CoverNote July/August 2014

DECISION FINAL: IAG GETS GREEN LIGHT FOR ACQUISITION...

July/August 2014 The professionals’ magazine from IBANZ

COVERED IN A CRISIS PROTECTION AGAINST THE THREAT OF KIDNAP

Insurance bosses map out mega trends

www.ibanz.co.nz

Bad's not going anywhere.

Neither are we.

NZ6055/1 05/14

Welcome

Advertising/Editorial: Robert Johnson, Benefitz Telephone 09 477 4702, Mobile 027 4970 712, Email: robert@benefitz.co.nz Gary Young

Design/Production: Anne Vindriis, Benefitz Imaging: CTP by Benefitz Produced for IBANZ by: Benefitz, Cnr Constellation Drive & Parkway Drive, Mairangi Bay, North Shore City.

PO Box 33-1630 Takapuna.

Telephone 09 477 4700, Fax 09 477 4799 Advertising Deadlines: Bookings 10th of the month prior to publication, Material 15th of the month prior to publication.

CoverNote is the official publication of IBANZ and is distributed FREE on a quarterly basis (March, June, September, December) to members throughout New Zealand and associated companies.

Additional copies are available at a cost of $7.50 per copy, or 12 month (4 issue) subscriptions at $30.00, inclusive of postage and packaging. The articles or opinions featured within this magazine are not necessarily the opinions of the Publishers or IBANZ, and they do not accept responsibility for the content of articles featured within the publication. No part of this publication may be reproduced without the written permission of the Publisher. The publishers do not accept responsibility for loss or damage to unsolicited photographs or manuscripts.

IBANZ Enquiries should be made to: Gary Young, Chief Executive, IBANZ. Email: gary@ibanz.co.nz IBANZ National Office located at: Level 1, 143 Nelson Street, Auckland.

(P.O. Box 7053, Wellesley Street) Telephone 09-306-1732.

Website: www.ibanz.co.nz

CEO, IBANZ

S

ince 2008, like it or not, insurance has become part of a regulated environment overseen by a new entity, the Financial Markets Authority (FMA). This year the first FMA chief executive moved on to be replaced by Rob Everett, a former securities lawyer who most recently worked in a global regulatory consulting business in the UK. For Everett a key reason for taking on the role at the FMA was their fresh and innovative approach. Regulation in New Zealand differs from many jurisdictions in that it is noticeably less prescriptive and more inclusive.

The New Zealand way has involved a very consultative approach to legislation.

In my own experience with regulatory development at the Code Committee I saw how vital consultation was to producing an acceptable end result. Such an approach is better able to produce an environment in which everyone can thrive including the end consumer.

The hard thing with regulating financial services is the disparate nature of the sectors included. In the initial phase of regulation here the focus has been on those dealing with investments. General insurance has, quite rightly, been low profile, because of a lack of problems to be addressed. Perhaps because our members who comprise the majority of advisers in the general insurance sector, have readily accepted the need for professionalism.

Consumers dealing with an IBANZ member can have confidence that their adviser has signed up to a professional association that sets high standards in terms of conduct and personal development through education.

A common message from both FMA chief executives has been that a minimalistic approach to compliance is unacceptable. IBANZ agrees that doing the bare minimum is not the way to create a respected profession. Our high standards can give consumers confidence in the quality of IBANZ members as advisers.

Achieving and maintaining the necessary standards are not easy and the world is constantly evolving which can make knowledge redundant or at best less relevant.

Understanding where our sector is heading in the future and what changes are predicted is vital when planning professional development to maintain competence.

The changes in the general insurance market have been significant in recent times, and looking ahead the rate of change is only going to increase. This why in October IBANZ is planning a one-and-a-half day forum looking to the future, outlining strategies and professional development to ensure delegates know what’s in store for our industry in the coming years and how they will need adapt for success.

