains strong and the challenge there is to ensure New Zealand is doing everything it can in terms of adaptation and risk reduction to ensure reinsurers maintain their confidence in our market. We have a great
About the people
story to tell, and we all need to be telling it. Central and local government, insurers and the private sector must all work together to work locally and nationally to reduce risk. ICNZ plays a key leadership role here in campaigning and advocating for this to happen.
Grant Milne: We are definitely seeing more options available in the commercial space through the underwriting agency channels. So while most of these options are niche around a product or a particular industry segment, there are a lot more general property facilities available for the SME customer segment, too.
Andy Croy: Capacity in the New Zealand insurance market should be readily available, but the challenge will be how it's deployed, with pricing playing a key role. As climate change, technological advancements and evolving risks reshape the market, insurers must adapt to long-term changes. At QBE, we have the capacity to write business, and by leveraging AI, data analytics and focusing on ESG factors, we can provide more accurate risk assessments and pricing. The key will be balancing these elements to deploy capacity effectively in an ever-changing environment. Supporting local capacity and markets is essential to ensure we avoid service gaps, particularly during disruptions or peak demand periods. By integrating global expertise with local resources, we can consistently meet our customers' needs. With over 100 years in New Zealand, QBE is committed to remaining a stable, consistent presence throughout market cycles. We don’t move in and out of the market; we’re here for the long-term, dedicated to providing reliable service.
Neil Cousins: With calls coming in from the London market, it was only a matter of time before capacity increased and prices started to fall. This appears to be prominent in the corporate market but will gradually drift into Mid and SME markets. Does this worry me? for sure. The pricing increases following the large event in 2023 were too strong and therefore adjustment is needed, but to move to a soft market
will only cause disruption when the next event or series of events come around. predict that domestic market will continue to rise with the lack of competition.
What trends do you see happening with pricing in 2025?
Kris Faafoi: I am always going to be careful when talking about pricing. What we have seen since the North Island weather events of 2023 is pressure on pricing, and the Reserve Bank helpfully outlined in its Financial Stability Report in May that the trend in the wake of a large-scale event is an increase in reinsurance costs and house cover premiums as the market recalibrates. We’ve had a relatively benign period (touch wood) more recently and most commentators are saying that the rate of increase in reinsurance costs should plateau. At the same time, inflation is now showing signs of coming off levels that have meant increased costs. Insurers are also doing what they can to keep costs down for customers and be as efficient as possible.
Grant Milne: We have seen a sharp drop-off in pricing across the commercial segment in the past two months. This has happened a lot quicker than we had anticipated, so we are not sure how far pricing will drop at the moment. Unfortunately for our personal lines customers we are not seeing the price reductions, and in some regions the pricing is still going up. We still see the London and offshore markets as viable and competitive options, and they do play an important role with spread of capacity and smoothing of pricing.
Andy Croy: In 2025, downward pressure on premiums will likely continue in short-tail lines of business, influenced by global metrics and unforeseen weather events. While downward pressure persists in the short-term, long-term pricing stability will depend on how insurers balance innovation, climate change impacts, and technological advancements in risk assessment. QBE is well-positioned to navigate these adjustments, utilising advanced data analytics
and AI to ensure fair and precise pricing. We are committed to leveraging our global resources and local expertise to offer adaptive and resilient solutions.
At the end of another busy year how do you intend to relax and prepare for the year ahead?
Kris Faafoi: The Faafoi family is off to Fiji on Christmas day for some fun and sun. My kids and wife are looking forward to it and deserve it, as they have been very supportive in my first year in this new role. I will also dust off my golf clubs for my annual thrashing with old school friends in Christchurch and my middle son Fred has a Hawkes Bay cricket tournament that am looking forward to taking him on, as haven’t had the chance to do much of that kind of thing in my life prior to ICNZ. I’m going to take this chance to also tautoko the team at ICNZ. We’re really looking at how we can make the best contribution to our sector and the nation in a different way. So, I hope they have a restful festive season and recharge for 2025.
Grant Milne: Well, at the time of writing this am sunning myself in Fiji with my wife, celebrating our 25th wedding anniversary, so Christmas this year will be a short trip back to Hawkes Bay to spend time with our extended family before returning to Auckland ready for 2025.
Andy Croy: After a busy year, I’m looking forward to some time to unwind and enjoy quality time with my family. love exploring New Zealand's beautiful forests, so I’ll be hiking over Christmas, followed by some relaxation with my family in the South Island. It’s the perfect opportunity to recharge before the exciting challenges and opportunities the new year will bring.
Neil Cousins: 2024 has disappeared so quickly, maybe it’s a sign of getting old! I’m a man of routine and enjoy a quiet family Christmas at home and then off to Lake Tarawera for January. This year have my oldest friend coming over from the UK, so can show him the reason we moved here 16 years ago.
Kris Faafoi joined the Insurance Council of New Zealand Te Kahua Inihua o Aotearoa (ICNZ) as Chief Executive in April 2024. He is a former member of Parliament and Cabinet Minister who served in a number of roles, including Minister of Justice, Immigration, Commerce and Consumer Affairs and Broadcasting and Media. Before that, Kris worked as a journalist, including at TVNZ and the BBC. He lives in Wellington with his wife Mae and is father to three young men George, Fred and Theo.
Andy Croy is a senior executive who brings over 25 years of experience, 18 of those with QBE. Andy has held company secretarial and governance roles in the consulting, environmental and education sectors in both Australia and the United Kingdom. From 2019 to 2023, Andy served as the QBE General Manager, Pacific, overseeing the strategic and operational leadership for QBE across six Pacific nations. In mid 2023, Andy took up the role of General Manager, Distribution NZ.
Grant Milne is the Managing Director and Shareholder of ICIB BROKERWEB Group. He has been in the insurance industry since 1988 starting his career as a cadet at State Insurance in Hastings. Grant has worked in several roles both client facing and senior leadership positions with Multinational and New Zealand owned business over his career.
Neil Cousins joined Steadfast in 2017 to take on the position of Broker Services Manager and became CEO in 2022. During his tenure, Steadfast NZ has doubled the number of members and tripled in GWP. Neil started his career in London in 1991 and has been involved in the insurance industry both as a broker and underwriter. During his career, Neil has had the opportunity to create schemes and facilities, take recognised companies into different areas of business, and establish a brokerage under the highly compliant UK financial services legislation.
KRIS FAAFOI
ANDY CROY
GRANT MILNE
NEIL COUSINS
New Zealand ranked ninth most impacted by natural disasters
Arecent report by Intersec has found that New Zealand ranked ninth on the list of countries most impacted by natural disasters between 2000 and 2024.
Utilising data from EM-DAT and population figures from publicly available sources such as the World Bank, Intersec’s study led to the creation of a Disaster Impact Index, which combined human and economic tolls.
According to the study, New Zealand took the ninth spot with a Disaster Impact Index of 6.96. Despite the country only having 179 deaths and injuries, its economic damage reached $35.34 billion.
Meanwhile, Dominica was the country that was most impacted by natural disasters, with a Disaster Impact Index of 66.21, with 26,794 deaths and injuries among a population of 66,205. Notably, major hurricanes have ravaged the island and caused economic losses of around $1.96 billion.
The Bahamas ranked second with an index of 42.58 and about 116,601 deaths and injuries with a population of 401,000. The economic damage faced by the country was about $6.02 billion.
At the third spot was the United States with an index of 40.86. It had a total of 5,260 deaths and injuries with a population of 345 million, not counting the damage caused by the recent Hurricane Milton in Florida. It also suffered an economic loss of $13.74 billion.
The Solomon Islands took the fourth spot with an index of 26.97, followed by Puerto Rico with 24.98, Japan with 19.47, Grenada with 12.05, and Tonga with 11.44. Guatemala took the tenth spot with an index of 4.49.
