FROM NZCB —
Grant Florence Chief Executive
From the Chief Executive Welcome back to another year and I do hope that you will find this year, 2020, busy, profitable and enjoyable as many of us I am sure will pick up where we left, at the end of 2019. I trust you had a pleasant and restful Christmas and New Year break. Around mid-January we had to regrettably advise you all of a suspension of our Halo 10 Year Residential Guarantee (Halo) insurance service from the end of January 2020, as we had not been able to find a replacement insurance underwriter. Halo’s underwriter since the commencement of the scheme back in early 2016, a syndicate of Lloyd’s of London had advised us of their intention to withdraw from the scheme. This followed a merger of Canopius with another syndicate of Lloyd’s and the subsequent withdrawal of their mandate to do this type of 10-year coverage business. This affected the Halo scheme, but also saw Canopius withdraw from five or six other similar schemes that they were the underwriter for around the world, including Europe.
The challenges to find underwriters include securinginsurers who have an appetite for providing a long-term 10-year insurance cover (most only have an insurance horizon of one or two years). We have continued to work hard to find a replacement underwriter and, at the time of writing this article, have not yet achieved this, but we are making good progress. I am determined to secure an insurance underwriter that has financial strength, is independent, carries a strong credit rating and provides some certainty. There are many options of introducing backers of Halo who are of a lesser quality, suspect credibility and unknown financial strength but in the long run, these will not serve our purpose and, more importantly, the purpose of our homeowner customers. As part of our replacement search, we are however looking at all options.
The challenges to find underwriters include securinginsurers who have an appetite for providing a long-term 10-year insurance cover (most only have an insurance horizon of one or two years), covering building defects, the relative remoteness of New Zealand, the history of housing in New Zealand together with the changing risk and nature of insurance globally. This latter point has become of real significance since we first introduced Halo with the Canopius syndicate backing. This is further complicated by the fact that dependent on the structure used, there are up to seven different parties involved and to get them all aligned and thinking alike takes time (and indeed patience). This also includes the need to have a structure that is acceptable to the New Zealand regulations. So, it is a little bit more than a few discussions with the local insurance company. It is interesting, despite the NZCB Boards’ Halo mandatory policy, that the use of Halo has varied across our members – from those who use it on every job as an important tool in their sale process, to those who have never used Halo and do not see the benefits to their business or their customers. I understand it is an important issue for our members and we continue to be determined to get Halo back up and running again as soon as practicable. Minister for Building and Construction Hon. Jenny Salesa has announced that during 2020 will also see the introduction of the first of the changes to the regulatory regime of the building industry. There will be law changes introduced during the year on three of the aspects that the Ministry of Business, Innovation and Employment (MBIE) consulted on earlier this year. These are the Building Levy, Fines and Penalties and lastly Building Products and Methods. We will be following these very closely and will of course be providing input and comment at both a MBIE policy level and also at any Select Committee hearing(s). I take this opportunity to thank you all, for your support of the Association. ‘Till next time...
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