We are encouraging delegates to “catch the next wave”. This is no time to have your head in the sand if you want to remain as an IBANZ member at the forefront of professionalism.

Gary Young, CEO, IBANZ

www.covernotemag.co.nz

1

Contents: July 2014

Features 12. From the Google Car to social media

Insurance bosses outline challenges and opportunities for the industry.

22. Merger given go ahead The Commerce Commission has decided to

40. The fast way to becoming a digital front runner David Lamb takes a look at the increasing impact of digital in the marketplace

unconditionally approve IAG’s purchase of Lumley General Insurance.

26.

Covered in a crisis

Recent events in Nigeria have publicised another location where threat of kidnap is a real present threat.

34. Product contamination

The impact of a product recall incident can create long-lasting damage to brands and business reputation.

42. Pick ‘n’ mix approach to professional liability

ZI Pro Select, new, comprehensive and cost N effective liablility product.

46. Strong capacity drives competition

Softening property pricing worldwise generated

overall insurance market declines in the first quarter of this year.

Regulars 1. View from the CEO’s chair 3. News 18-21. Out & About 22. Forum 2014 30. Ask an Expert

48. Professional Development: Professional IQ College 52. IBANZ Contacts DECISIO

N FINAL:

IAG GET

S GREEN

LIGHT FOR

ACQUISI

TION...

July/August 2014 The professio

nals’ mag azine from

WANT YOUR VERY OWN COPY OF

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See page 56 for details on how you can have your very own copy delivered directly to your door... HOT OFF THE PRESS!

IBANZ

COVERED IN A CRIS IS

PROTECTIO N AGAINS THREAT OF KIDNA T THE P

Insurance map out bosses mega tre nds www.ibanz .co.nz

Correction...

The last edition of Covernote included an article with the heading: Don’t apologise for Christchurch,Vero boss says The article was based on a speech given by the CEO of Vero, Gary Dransfield.

The heading was wrong. Mr Dransfield did not use those words in his speech.

What he did say was that over $40 billion of insurance company money would fund most of the rebuilding of Christchurch.

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July/August 2014

He also said that it was insurance company payouts that were powering growth in the New Zealand economy.

As a result, there was no need for insurance companies to be defensive about their efforts in Christchurch.

Covernote apologises for the error and the subsequent issues it created for Vero.

News

NM Insurance takes on new business development manager NM Insurance has appointed Natalie Davies as business development manager.

She will be based in the Auckland office and brings years of underwriting and customer service experience to the role.

Davies will be working to build relationships with brokers across New Zealand, ensuring as many customers as possible have access to NM Insurance products.

Lyndon Turner, CEO of NM Insurance said: “I welcome Natalie to the role and our organisation, Natalie brings with her many years’ underwriting and most recently development experience and her passion for our product space will complement the very competitive offerings we have in New Zealand.”

Marsh enters Queenstown market Insurance brokerage Marsh is opening a new branch in Queenstown.

The firm said it had identified a need to enhance its service offering to South Island clients.

The Queenstown office will complement the services provided by Marsh teams in Christchurch, Dunedin and Nelson.

Grant Milne, who heads up Marsh in New Zealand, said he was excited about the prospects for the new office. ”Queenstown provides Marsh with a huge amount of opportunity,” he said. “The area is rich in tourism, primary industry and viticulture – all areas where Marsh has proven strengths. We have the advantage of being able to leverage our global resources but also have 55 years of experience working with local New Zealand businesses.”

Queenstown is the fourth new office that Marsh has opened in the last 15 months.

It opened offices in Hamilton and Nelson last year and Hawkes Bay earlier this year.

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3

News

New qualification may be signed off next month NZ Qualifications Authority approval for the new Certificate in Financial Services, Level Five, is expected to be granted next month.

It is a requirement for authorised financial advisers and is recommended for registered financial advisers to show that they are operating with care, diligence and skill – as required by the Financial Advisers Act of anyone providing financial adviser services.