“This analysis underscores the critical need for enhanced preparedness in countries at high risk of natural disasters. While the study highlights the devastating human and economic tolls, it also points to
the importance of investing in early warning systems, infrastructure resilience and disaster response strategies,” said Intersec’s Charlotte Cardona.
“Such investments are essential because they can save lives, reduce economic losses, and protect vulnerable communities from the growing frequency and intensity of natural disasters. Publicprivate partnerships are key to scaling these efforts, as businesses can help accelerate the implementation of climate adaptation measures and ensure a more resilient future.”
The Disaster Impact Index combined the total number of deaths, injuries and economic damages, which were adjusted on a per capita basis. It also acknowledged that the same absolute number of casualties or economic losses has a bigger impact on smaller countries.
73% of small businesses concerned about cyber security
Recentresearch from insurer AMI shows that 73% of small business owners are concerned about cyber security, and one in four say they’ve been affected within the last two years.
Despite that concern, more than half of business owners surveyed feel confident in their current cyber security settings (54%), with only 37% intending to boost their protection within the next 12 months.
“What we saw in the research, and this is consistent with reporting from Cert NZ, is that small business owners often think they’re too small to be impacted, or that if they are, they’ll be able to recover quickly,” says AMI Executive General Manager Consumer Brands, Paula ter Brake.
“However, Cert NZ recently reported that New Zealanders, including business owners, lost $6.6m due to cybercrime, which is up 84% from the previous period. Cybercrime is notoriously under reported too, so it’s quite possible that the true impact is much higher.”
AMI’s research shows that cost is the main factor holding businesses back from investing in new cyber security processes or systems, with 40% saying this is the main consideration.
AMI has recently launched a new cyber insurance
solution that brings together expert help to support businesses before, during and after a cyber-attack or incident, including ransomware, business email compromise, phishing and AI-assisted scams. In the event of a cyber-attack or incident, a panel of IT experts is assembled to help business owners minimise damage and restore systems, so they can get back up and running quickly.
“These days we are so dependent on our technology,” says Paula ter Brake. “The nature of cyber security is that it’s constantly evolving, so there’s a real need for ongoing protection, awareness and education. Cyber insurance can help businesses recover faster if things go wrong.
“Although many small business owners think they don’t need to up their cyber security, or that they won’t be significantly impacted, it’s clear that in this digital age, they may be leaving themselves exposed, and the risk is only growing as we conduct our lives and businesses increasingly online.”
AMI’s business cyber insurance taps into the expertise of global cybersecurity specialist UpGuard, which provides cyber risk monitoring, and acts as an early warning indicator of vulnerabilities to minimise the potential of cyberattacks.
Commercial is a specialist underwriting agency insuring New Zealand businesses since 1996. Backed by AIG and Lloyd's, we provide Property insurance and a suite of covers under our Management Liability products to commercial businesses, Not-for-Profits and sporting organisations across New Zealand. In addition, our team has the ability to tailor a solution for your clients' hard-to-place Property and Liability risks via our London binders and open market partners. Your clients will have peace of mind with access to AIG's Property Express Claims Service, providing streamlined assessment and settlement of claims.
360 Commercial team looks forward to working with you.
us at: 360uw.co.nz/360_commercial
Insurance bodies send message during CHOGM
The peak bodies representing personal and business insurers in the United Kingdom, Canada, Australia and New Zealand called on Commonwealth leaders at the recent Commonwealth Heads of Government Meeting (CHOGM) in Samoa to discuss worsening extreme weather and its impact on national economic and community resilience across the Commonwealth.
The Association of British Insurers (ABI), the Insurance Bureau of Canada (IBC), the Insurance Council of Australia (ICA) and the Insurance Council of New Zealand (ICNZ), jointly wrote to the Prime Ministers of their respective nations calling for the issue to be put on the agenda.
This followed a Global Insurance Protection Gap Forum held in Sydney, Australia in mid-October involving the four leaders of the ABI, IBC, ICA, and ICNZ along with insurers, Australian government representatives and regulators.
The four associations collectively represent insurers writing approximately US$200b in gross annual premium, with their members playing an essential role in enabling individuals, communities and businesses to recover from the unexpected, and reduce risk across the economies in which they operate.
Operating in Commonwealth nations, the four organisations and their members face similar regulatory, political and financial environments, with their governments and regulators having similar tools at their disposal to implement solutions.
The Global Insurance Protection Gap forum agreed that:
• As extreme weather intensifies, populations expand and more homes are put in harm’s way, the insurance protection gap will widen.
• Flood risk is often concentrated in particular areas, but the widespread nature of flood risk is going to increase.
• Governments and insurers have a critical opportunity to collaborate across global markets to build a shared view of current and future hazard risk.
• We must stop locking further risk into our economies by building homes in the wrong places.
• Applying excessive taxes and levies to insurance premiums can directly affect the affordability of insurance coverage.
“Our nations share a common history and a future challenge with climate change. By working closely together our insurance representative bodies are committed to doing their bit to help reduce risk from natural hazards and protect our families and communities,” said Kris Faafoi, CEO, Insurance Council of New Zealand, as part of the joint submission.
“By reducing the protection gap we keep communities safe, reduce the costs to taxpayers and ratepayers and maintain insurance capacity and affordability.
"Just last year New Zealand experienced how devastating severe weather events can be on lives, livelihoods and communities. There is much to be gained by working together on these issues across the UK, Australia, Canada and New Zealand through policy work, relationships and our responses to natural disasters. Insurers stand ready to work with their own governments and across jurisdictions to proactively protect the things we hold dear, our communities and our countries, now and into the future.”
Commercial buildings come in all shapes and sizes. This one just happened to house a small ballet studio. A recently renovated building just big enough to fit a dance teacher and thirty little ballet dancers.
Fortunately, the building was insured with NZI and the owner had booked a free electrical inspection*. The inspector knew something wasn’t right when he couldn’t find the switchboard.
After eventually locating it hidden away in a cupboard, he immediately noticed a more serious problem. Something smelled hot.
Being on our toes prevented a fire at the ballet studio.
Thermal imaging quickly revealed overheated timber behind the wiring and a switchboard seemingly preoccupied with the idea of setting fire to a ballet studio.
But it never got the chance. The NZI Electrical Inspector caught the problem in time, notified the property manager, an electrician was despatched, and a new switchboard was in place that same afternoon.
There was no fire. The dancers are still dancing.
From referee to Relationship ManagerTim Littler’s knockout NZI journey
It’s not often that you stumble across someone with a passion for both mixed martial arts (MMA) and insurance, but that's precisely what you get with Tim Littler, NZI's Principal, National Broker Partner.
With a career as intriguing as his hobbies, Tim’s journey blends problem-solving, relationship management and even the occasional MMA fight night. We sat down with Tim to explore his leap from audio engineering to insurance, his new role at NZI and what makes him tick.
A roundhouse kickstart into insurance
For Tim, entering the insurance industry was a practical choice made after high school. "I initially chose to work in insurance to pay the bills while I studied audio engineering in the evening.
“I’m a second-generation insurance person as my dad worked at SunAlliance for many years," he says. He laughs as he recalls, "In the interview for that first job, I told the hiring manager I’d be there for 18 months – long enough to secure my qualification before leaving to work in a recording studio.”
As fate would have it, once Tim gained his qualification he realised the insurance sector offered far more than he imagined. “What was intended to simply fund my career became my career! I saw the many avenues for both personal and professional growth and so wanted to stay. spent eight years in my first role before a short stint with an online media company, then I found my way ‘home’ to insurance.” Returning to his roots
Upon returning to the industry, Tim joined Lumley in 2009 as a Relationship Manager. He then accepted a Christchurch earthquake partnership manager position – a role that was personal. “I was born in Christchurch and spent my early years there before dad’s work moved us to Auckland,” he recalls. “I still have family in Christchurch so supporting the recovery after the earthquake felt like a personal calling. wanted to help in any way I could.”
After three years travelling between Auckland and Christchurch and once IAG acquired Lumley, an opportunity arose within NZI’s Key Partner Team as a partnership manager.
“It was a team I had targeted to become a part of,” he shares.
“It was on my development plan, so when that popped up, I went all in!"
Since then, Tim’s worked across NZI in various relationship and governance roles, and in August this year he was promoted into his new National Broker Partner position.
Turning challenges into solutions
Seeing his new role as a return to familiar territory, Tim says,
“In my new role have the opportunity to look after our large, corporate broker partners like Gallagher, Aon, Marsh and WTW. Due to my previous roles at NZI have a number of existing relationships, so I haven’t quite felt like the new kid on the block which has been nice.”
When asked what he enjoys most about his work, Tim says,
“I love the problem-solving element. I try to bring a pragmatic lens and like being challenged to solve problems. There’s also great variety because you never know what each day might bring.
“Being back in the partnership space means I can channel my energies into what I feel do best, which is building strong relationships and looking to drive constant improvement.”
Providing the personal touch
Having been in the industry since 1998, Tim has witnessed significant changes.
“Technology has advanced massively, making it a lot easier to collaborate with others and get access to expertise. There's
been consolidation in the intermediated market of both insurers and brokers, resulting in larger, more sophisticated entities,” he notes. “One of the biggest shifts I’ve seen is how brokers act more as risk partners, providing not just insurance, but tailored, personalised advice around risk management in general.”
Tim also highlights the increasing value of education in the industry, noting "There are more qualified professionals now."
He adds, "As a Senior Associate with the Australian and New Zealand Institute of Insurance and Finance (ANZIIF), I found combining my study and work experience to be symbiotic. My advice for anyone entering the industry is to take full advantage of opportunities to upskill and to network, because we’re in a people-focused industry, after all."
The great Kiwi collector
Tim’s not just a dedicated insurance professional, he’s also an avid collector with an Air Jordan sneaker collection like no other.
His obsession began during childhood, growing up watching Michael Jordan and the Chicago Bulls dominate the NBA in the 1990s. "I remember trying to convince my parents to buy me a pair of Jordan 7s. They were around $250 and my parents weren’t having it," Tim laughs. "So I made a vow that when I grew up, I’d buy them myself."
And buy them he did. Tim's collection spans decades with many pairs untouched, sitting in storage. "For me, it’s the thrill of the chase – collecting something nostalgic, plus the people you meet along the way."
Tim’s collection now comprises over 600 pairs. “I have around 30 pairs actually wear,” he laughs, “but the rest remain untouched.”
The fighter within – demystifying MMA, and insurance Sneakers aren’t Tim’s only passion. He's also been an MMA judge and referee for ten years, a hobby sparked from a lifelong interest in combat sports, starting with watching boxing legends like Evander Holyfield and Mike Tyson.
“In the 1990s got into K1 kick-boxing, which was big here at the time with local fighters like Jason Suttie and Mark Hunt. I then got hooked on UFC after a friend gave me a VHS tape
of UFC3, which showcased fighters from different fighting disciplines.
“In 2014, a friend invited me to ‘shadow judge’ a local MMA event. I ended up judging ten fights that night and I’ve been involved ever since. To better understand the sport, I’ve also trained in kickboxing and ju-jitsu.”
For Tim, MMA is more than a sport; it’s a misunderstood art-form. “People can think of it as brutal, but MMA is essentially a combination of many respected Olympic-level sports such as boxing, wrestling, judo and tae kwon do,” he explains. In the same way he enjoys demystifying insurance when talking to friends, Tim loves educating people about the beauty of MMA.
A family-focused future
Tim is excited about his next chapter with NZI and equally, he’s looking forward to cherishing some family time. “I’m so stoked about my appointment, but I’m just as excited to spend some quality time with my kids this Christmas," he shares.
Being a dedicated dad to Blake (6) and Peyton (8) is top priority for Tim who says, "There’s nothing greater than seeing them grow into their unique personalities. They’re still at an age where they think their dad’s cool, so I’m maximising that opportunity while it lasts!” he laughs.
Living in Gulf Harbour, nature also plays a significant role in Tim’s downtime. "Shakespear Regional Park is right on my doorstep, so whether it’s a walk with a good podcast or just getting outside to get the heart pumping, find the outdoors amazing for relaxation." Tim loves sharing the outdoors with his children, encouraging them to foster being active along with their curiosity and appreciation for nature.
With his family-focused mindset and zest for life, Tim feels ready to embrace the future. "In everything do down the track, I believe the most important thing can bring to the table is my authentic self. There’s only one of me after all, so it’s important to be genuine." Wise words from a man who clearly knows how to live with purpose and intent.
Tim's two children, Blake and Peyton.
Report explores the potential for historic loss data related to risks
WillisTowers Watson (WTW) has released a new report exploring the potential for historic loss data to help financial institutions narrow gaps between perceived and actual operational risks.
Part of the firm’s 'Bridging the Gap' series, the report investigates how evolving operational threats are reshaping risk management priorities.
WTW's recent survey gathered insights from over 100 directors at financial institutions globally, capturing their concerns about a range of risks; from cyber threats to regulatory breaches, health and safety issues, and internal control lapses.
Interestingly, directors placed these top risks in close order of importance. However, WTW raises a key question: Are these high-level concerns fully aligned with the priorities risk management teams face daily?
Priorities of directors and officers
According to the report, many of the risks that directors prioritise are severe in potential impact but lower in probability. For instance, cyber risk ranked highest among concerns for financial institutions in WTW’s 2024 Global Directors and Officers Survey Report.
While cyber threats have resulted in a threefold increase in disruption scenarios over the past five years, the financial exposure remains lower than other, more frequent operational issues.
Risk managers, meanwhile, often focus on the cumulative financial effects of smaller, recurring issues, which can add up over time.
Execution risk, for example, has been a leading operational concern in recent years, making up around 25% of key risk scenarios and 15% of loss events among financial institutions.
This kind of ongoing risk requires close monitoring to prevent a
slow accumulation of financial impact, described by WTW as 'death by a thousand cuts.'
Historical data could help evaluate evolving risks
The growing cyber threat has led directors to examine how historical data might help in evaluating evolving risks.
WTW noted, however, that historical data can be challenging to interpret without detailed breakdowns of specific incidents.
For example, knowing that a wealth manager incurred a $210 million loss from a data breach offers limited insight without understanding that the costs involved included 34% for settlement, 25% for fines, 16% for credit monitoring, and the remainder for notification, legal defence and other expenses. Such breakdowns offer more actionable insights for decisionmakers seeking to strengthen risk frameworks.
Key factors for effective operational risk management
To improve resilience and balance information needs, WTW identified three key strategies for a robust risk management framework:
Use subject matter experts: Subject matter experts bring valuable insights into emerging risks and provide a proactive approach, often identifying issues beyond current controls. Leverage internal data: Even limited internal data is essential for a realistic risk profile. Including it in risk measurement allows organisations to align perceived and actual risks more closely.
Consider broader industry insights: Incorporating third-party claims data and broader industry experience adds depth to scenario planning, supporting a comprehensive view of potential costs and challenges.
WTW’s findings highlighted the importance of integrating detailed loss data into risk management practices.
Natural Hazards Commission closes EQC chapter
Report highlights preparedness initiatives and renewed focus
New Zealand’s Natural Hazards Commission
Toka Tū Ake (Natural Hazards Commission or NHC) has issued its final annual report under its new name following its rebranding from the Earthquake Commission (EQC).
The report highlighted a year centred on preparedness initiatives and a renewed focus on homeowner awareness around natural hazard risks.
Though New Zealand experienced a year with fewer major earthquakes and weather-related incidents, the commission remained active, particularly due to the recovery from the early 2023 North Island weather events.
Claims processing and community recovery initiatives
Board chair Chris Black noted that the reduced number of catastrophic events allowed the organisation to focus on claims processing and community recovery efforts.