A new version has been a work in progress for some time and NZQA said it was in the last stages of being signed off. It will include strands for financial advice, investment, insurance –

life and health, insurance – general, lending – residential property, and lending – personal, banking and trustee services.

Candidates need to complete the core standards, including financial advice if they want to be advisers, and any strands that apply to their sector.

NZQA had sought further information and clarification of certain aspects of the qualification, a spokeswoman said.

The new qualification requires 90 credits, 80% more than required by the level five qualification at present.Although the new qualification will be sat by those new to the field, it will also have

an effect on existing advisers.

A requirement of the code of conduct for authorised financial advisers is that AFAs keep their competency up to the standard of those who are new to the industry.

That means existing advisers will need to be sure that they are confident they would meet the standards of the new level five qualification and understand the changes it introduces. There will likely be a period when both qualifications will be available. In their CPD plans, advisers should include keeping up with the changes to the Code and AFA qualifications, Mann said.

Storms cost $25 million Storms and flooding that hit Canterbury in February and March led to insured losses of about $25 million, the Insurance Council of New Zealand says.

“The most damaging of the storms was that on March 4-5, when $21.9 million of damage occurred. While this storm system also hit Wellington and the Hawkes Bay, the brunt of the damage, totalling $19.6 million, was in Canterbury where there was extensive flooding in Christchurch,” Insurance Council Chief Executive Tim Grafton said.

“Most of the damage in Canterbury was to home and contents with $13.4 million in losses followed by damage to commercial property ($2.8 million) and motor vehicles ($2.5 million),” he said.

A less damaging storm also hit Canterbury on February 23, when there was $3.3 million of insured damage and reports of tornado damage.

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July/August 2014

News

First major events at newly-named QBE Stadium The Blues v Sharks game on May 23 was a great event, with a crowd of more than 16,000 in the new QBE Stadium. Unfortunately the Blues could not overcome the strength of the top-of-the-table Sharks, going down 29-23 at the final whistle.

QBE Stadium has also hosted 15 of the IRB Under 20s Junior Rugby World Championship games. The tournament features 30 games in all which are being hosted at QBE Stadium, EcoLight Stadium and Eden Park from 2 June. This is a fantastic opportunity to see some of the world’s best young players who will undoubtedly become the international rugby stars of the future.

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News

Temporary accommodation cover confusion

Complexity of cyberspace could cause major meltdown: Report Mismanaged cyber risks could cause an upheaval on the scale of 2008’s global financial crisis, a new report from Zurich and international think tank the Atlantic Council says.

The report has identified cyber risks that pose a threat of a wide-scale systemic shock.

It says even cyber security professionals are not clear how the failure of an organisation or of technology could spread to become a systemwide risk.

James Stringer, Zurich’s national underwriting manager, professional indemnity – financial lines, said the modern reliance on information technology had created a system of interconnected risks.

“Cyber-risk management professionals need to look beyond their internal information technology safeguards to interconnected risks that can build up relating to counterparties, outsourced suppliers, supply chains, disruptive technologies, upstream infrastructure and external shocks.”

The report said the risks were compounded when a company outsourced the management of its servers, IT and cyber security. “Little

information may be known about the third party’s information security or business continuity safeguards and it may also in turn outsource activities to other companies.”

The report said there was a risk that cyberspace’s complexity would backfire.

“Organisations are unknowingly exposed to risks outside their organisation, having outsourced, interconnected or exposed themselves to an increasingly complex and unknowable web of networks.”

Stringer said businesses needed to think about their cyber risks and have a plan in place to combat them. “Few people truly understand their own computers or the internet, or the cloud to which they connect, just as few truly understood the financial system as a whole or the parts to which they are most directly exposed.

The result means that a significant chain of disruptions to an interconnected system could bring it all crashing down. Companies need to build resilience and the ability to bounce back from disruptions to make them as short and limited as possible.”