“The relatively quieter financial year claim-wise has allowed us, in conjunction with our insurer partners, to focus on the recovery effort brought about by the impacts of the 2023 North Island weather events,” he said.
He reported that despite the complexity of land-based claims, the NHC managed to meet its timeliness goals for these events and processed an additional 4,000 claims for other natural hazard events during the year.
A key challenge following the North Island events was addressing limited public awareness about land coverage specifics under NHC’s insurance.
Black explained that new initiatives aim to provide better information on land claim processes and timelines, with a focus on helping homeowners understand that compensation levels may not always cover the full cost of land reinstatement.
Natural Hazards Insurance Act 2023
The year also saw the roll-out of the Natural Hazards Insurance Act 2023, introducing new standards for claim support and handling for affected homeowners.
The Act aims to ensure a transparent, homeownercentred claims process, with additional steps in place if claim outcomes are not fully satisfactory.
Canterbury earthquake claims
The commission also reported progress in processing reopened claims from the Canterbury earthquake sequence, with Black noting a 21% reduction in these cases.
“These claims often involve previously undiscovered damage. Despite these challenges, we reduced the balance of reopened claims by 21% through putting homeowners at the heart of our work and focusing on creating a positive claims experience for them,” Black said.
The NHC’s on-sold programme for Canterbury homeowners resulted in 241 completed rebuilds and repairs, along with 161 additional applications settled. Natural Hazards Portal
Further highlights included the launch of the Natural Hazards Portal, which drew:
• nearly 50,000 users in its first year;
• a record NZ$9.2 billion reinsurance coverage secured for the year; and
• an investment of NZ$10.5 million in research grants and sponsorships.
The commission also helped develop a Funding and Risk Management Statement to project the Natural Hazard Fund’s future financial balance over the next five years.
Market update shows premium increases slowing
New Zealand’s latest market update signals a trend toward a softer commercial insurance market, following an extended period of premium growth.
The report, released in November, indicated that premium hikes are tapering off, reflecting a slower rate of increase compared to earlier in the year.
Companies dominating New Zealand insurance market
New Zealand’s insurance market remains highly concentrated, with two primary insurers – Insurance Australia Group (IAG) and Suncorp – representing most of the market.
Both companies reported robust financial results as of mid-2024, primarily driven by rising premium rates and fewer large-scale claims over the past 18 months. Reinsurance costs have also steadied, providing additional support for these financial results.
Slowdown in premium increases
This softening trend in New Zealand’s insurance market aligns with broader international patterns, where global markets are experiencing a slowdown in premium increases despite frequent costly climate-related events.
Gallagher’s report noted that although costs from catastrophic events remain high, premiums have levelled off in recent months. While data for 2024 catastrophic event costs remain incomplete, Hurricane Milton’s anticipated impact may drive up global losses.
Increasing climate-related claims in North America have prompted insurers and reinsurers to diversify their portfolios, opening more interest in the New Zealand market.
Lloyd’s of London and other reinsurers are actively pursuing additional underwriting opportunities in New Zealand, increasing competition within the commercial sector, especially for larger corporate clients.
Challenges in New Zealand insurance market
Gallagher New Zealand’s report highlighted that while
increased competition could benefit policyholders in some cases, there are still notable uncertainties, including the ongoing impact of extreme weather events and geopolitical risks.
Insurance inflation in New Zealand stood at 12.9% yearon-year as of September 2024, substantially higher than the national inflation rate of 2.2%, according to Stats NZ data.
However, September data also showed a slight decline in the insurance inflation rate – the first since late 2023.
For insurers, the move toward lower pricing may not apply across all policies. Insurers are beginning to adjust premiums with greater scrutiny on individual risks and claims histories.
Lower-risk clients with strong claims records may see more favourable pricing adjustments, while others may face different terms.
APAC insurance market
In a separate report, Gallagher Re recently released its 2024 Asia Pacific Market Watch, examining insurance industry dynamics across 14 markets in the region.
The report identified various factors, including regulatory developments, economic growth and digital innovation, as critical drivers influencing the sector’s stability and resilience.
The Asia-Pacific market remains poised for growth, with emerging demand in accident and health, cyber and electric vehicle (EV) insurance segments.
Economic recovery across the region has increased the need for new risk solutions, positioning Asia-Pacific as an essential contributor to the global insurance industry’s growth trajectory.
Digital and technological advancements continue to boost the insurance sector, with accident and health, cyber and EV motor insurance segments gaining particular traction. Notably, cyber insurance demand has surged across markets such as Malaysia, Singapore, Australia and New Zealand as cyber threats intensify.
AI’s growing role in insurance spurs regulatory response
The swift development of AI has resulted in the increasing integration of AI technology in insurance claims management and insurance underwriting.
In certain cases, AI has been used by insurers to streamline administrative work to improve efficiency, especially for day-to-day claims handling. Insurers have also begun incorporating AI capabilities into other facets of the business, such as underwriting and the investigation of suspected fraud. As AI continues to impact how insurers are conducting business, various states are responding with regulatory frameworks to address purported risks.
Specifically, regulators have expressed concern that the use of data sets and the algorithms developed to process them in marketing, underwriting and claims handling may knowingly or unknowingly lead to systemic denials or discrimination and other disparate impacts to consumers. Accordingly, a patchwork of
guidance has emerged, focused on governance, oversight and disclosure regarding the use of consumer data and AI technology.
As at the time of writing, four states, including California and New York, have issued their own regulatory guidance and 16 others have adopted the model regulatory framework issued by the National Association of Insurance Commissioners (NAIC) to address the growing implementation of AI in insurance practices.
While the various regulatory approaches have some notable differences, they share a common objective of mitigating the purported risk of unfair treatment to policyholders and consumers.
As the regulatory landscape concerning the use of AI by insurers evolves, there is an expected trend of class action lawsuits alleging unfair business practices or bad faith liability for insurers’ use of AI in areas such as underwriting and claims handling.
For insurers that have already integrated or plan to implement any form of AI technology or use of consumer data in their insurance practices, some suggested actions are as follows.
• Examine the requirements and suggestions of any applicable regulatory framework against already-existing policies and procedures concerning the use of consumer data and AI platforms to identify potential gaps in compliance.
• Review existing laws prohibiting discrimination in the context of insurance rate-making, claims handling, processing of insurance applications, and other insurance practices to ensure ongoing compliance.
• Where disclosures to policyholders and potential insureds are required, draft clear, concise and compliant disclosures
concerning the use of AI technology and/or consumer data in insurance decisions.
• Maintain documentation relating to all aspects of the implementation of AI technology, including any assessments, testing, maintenance, monitoring and oversight of said programs.
• Adopt a mechanism for assessing the quality of data relied upon and performance of algorithms to identify any risk of systemic adverse decisions and outcomes.
• Consider retaining outside counsel to perform a comprehensive compliance review or to support compliant implementation at the outset, helping to mitigate future litigation risk and strengthening attorney-client privilege arguments.
Contracts of Insurance Bill receives royal assent
Dentons recently provided this update on the Contracts of Insurance Act 2024
On 15 November 2024, the Contracts of Insurance Bill received royal assent.
The new legislation modernises and consolidates existing insurance laws. It is intended to promote the confident and informed participation of insurers, policyholder and other participants in the New Zealand insurance market, and ensure that the provisions included in contracts of insurance, and the practices of insurers in relation to those contracts, operate fairly. Changes include modifying (and clarifying) a policyholder's duty of disclosure and the consequence for failure to comply with that duty.
The two Acts resulting from the passage of the Bill (the Contracts of Insurance Act 2024 and the Contracts of Insurance (Repeals and Amendments) Act 2024), will come into force on dates to be set by Order in Council, with a long-stop date of three years from the date of royal assent.
Dentons reported the following information during September on the Bill.
In brief
• The latest version of the Bill includes power to make regulations regarding the use of genetic testing by insurers.
• The Bill clarifies that premiums payable are excluded from unfair contract terms in respect of life and health insurance policies
• Reinsurance contracts are also clearly carved out from the scope of the regime.