Brake Road Safety Week Young drivers were given a lesson in the power of distraction during this year’s Road Safety Week.The theme of the week was ‘tune in to road safety’. The message was when using roads, we all need to “tune in” and give it our full attention - to keep ourselves and others safe.

The event is run through Brake, the road safety charity. Brake campaigns for safer roads, runs education programmes and supports the victims of road traffic crashes and their families.

The launch of Road Safety Week took place at Kelston Boys’ High School, where the boys

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July/August 2014

took turns to drive the driving simulator while their friends distracted them with phone calls or texts. They were all surprised at how quickly they lost concentration and the cars went out of control and, in some cases, crashed. It was a valuable lesson to underline the importance of maintaining attention and not giving in to distractions.

As well as raising road safety awareness, the day aims to raise funds for Brake. QBE offices around the country held a “bright day” Fundraiser - a mufti day with a twist.

Temporary accommodation benefits are proving an issue for some Canterbury residents forced out of their homes by the region’s earthquakes, the Insurance and Savings Ombudsman says.

The benefits may be payable under contents or house insurance policies.

In an example given by the ISO, a woman bought an earthquake-damaged house in 2012, and transferred the owner’s EQC and insurance claim to herself. She arranged house insurance with the same insurer the previous owner had used.

She was told a few months later she would have to move out of the house during repairs. She tried to claim for temporary accommodation costs and was declined because the damage occurred before the policy was put in place.

While the new owner though the deed of assignment transferred the previous owner’ rights to her under his policy, the ISO said this only related to the repair of damage, not cover for temporary accommodation.

The ISO said it was common for accommodation benefits to apply only if the policy was in place at the time the damage occurred.“Also it is often a requirement under a policy that your need for temporary accommodation is unforeseen and/or unexpected. If you bought the house knowing you would have to move out during repairs, then your need for temporary accommodation is not unforeseen or unexpected.”

Customers should be encouraged to check their policy documents, the ISO said.“Your particular policy wording is very important.”

News

Post-budget lunch well-attended The Trans-Tasman Business Circle Post-Budget Luncheon was held on May 16 at the Sky City Convention Centre. The ballroom was filled to capacity with more than 1000 businesspeople in attendance.

QBE Insurance was a major sponsor of the event.

QBE said it, and fellow sponsors AUT and Westpac INstitutional bank, were proud to host Prime Minister John Key for his first major speech following the May 15 Budget.

This was the National-led Government’s sixth budget.

As well as getting its finances in order, Key assured the audience that the Government was continuing to address New Zealand’s significant economic challenges, including a sustained rebalancing towards the internationally competitive sectors of the economy. Budget 2014 contributed to the Government’s other priorities of delivering better public services and support for families within tight financial constraints while also supporting the rebuilding of Christchurch and steering the finances back to surplus, Key said.

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Case study

Murky law needs clarification: IBANZ A

lengthy court battle over fire service levies is an indication the law is outdated and needs to change, the Insurance Brokers Association says.

The Court of Appeal has rejected the Fire Service’s attempt to change the way the fire service levy is applied to commercial insurance premiums.

Insurance levies pay for the vast bulk of New Zealand’s firefighting operations but the Fire Service argued that some brokers and insurers were structuring policies to reduce the levies payable by their clients.

Despite rejecting the Fire Service claim, the judges acknowledged that the law needed to be changed to take account of composite policies.

It follows a 2012 High Court decision, which found composite and split-tier policies were not “artificial in nature”, supporting IBANZ and Vero’s claim.

The Appeal Court said the legislation was drafted before composite policies became common.“Undoubtedly section 48 has not kept pace with developments in New Zealand in the structuring of fire insurance policies covering commercial properties. Notwithstanding its apparent purpose, it is fair to say that section 48 is now at breaking point.”

The Fire Service has now said it will take the case to the Supreme Court. It may also approach the Government about fixing or rewriting the legislation.