• The threshold for misrepresentation has been reframed as ‘dishonest’ rather than ‘fraudulent’, with dishonest misrepresentation being taken as showing lack of reasonable care.
• Timing for the implementation of the Bill is still to be confirmed.
Introduction
The Finance and Expenditure Committee has reported back on submissions received on the Contracts of Insurance Bill. In this Financial Law Insight we break down some of the key issues identified by submitters, how the Committee responded, and its recommendations for the Bill.
The story so far
The Contracts of Insurance Bill (Bill), introduced to Parliament on 29 April 2024 by Hon Andrew Bayly (after a rebrand of the previous Insurance Contracts Bill), signifies a long awaited reform to New Zealand’s insurance contracts law.
To recap, the proposed changes set out in the Bill include:
• A new duty of disclosure: for consumer insurance contracts – those wholly or predominantly for personal, domestic, or household purposes – policyholders will have a duty to take reasonable care not to make a misrepresentation to the insurer. For non consumer insurance contracts, policyholders will have a duty to make a fair presentation of the risk.
• Proportionate remedies: rather than wholly avoid a contract for the policyholder’s failure to disclose, insurers will instead need to respond proportionately, based on how they would have acted had the information been known at the time of entry into the contract.
• Codified and modified duty of good faith: the
Bill modifies the duty of utmost good faith so that a consumer insurance policyholder is only under a duty to take reasonable care not to make a misrepresentation (or a duty to make a fair presentation of risk in respect of non-consumer insurance contracts). Insurers will no longer be able to avoid a contract on the basis, utmost good faith has not been observed.
• Clear, concise and effective: insurers will be required to ensure insurance contracts are worded and presented in a clear, concise and effective manner.
• Claims paid within a reasonable time: a new implied term included in insurance contracts that insurers must pay claims ‘within a reasonable time’.
• Unfair contract terms: a narrowing of existing exemptions from the Fair Trading Act's unfair contract terms for insurance contracts.
Key issues identified by Select Committee
The Finance and Expenditure Committee (Committee) has now released its report on the Bill. Initially, the Committee expressed particular interest in receiving written submissions on:
• what is a ‘reasonable’ timeframe for resolving claims
• whether the policyholder disclosure duty is sufficiently clear and plain language
• provisions around surrender values for life insurance policies.
Submitters also called for greater consideration of several other matters in the Bill. These issues, which the Committee responded to, were in relation to:
• genetic discrimination in life and health insurance
• the definition of ‘specified intermediary’
• disclosure duties for consumer and non-consumer insurance contracts
• duties of brokers in relation to premiums and payments due to the policyholder
• the need to exclude premiums payable from ‘unfair contract terms’.
Genetic discrimination in life and health insurance
Several submitters brought to the Committee’s attention the issue of ‘genetic discrimination’ in the context of life and health insurance – being instances where insurers treat consumers differently based on genetic testing results. The Bill (as introduced) was silent on this issue, and it is not addressed by either existing law or government policy.
The Committee agreed on the importance of the issue, noting that a cautionary approach to genetic testing is needed to avoid undue genetic discrimination.
The Committee recommended inserting new regulationmaking powers that could prohibit or regulate the conduct of insurers in connection with genetic testing. The Bill provides a non-exhaustive list of conduct that could be regulated, including:
• whether an insurer can require a person to undergo or consent to, or disclose the results of, a genetic test or answer a question about whether they have undergone any genetic test
• whether an insurer can refuse to engage with a person due to the above factors
• what may be taken into account by an insurer. Specified intermediaries
The Bill subjects ‘specified intermediaries’ to certain duties.
For example, in relation to consumer insurance contracts, specified intermediaries must take reasonable steps to pass on a policyholder’s representation to the insurer before the insurer enters into or agrees to vary the contract.
Submitters argued, and the Committee agreed, that the narrow definition of ‘specified intermediary’ would only capture those who receive a commission or other incentive directly from an insurer. It would not capture financial advisers engaged by financial advice providers (FAP) in cases where FAPs receive commissions from insurers, and then pay their financial advisers.
The Committee recommended broadening this definition to include intermediaries who receive a commission or consideration directly or indirectly from an insurer. This ensures financial advisers are also covered by the duties imposed on specified intermediaries.
Are the disclosure duties clear enough?
‘Reasonable care’ duty for consumer insurance contracts
The Bill proposes a new disclosure duty on policyholders of consumer insurance contracts to take ‘reasonable care’ not to make a misrepresentation to the insurer before the consumer insurance contract is entered into or varied.
Submitters were generally supportive of the amended duty that requires policyholders to take reasonable care not to make a misrepresentation.
A common sentiment among industry submitters was that the Bill’s ‘weighing up exercise’ to determine reasonable care creates uncertainty. Greater clarity is required for insurers to ascertain the appropriate questions to ask before entering into a contract. The Committee disagreed with this and considered that the Bill uses appropriate language for a statutory duty, and that the duty on insurers to inform a policyholder of the general nature and effect of the policyholder’s disclosure duty could include ‘explaining what this means in practical terms’.
More significantly, the Committee recommended replacing ‘fraudulent’ misrepresentation (which is always taken to mean lack of reasonable care) with ‘dishonest’ misrepresentation.
Submitters argued that a broadening of the threshold is necessary to refer to actions that are not honest or lack integrity, without always involving deliberate deception with the intent to secure an unfair or unlawful gain. The Committee agreed on the basis that the term ‘dishonest’ is appropriate, consistent with the approach in the United Kingdom, and avoids associations with criminal standards.
The Bill also tidies up what matters may be taken into account by an insurer when determining whether a policyholder has taken reasonable care not to make a misrepresentation.
The Bill includes a clause that provides where a policyholder fails to answer a question or gives an obviously incomplete or irrelevant answer, then any steps the insurer took in response to that failure or inadequate answer will be taken into account. This clearly places the onus on the insurer to take additional steps if a non-answer is given or an answer is obviously incomplete or irrelevant.
‘Fair presentation of the risk’ duty for non-consumer insurance contracts
The Bill sets out a different disclosure duty for policyholders of non-consumer insurance contracts. In this case, policyholders must make a ‘fair presentation of the risk’ before entering into the non-consumer insurance contract. However, a policyholder is not required to disclose a circumstance if
the insurer knows, ought to know, or is presumed to know the circumstance.
Submitters argued for the removal (or at least the narrowing) of the presumption that an insurer is taken to ‘know’ something if it is known to any individual who participates in the decision whether to take the risk on behalf of the insurer, or any individual who is, or works for, a specified intermediary ‘in relation to the contract of insurance’.
Some submitters argued that the insurer should only be deemed to know what has been disclosed to them (or the specified intermediary) by the policyholder. The Committee disagreed on this specific point, but proposed to amend the clause to make clear it is intended to apply to individuals who are or who work for a specified intermediary in relation to that insurance contract (and not to other employees whose work is unrelated to that specific contract).
‘Reasonable’ timeframe to resolve claims
The Bill proposes to introduce an implied term into every insurance contract that an insurer must pay out a claim within a ‘reasonable time’. The previous Insurance Contracts Bill provided a specified 12-month reasonableness period which, if not met, would have resulted in interest payable on any outstanding claims from that date.
Submitters supported removal of a specified time period, and were of the view that an open-ended reasonableness standard would allow insurers to take into account a range of factors specific to their context. The Committee recommended expanding the ambit of ‘reasonable time’ to include reasonable time to gather information needed to investigate and assess the claim.
Duties of brokers in relation to premiums and payments due to the policyholder premiums
The Bill imposes a duty on brokers to pass on to the insurer any premiums that they receive from a policyholder within a ‘relevant period’. The Bill clarifies that this does not prevent insurers from making a contract or an arrangement with a broker to vary this period.
Submitters queried whether this would retrospectively allow for variations to be agreed to existing arrangements, to save existing arrangements from being renegotiated. The Committee agreed that any existing agreements that vary the timeframe for payment should continue to apply.
A ‘grandfathering provision’ is now set out in the Bill to make clear that existing contracts or arrangements of this kind will continue in effect after commencement of the Bill.
Separately, the Committee also recommended removing the criminal offence for failure to pass on premiums as outlined above, and instead providing that the relevant insurer may recover in Court as a debt due any amounts not passed on by a broker under the duty.
Payments due to the policyholder
The Bill imposes a further duty on brokers to pass on to the policyholder any payments made by the insurer within seven days of the broker receiving the money. The Committee recommended a limited amendment to now require brokers to pay policyholders of non-consumer insurance contracts ‘as soon as reasonably practicable’ rather than within seven days. This permits a degree of flexibility for commercial insurance arrangements that can be more complex than consumer ones.
Excluding premiums from unfair contract terms
The Bill will amend the Fair Trading Act to remove some exemptions from the unfair contract terms provisions of that Act that currently apply to insurance contracts.
Submitters argued, and the Committee agreed, that
the list of terms to be excluded from being unfair contract terms should also include a term relating to the amount of a premium payable in the context of life and health insurance contracts. This aligns insurers of life and health policies, which adjust premiums on annual policy anniversaries, with general insurers whose contracts renew (and are repriced) on an annual basis.
Surrender values for life insurance policies
The Bill carries over existing provisions in relation to surrender values, allowing a life insurer to apply the surrender value of a life policy in payment of overdue premiums and interest. As long as overdue amounts do not exceed that value, the policy is not void because of the non-payment.
The Committee expressly requested feedback for this area, however the submitters that provided feedback were supportive of these provisions and did not suggest any changes be made. The Committee considered it appropriate to retain these provisions unchanged.
Other amendments recommended
In addition to technical changes, the Committee recommended several other useful amendments to the Bill. These include:
• excluding contracts of reinsurance from the Bill (by expressly excluding such contracts from the definition of contract of insurance)
• removing the presumption that an insurance contract is a consumer insurance contract
• amending the ‘conflict of laws’ provision to allow for parties to a non-consumer insurance contract to have the autonomy to choose which law governs their contracts (not limited to New Zealand law)
• changing ‘all reasonable steps’ to ‘reasonable steps’ regarding an insurer’s need to ensure that policyholders are informed of certain matters such as the duty of disclosure and accessing third party information
• clarifying that compliance with the duties in the Bill does not place specified intermediaries in breach of any contract
• clarifying that life insurers may charge a higher premium for the remainder of the contract if the insurer would have entered into a contract on different terms but for a qualifying misrepresentation or breach by the policyholder.
Next steps
The Bill is currently at the second reading stage. The House will now debate and vote on any changes suggested by the Committee. This will determine its fate, as the House will be asked to adopt the Bill before it ‘in principle’.
With the Bill being close to final form, a key consideration now will be planning for its implementation. This includes timing of key obligations.
We had suggested a two year transition period at a minimum. Officials have noted that more than 12 months’ lead time will be needed for the significant set-up work required for many of the substantive changes in the Bill, including the new disclosure duties. However, the determination of the commencement dates has been left to a later phase after the Bill is in the final legislative stages. Helpfully, further engagement with ‘stakeholders’ will be undertaken on timing.
Special thanks to Dentons and their Financial Services team, particularly Partner Catriona Grover (who led this work), for allowing us to use this update in CoverNote.
Visit: www.dentons.co.nz for more info.
Understanding the unique risks in our rural sector
In years gone by, New Zealand was often jokingly referred to as the land of sheep, with around 10 of them for every person. While the number of sheep has dropped in the last few years to a ratio of five to one, we are still a nation that relies heavily on our rural sector.
According to Federated Farmers, 14% of New Zealand’s population currently lives in a rural community, with agriculture, of course, being a key pillar of our economy. We were therefore keen to explore how this vital contributor to our country is faring when it comes to changing weather patterns, insurability, and what some of the key issues are when it comes to managing rural risk.
We asked five of NZbrokers’ rural specialists in different regions to share their thoughts on how our rural community is faring, and what are some of the different issues they deal with compared to brokers in our towns and cities.
Liability identified as a key risk
When it comes to the top risks being faced out in the pastures there were a range of different issues our brokers highlighted - from the staffing challenges farms are having, to malicious damage of property, through to falling commodity prices. An area that was highly commented on, however, was around increased liability.
A raft of new regulations has raised risk for farmers including new rules around waterway fencing, greenhouse gas emissions and the number of workplace accidents happening on farms, especially those involving quad bikes and ag machinery and equipment.
Increased risk does, of course, mean a higher likelihood of claims. Suffice it to say that farmers need to consider higher limits on their liability policies to ensure there is enough to cover their defence costs alone.
Climate change unsurprisingly plays a part
As with the whole country, climate change is having a massive impact on risk and insurability. Rural areas are particularly vulnerable due to the impact adverse weather has on their ability to produce and ultimately on their income.
The Wairarapa, Hawkes Bay and deep South have a higher risk of flooding, while hailstorms are very prevalent in North Canterbury. Couple this with severe droughts in summer, and this has driven up insurance premiums considerably in the last three to five years.
The volatility of the weather does not just relate to damage to property but has long-running effects, such as the stress it puts on farming systems. For example, clients may need to switch to once-a-day milking from Christmas onwards to conserve feed, reduce costs and maintain cow health. Rising motor insurance costs
Motor vehicle insurance has increased for both townies and rural owners. Out in the country, it is the high cost of vehicle repairs and the cost of ag machinery, such as new tractors, which has pushed up premiums.
Motor vehicle accidents, including the likes of quad bikes, have also played a part, along with the amount of claims due to machinery damage. This can include, for example, claims on damaged tractor tyres.
Dealing with unique claims scenarios
Claims outside of cities also take on quite a different turn. Whilst there is the usual property and vehicle damage, as noted above, specialist knowledge is definitely required to deal with the more unique nature of rural claims. Some of the most common ones our brokers are dealing with are:
• Milking contamination.
• Powerlines coming down on farms, leading to claims for repair costs.
• Foreign objects in harvesters.
• Stock escaping with resultant damage.
• Damaged pumps.
Claims for milking contamination, for example, can be quite significant. This is especially the case if the contaminated milk is loaded into a tanker, causing the milk from neighbouring farms that has also been pumped into the same tanker, to be unusable. Recent cases have seen around $9,000 for individual milk loss and $18,000 for liability.
Arranging insurance has its challenges
As brokers, we consistently face challenges no matter where we are based. From a rural perspective, there are some particular issues that have been faced, especially over the last couple of years.
• There is a shortage of underwriters offering rural insurance. With domestic insurance being a high portion of the insurance required, and the cover being quite highly priced, there is a lack of competition available to provide clients with better options.
• It has become very hard to pick up new business due to price, especially when competing with direct rural markets. Trying to offer a product that is 20% higher, based solely on service, is a tough sell in the current economic climate, and there is little discounting available.
• Underwriting has tightened up, making it harder to get cover, even for a ‘typical’ farm.
Are insurers stacking up in the rural sector?
Our brokers felt that insurers could improve their game in certain areas, with some believing that rural expertise was lacking amongst certain underwriters.
The comments were that insurers need to look more at the holistic needs of farmers, develop options to make cover more affordable, and better understand rural risks, especially if they are based in the city.
There is perhaps also the opportunity for other players to enter the market to provide more competition, which would provide a better outcome for both customers and brokers.
The need to support our rural sector
All in all, one thing is clear: Managing rural risk and claims requires a very unique skill set, from placement through to claims, whether you are a broker or insurer.
As an insurance community, it is also important to continue to support our rural community, who contribute so much to our economy and literally help us put food on the table.
MrInsurance dispute about flood repairs
and Mrs Chen* held insurance on their house. In January 2023, the Auckland region was affected by widespread flooding, and the house was damaged as a result. Mr and Mrs Chen made a claim to their insurer for the damage.