IBANZ chief executive Gary Young said that fixing legislation would be a welcome move: “Our belief is that it should be rewritten completely not just fiddled with. It’s an inefficient way of collecting funding.”

Young said his organisation wanted the levy removed completely.

He said it encouraged underinsurance by raising the cost of cover. “Our ultimate aim

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July/August 2014

OUR ULTIMATE AIM WOULD BE TO HAVE FIRE SERVICE FUNDING REMOVED FROM INSURANCE ALL TOGETHER. IT IS UNFAIR AND INEFFICIENT TAX. would be to have Fire Service funding removed from insurance altogether. It is an unfair and inefficient tax.”

Young said IBANZ’s key reason for supporting this case was to gain certainty for clients and members of the association about what was acceptable under the current legislation. “This is only an issue because the legislation is outdated.”

He said: “While this debate has been moving through the courts IBANZ has been tackling another issue with the Commission over levy audits. Again there is uncertainty over the obligations of brokers and the powers of the

Commission. IBANZ has been working with the Commission to resolve this latest issue. We are hopeful of arriving at a solution that works for both parties without having to go down a legal pathway.”

Young said IBANZ believed legislation should be clear and relevant.

“That is not the case currently. We had hope dthe Commission would not take this issue to the Supreme Court. If the decision of the courts is untenable then the government should stop prevaricating and just sort it out once and for all.

Endless reviews over the years have suggested this is necessary so now we just need action.”

News

Legacy of service continues under a Mint new name After more than 100 years of service in the building glass sector, Smith&Smith has sold that part of its business to Building Glass.

All call handling, workflow, and account management has now been re-launched under new ownership and management, as Mintglass.

Under the direction of past Smith&Smith operations director and now Mintglass chief executive Mark Morgan, the company is fasttracking the establishment of a dedicated nationwide network of Mintglass branches, and wider network partners in smaller towns and areas.

Mintglass operates its own branches in Auckland, Hamilton, Hastings, Palmerston North, Wellington, Christchurch, and Dunedin, and draws on the expertise of more than 30 other specialist local flat glass companies who are formal Mintglass Network Partners.

The company says that, through its network

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of nearly 40 locations, customers can continue to be confident in the promise of a “mint job every time” – but now with the assurance of a company solely dedicated to the building glass sector.

Mintglass has been rapidly rebranding vehicles, branches, launching a new interim website, outfitting its front-line employees in new vehicles, and commencing training of new call centre teams. The key objective is to reassure customers that rather being business as usual, they can now expect an enhanced focus on their glass needs from a company proud to be able to draw on a century of knowledge and expertise.

The company has taken over key insurance supply partnerships. Mintglass now has preferred or recommended supply agreements with AMI, NZI, AA Insurance, Lumley, Vero, Medical Assurance, FMG, Crombie Lockwood, Marsh Insurance Brokers, New India Assurance, and Cunningham Lindsey, among others.

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News

Inside guide to Vero’s new campaign A

n all Vero-studded cast has been gracing television screens across the country since March as Vero launched their new television commercial – “That’s better”. Ian Walker, Vero’s executive manager marketing, gives you the background to the new campaign: It’s the first time in several years that we’ve used the medium of television in our advertising and we wanted to give you the thought behind this commercial and the Better campaign.

We all know that the Christchurch earthquakes did not just change a city; they challenged some of the fundamentals of the insurance industry. Over the last three years, Vero’s focus has been twofold: Settling our earthquake liabilities in the most efficient possible manner, and developing a future strategy that will allow us to be a strong, sustainable and leading player in the New Zealand insurance market.

Our strategy is centred on the creation of value. It’s about: • Vero being a better insurance company.

• Vero providing a better service to brokers.

• Vero driving the change that will result in a better insurance industry.

• Vero better-protecting New Zealand’s future.

Insurance is not about things going wrong; It’s about us putting them right. Avoiding event and resolution clichés, passive assurances,

innocuous but by creating a number of cause and effect scenarios we show the real value of what we do. Our day-to-day work is connected to a series of situations where our products and services, and our claims resolution, make things better for you and your customers.

It’s a different kind of commercial from the two that featured Sensation, our iconic bull. While we don’t want to lose our personality or sense of humour, we are sensitive to the need for advertising that is appropriate given the circumstances still being experienced by many in Canterbury. I hope you will agree that the new commercial is nonetheless watchable and engaging.

The commercial is running on free-to-air, pay network television and in digital environments too (such as On Demand); print and online advertising will support the television activity.

We are excited to have made an ad that presents our company, and our industry, in a manner that goes to the heart of what it is we really do: the creation of value. And it sums up perfectly something that our chief executive, Gary Dransfield, has said many times over the last few months; that we are proud to be in insurance, and proud to be Vero. To view the commercial, you can see it on Vero’s YouTube channel: YouTube.com/user/NZVero

WE ARE EXCITED TO HAVE MADE AN AD THAT PRESENTS OUR COMPANY, AND OUR INDUSTRY IN A MATTER THAT GOES STRAIGHT TO THE HEART OF WHAT IT IS WE REALLY DO.

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July/August 2014

or pretending we can stop anything before it happens, we have made a commercial that connects the things we do each day with replacement, repair, or rebuilding for those who have suffered loss or damage. We also show the value we deliver as an enabler of business in New Zealand.

The commercial opens in a Vero office with our people going about their work. The physical actions we perform each day are seemingly

Feature: Insurance mega trends

FROM THE GOOGLE CAR TO SOCIAL MEDIA

Insurance bosses outline challenges and opportunies for the industry.

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July/August 2014

N

ew Zealand’s insurance industry is in a good position but there are some clear trends and challenges it will have to contend with to remain relevant into the future, some of the sector’s leaders say.

Representatives of the Insurance Council of New Zealand, IAG, Vero and QBE addressed a Trans-Tasman Business Circle Insurance Panel event in Auckland in early June.

They discussed the macrotrends that face the industry, and the ways insurers might tackle them.

TREND: TECHNOLOGY Constantly changing technology is one of the biggest issues that insurers have to grapple with, the panel said.

Ross Chapman, general manager, New Zealand operations of QBE Insurance, said the insurance industry had been a slow adapter when it came to technology. “We’re way behind what the banks have done, what other industries have done. We’ve got some catching up to do there.”

He said social media was a key development that insurers needed to master to manage their reputations in the market. “How do we communicate with customers, how we manage our reputations, those sorts of things. That’s something we need to do some work around.

The world is moving on, we need to chase it along and get on top of things.”

There were many ways that technology could help insurers do their jobs better - such as by allowing the use of granular data to determine risk down to precise locations. Chapman said the key to using the granular approach properly was to get the right data and analyse it well.

But he said granular pricing would never be able to take over completely as a strategy for insurers.

“If you go back to the basic principles of insurance, it’s about the misfortunes of a few being funded by the contributions of the many. There is always going to be a limit to how granular you can get to. You could get to the point where one person is paying next to nothing and another is paying a fortune…

there’s always going to be a level of cross subsidisation.”

He said insurers would use their increasing access to data to select where in the market they wanted to be, and adjust their portfolios.

Jacki Johnson, chief executive of IAG NZ, said they could use pricing as a signal to help people understand risk in specific areas.

Vero’s general manager of personal lines, Adam Heath, said it was possible that some of the most useful data would end up coming from outside the insurance sector as other competitors emerged.

There were a lot of people already getting data, processing it and coming up with outcomes, he said. “Doing it faster and Continues overleaf…

www.covernotemag.co.nz

13

Feature: Insurance mega trends

…Continued

better than we can. It’s about understanding where that technology is going.”