The insurer accepted the claim, however a dispute arose in relation to the scope of the damage. Mr and Mrs Chen said there was damage to the foundations from the flooding, but the insurer declined to include this in the scope of repairs.
Mr and Mrs Chen also said the insurer had service issues and delays while dealing with their claim.
The IFSO Scheme investigated. To be covered by the policy, Mr and Mrs Chen needed to prove that the foundation damage was 'sudden', which it could be if it was a direct result of the flooding.
The insurer had a report from a structural engineer, who stated that all floor level variations measured across the dwelling existed at the time of the last renovation and redecoration works. There was no indication of sudden floor settlement.
Mr and Mrs Chen produced their own report from a structural engineer, who said it was not possible to give a definitive cause of the damage, but that it was possible water pressures could have upset the foundations.
This was not sufficient to confirm that the foundation damage was caused by the flooding, particularly as both experts had noted there had been issues with floor levels prior to the flood. Therefore, the IFSO Scheme found that the insurer was not required to include the foundation repairs in the scope of work.
There had been some delays in Mr and Mrs Chen’s claim, however, in the context of the extensive nature of the flooding, which impacted insurers’ ability to respond quickly and effectively to claims. The IFSO Scheme did not believe this meant the insurer had significantly breached the Fair Insurance Code.
The IFSO Scheme was unable to uphold the complaint. Complaint not upheld
Insights for consumers
House
damage or loss, and only very limited cover
Linda Vercoe from Vercoe Insurance Brokers in Matamata and Morrinsville
William Parker from Hurford Parker Insurance Brokers in Hastings
Sheryl Rooderkirk from ICIB Brokerweb in the Wairarapa
Paul Borgman from Insurance Brokers Alliance in Southland
James Macfarlane from Vision Insurance in Ashburton
Process concerns over Cyclone Gabrielle claim
Patricia’s* small business was affected by Cyclone Gabrielle in February 2023. The premises flooded and the business was closed for several weeks. Patricia submitted a claim to her insurer to cover material damage and business interruption, and also made a claims preparation costs (CPC) claim. Approximately three months later, the insurer paid Patricia $58,000 for the material damage and business interruption claims.
However, Patricia was most unhappy with the way her insurer had communicated with her and dealt with her claims. She also considered the insurer’s offer for the CPC claim ($1,230), did not accurately reflect the amount of time she spent putting together her claim.
Patricia raised many different issues while the complaint was going through the insurer’s internal complaints process, and while the complaint was being investigated by FSCL. In summary, Patricia complained that: The insurer had not met
their obligations under the Fair Insurance Code (the Code) to pay her claim within a reasonable time, to provide information about the claim process, and to provide regular updates; the insurer failed to provide her with information from her file, failed to answer specific questions she had for them in lengthy telephone calls, and that their special investigations team bullied her; the amount offered for the CPC claim was too low.
The insurer acknowledged there were some shortcomings in their process. They apologised and offered to pay Patricia $10,000 to resolve her complaint. Patricia did not accept that amount and unilaterally changed the insurer’s settlement agreement to state they would pay her $100,000 not $10,000.
Patricia said she did this to ‘catch out’ the insurer to see whether they were paying attention to detail.
What was FSCL’s view?
In the round, we considered the insurer’s $10,000 offer, along with their apology, was a more than fair way to resolve the
complaint. This was especially considering that Patricia had changed the amount in the settlement agreement, which could have been viewed as her acting in bad faith. The reasons for our decision were that: Patricia’s claim was paid within three months. We said that timeframe was reasonable, particularly considering the high volume of claims insurers received following the 2023 weather events. There was one occasion where the insurer gave Patricia an update after 22 working days (instead of the 20 working days required by the Code), but we did not consider this was a significant breach of the Code; we saw that most of the communication between Patricia and the insurer was via the loss adjusters. Some of this communication did not clearly set out what was happening with the claim process, and we encouraged the insurer to ensure loss adjusters (their agents) communicate clearly with clients; we saw no evidence that the insurer’s special investigations team bullied Patricia; The insurer didn’t provide all telephone calls to FSCL. We asked the insurer to
Insights for consumers
We expect a consumer to pursue their complaint in a reasonable manner and with the goal to resolve the complaint, not to punish the financial service provider. Where a provider has made a reasonable settlement offer, we’ll look at declining to further investigate the complaint.
ensure they send through all information to FSCL following our request for a full claim file; we said that the $1,230 the insurer offered to pay Patricia for the CPC claim appeared to be reasonable and, in any event, the $10,000 offer would cover any shortfall.
What was the outcome of FSCL’s investigation?
We told Patricia we would not continue investigating her complaint because the insurer had made a reasonable offer to resolve the complaint, and it was more than we could award if we issued a decision on the complaint. We encouraged Patricia to accept the $10,000 offer. Patricia did not accept this and continued to drip-feed further claims to the insurer and raise further complaint issues.
We told Patricia it appeared she was not pursuing her complaint in a reasonable way, and did not want to resolve her complaint. Patricia did not accept this, and we closed our file.
Business affected by a cyclone
Insights for consumers and participants
It’s important that business owners understand what their policy covers, to prevent any disappointment when they submit a claim. If your business is insured for a loss of revenue, you may not be able to claim for lost income or additional expenses if you can’t prove a reduction in the business’s annual revenue.
The result in this case was a good example of an insurer recognising the insured’s vulnerability and genuine effort to minimise their loss, with the insurer deciding to ‘do the right thing’.
Olivia* is the owner of a small home renovation business supplying both material and labour to homeowners (the business), in the Hawkes Bay area.
In February 2023 the area was severely impacted by Cyclone Gabrielle, causing major road closures. This impacted Olivia’s ability to get stock from suppliers and delivered to her customers, and then to carry out the renovations, on confirmed contracts. Luckily the business premises and stock on hand weren’t damaged in the cyclone, but the road closures caused uncertainty for future stock availability. It also meant some of her employees could not get to customers’ homes to complete renovation work.
Olivia was worried the business would lose the confirmed contracts and that this would harm the business’s reputation. She quickly made alternative arrangements by hiring additional staff to service the areas her employees were unable to access. Olivia also personally drove some distance to her supplier’s warehouse to collect stock. Because of Olivia’s quick thinking she was able to complete most of the confirmed contracts. However, the continued delays meant a relatively large contract was cancelled.
Oliva submitted a $35,000 claim under her business interruption (BI) policy for the costs of hiring additional staff ($18,000), the costs Olivia incurred getting to and from the supplier’s warehouse ($2,000), and for the one lost contract ($15,000). The insurer declined the claim and said that the BI policy was not triggered because the business did not suffer an overall loss in revenue for the 2023/4 year, despite losing the large contract.
Olivia did not agree and complained to FSCL.
WHAT WERE THE PARTIES’ VIEWS?
Olivia said that:
If she had done nothing, and lost all the confirmed contracts, she considered she’d have had a valid claim. However, because she minimised her loss by hiring the additional staff and completing the contracts, she felt it was unfair that she could not claim for the costs of hiring the staff, and for her travel to and from the supplier.
Olivia also said the insurer unreasonably set the additional costs off against the business’s income by saying there had been no annual reduction in revenue.
The insurer was adamant that a valid claim was not triggered. However, they recognised that there might be some expenses that could be covered by the policy, including Olivia’s claim preparation costs of about $10,000. The insurer offered Olivia $25,000 in final settlement of the claim.
What was FSCL’s view?
We agreed that the BI policy was not technically triggered because Olivia’s business had not suffered a loss in annual revenue. However, our case manager recognised that Olivia’s business could have suffered a loss of more than $200,000 if all the confirmed contracts were lost. That is, if Olivia had not acted proactively there may have been a large loss in annual revenue, meaning she had ultimately saved the insurer from paying a much larger claim.
We discussed our views with the insurer and said it would be fair if they paid Olivia the $35,000 she’d claimed, plus the $10,000 for the claims preparation, a total of $45,000.
Both parties agreed and the claim was settled.
Your questions answered FORUM
Do brokers have an obligation to notify banks for non-payment ?
Whose responsibility is it now to notify banks if there is a mortgage or finance on a policy that is cancelled due to non-payment?
Decades ago there used to be an agreement between insurance companies and banks called the Continuous Agreement whereby in exchange for banks paying the unpaid premium to the insurance companies, the insurance companies would keep the bank continuously covered under the insured's (mortgagor's) policy to the extent of its interest (the amount outstanding under the bank’s loan). I have seen a copy of the document and none of the names of the insurance companies or banks who signed it are still trading. So it is a dead letter.
Purposively underinsuring
QUESTION
I'm dealing with a complex situation involving a commercial property owner. The owner recently obtained a valuation on their property, which has come back effectively doubling the previously insured value. Despite this, the owner has instructed me to ignore the valuation and act as though it doesn’t exist.
I have already advised them of the potential ramifications of their instruction, particularly in the event of a claim, but am now seeking clarity from a legal and professional standpoint.
As an agent of the insured, I am obligated to act in their best interests and follow my clients instructions. However, the valuation is a material fact that would likely influence any insurer’s decision to underwrite the risk or charge premium.
My questions are:
1. From a legal perspective, whose interests take precedence in this scenario - the insured (my client) or the insurer?
2. As a broker, do I have a duty to disclose this new valuation to the insurer, even if it conflicts with the client’s instructions?
3. How should balance my obligation to act in the best interests of the insured with the professional and ethical requirement to ensure material facts are accurately presented to the insurer?
Appreciate any advice you may have.
require you to (amongst other things), comply with the Code of Professional Conduct for Financial Advice Services which requires you to act with integrity towards your client.
2. No, you owe all your duties to your client. You have discharged those duties by advising the client of the possible consequences of his instructions. If, despite this, he/she confirms his/her original instructions, you must follow them. The only possible complication here would be, is if you have signed an agreement with the underwriter obliging you to disclose all material facts to it. This would put you in a conflict situation. Your duty to your client to follow instructions conflicts with your contractual obligation to tell the underwriter. Such agreements with underwriters should be avoided.
3. The duty of disclosure applies to the insured alone (not the insured's adviser). Acting against your client's instructions and disclosing behind his/her back would be a clear breach of your duty of care to your client, and if this causes financial loss to the client, the client could sue you.
The law has got itself into a pickle, in my view, regarding section 10 of the Insurance Law Reform Act 1977. As you know this says that the underwriter is deemed to know about the valuation, even though you have followed instructions and didn't disclose it in fact. In my view this is a dilemma for underwriters only and does not allow you to disobey your client's instructions. Of course you would be right if you advised your client that even though the valuation is not disclosed, the law says the underwriter is deemed to know of it and so is in a catch 22 situation.
Crossley
I answer in the same order:
1. You have been appointed by the insured to act for him/her as his/her agent at law. Under the common-law of agency, you owe a duty of care to the insured as your principal. This position has been separately reaffirmed by the recent changes to the Financial Markets Conduct Act 2013 which
I note an equivalent provision has been carried over, unfortunately, in the new Contracts of Insurance Act 2024. Further there is a section expressly preserving the law relating to the knowledge of fraud in this situation. It is not clear to me whether a broker performing his/her obligations to the client (including advising the client that the valuation is material and should be disclosed) would be viewed by a court as being fraudulent when instructed by the client to not disclose the valuation. This seems to be an unsatisfactory provision, not properly thought through.
The broker is the agent of the insured and has duties to the insured to look after the insured's interests. If the insured fails to pay the premium and a cancellation notice is issued by the insurer, assuming the broker knows about this, the broker owes a duty to the insured to advise the insured of the consequences of the cancellation. Not only will the insured no longer be covered, but the balance of any money repayable under a mortgage will become immediately due in full.
Having advised the insured of these consequences, the broker has discharged his obligations as agent. It is then for the insured to decide what action he will take.
If anyone is obliged to tell the bank that the policy has been cancelled for non-payment, it is the insured (mortgagor). Under the mortgage document the insured agrees to keep the security insured, otherwise the principal sum becomes immediately repayable in full. There will be an obligation to advise the bank if this is ever the case.
Crossley Gates, Keegan Alexander
Gates, Keegan Alexander
FENZ Levy on buildings - adjustment rate on inflationary provision from valuation
QUESTION
When we get a new valuation for a building, it usually has the sum insured amount broken down: Reinstatement Cost
Estimate and Inflationary Provision Demolition Cost. As a brokering practice, we use 50% adjustment on the MD rate on the inflationary provision on first and second year of the valuation. Is this the correct practice? can’t locate this information anywhere and have been questioned by an insurer. Can please get some clarification?
According to the July 2017 FENZ Levy Guide you can use the same multiplier that is accepted by the insure, but no less than 50%. The guide says, "The indemnity inflation factor is deemed to be part of the indemnity value. Whenever inflation is insured in an indemnity value contract of fire insurance, the levy is calculated using the same discount rate the insurer has applied in determining the premium rating for the contract of insurance (to a maximum of 50%)."
The guide is available here: www.fireandemergency.nz
(Guide for levy payers – page 5)
Small claims
QUESTION
My client has a dispute with a customer so raised a small claims tribunal action within the $30,000 limit. The customer has counter-claimed for $50,000 which, being outside small claims, I presume now becomes a civil matter action. Can our client continue his action with small claims to obtain a judgment?
Crossley Gates, Keegan Alexander
The Small Claims Tribunal is now called the Disputes Tribunal and is governed by the Disputes Tribunals Act 1988.
As I understand it, any counterclaim exceeding $30,000 by the Respondent in an existing Disputes Tribunal proceeding against the Respondent must be brought in the District Court (the Disputes Tribunal is a division of the District Court), along with an application to transfer the existing Disputes Tribunal proceedings brought by the other party to the District Court so that both related disputes can be heard together.
Simon Moss
Calendar of events
IBANZ offers a range of CPD from quality presenters who specialise in providing a variety of fire and general presentations, as well as a selection on soft skills, ranging from time management to client care.
February 2025
February 4 th
Topic: Legislation Breaches
Presenter: Stephanie Newton | FSCL
February 11 th
Topic: Stat Liability for Beginners
Presenter: Ellie Harrison | Wynn Williams
February 13 th
Topic: Business Risk Analysis
Presenter: Trevor Slater
February 20 th
Topic: Business Interruption Insurance for Beginners - Part 1
Presenter: Mark Anderson Commercial Loss Management
February 25 th
Topic: Insurance Policy Structure
Presenter: Mel Gorham | IBANZ
All webinars: 10.30 - 11.30am unless otherwise stated.
March 2025
March 5 th
Topic: Security Recommendations
Garry Morrison NZSA
March 6 th
Cyber Liability - being prepared and learnings from 2024
Delta
March 12 th
Business Interruption Insurance for Beginners - Part 2
Mark Anderson Commercial Loss
March 18 th
Fire Cause and Origin
Todd O'Donoghue | Halliwell Fire Research
March 19 th
Topic: Natural Disaster Claimswhere are we in 2025?
Presenter: Emma Gabor Gabor Law
March 26 th
Topic: Supporting clients through loss: A commercial fire case study
Presenter: Luke Bardsley | Mainland Claims
April 2025
April 2 nd
Topic: Technology Liabilityemerging threats
Presenter: Delta
April 9 th
Topic: Construction Liability
Presenter: Jeff Stagg McLarens
April 10 th
Topic: Managing Challenging Customers
Presenter: Lance Burdett Warn International
April 15 th
Topic: Business interruption natural disaster claims and issues
Presenter: Mark Anderson Commercial Loss Management
April 29 th
Topic: Negotiation Skills
Presenter: Trevor Slater
April 30 th
Topic: 10 email shortcuts you should be using every day