It could be that retailers’ increasing data stores on their customers could provide more information for insurers’ decision-making, he said. “From the point of view of what’s the best determinant of someone’s risk, it could be retail data, what they’re purchasing, if they’re spending a lot on cigarettes, alcohol, gambling, they might be a highrisk proposition. Who has that wealth of information? Competitors might come out of the retail sector.”

Some technology, such as the driverless Google Car, could completely shake up the industry, the panel said.

The question was addressed in this year’s Aon Benfield Scholarship, in which entrants had to write an essay in response to the question: “Will the Google Car end automobile insurance as we know it?”

Johnson said it was a good point to ponder: “Does [the Google Car] destroy the car insurance market or does it create opportunities because we have to adapt?”

She said companies such as Microsoft had changed consumers’ expectations. “Microsoft cycles used to be three to five years to get a new product out. Now it’s 30 to 60 days.

As an industry we need adaptability… that’s creating a customer expectation that things can change in 30 days.”

CHALLENGE: RELEVANCE Heath said a key theme for the industry was to make clear the value of insurance from a customer point of view.

“They’re not buying a policy, they’re buying protection,” he said. “Our customers are fundamentally changing and their view of what they’re protecting is changing.

[With the example of the Google Car] am I protecting the vehicle, or if I have a driverless vehicle, maybe I don’t even own it. Is there an asset that I own that I need to protect?

Maybe not but I still need to travel from place to place and that is inherently risky.”

He said insurers might eventually need to take a different perspective on what customers were looking to insure – the asset or the person holding the policy.

“What do different people see as being valuable? There are huge demographic changes occurring. Thirty or 40 years ago, you actually had to work hard to acquire assets and there was value in doing so, you really wanted to and were orientated towards

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July/August 2014

DOES THE GOOGLE CAR DESTROY THE CAR INSURANCE MARKET OR DOES IT CREATE OPPORTUNITIES BEACUSE WE HAVE TO ADAPT? protecting them. Now, it’s less so. In five or 10 years, the country will potentially be a fundamentally different place.”

Increasing ethnic diversity and changing cultural values would alter what people most prized, he said. “It’s more about people than assets.”

Ageing baby boomers would also change the market, Heath said, as they put more emphasis on enjoying their assets rather than accumulating and protecting them. “And Gen Y, what will their attitudes be towards insurance?

We’re already seeing their interesting attitudes to life and work now, how will that manifest itself?”

Johnson said insurance companies’ customer demographic – and the assets they wanted to protect - were changing quickly and it was important to remain relevant to every stakeholder.

“We need to outperform to be relevant to our customers, our partners such as reinsurers, our supply chain and also our investors – and last, but certainly not least, the people who want to work for our industry.”

New Zealand had a high insurance penetration, she said, but it was important for it

to remain that way, because of the level of risk the country was exposed to from geological and weather events.

“Weather risks are one thing but we’ve got geological risks, too. They might be less frequent but when they happen, they have a much bigger impact…The economy would be really knocked around if we weren’t relevant to customers. It’s a balance of keeping capital coming in and keeping ahead of trends. We need to keep reinventing ourselves so we don’t get stuck in the past.”

She said it was very important that the industry put some thought into where its next crop of recruits would come from.

For most young people leaving school, insurance is not one of the careers that is top of mind as an option. “Most of us segued into insurance, we all have a different journey. But when we get here we love it… if we don’t use the workforce we have well enough, and stop innovating, we’ll get locked into the past.”

TREND: GLOBAL MOVES Chapman said insurance was increasingly becoming a global industry. “You can’t look at New Zealand in isolation, you have got to look

at it in terms of global connections. You’ve got to look at the global picture and what’s going on around the world.”

Investors would take their capital where the best opportunities lay, he said. “Capital is very fluid, it moves according to where investors think they’ll get the best return. At the moment there’s plenty of capital coming into insurance industry because insurance is relatively profitable at the moment but it’s going through a cycle.”

It could be expected that as more capital came in, prices might drop and become more competitive and profitability declined, which would drive the investors to look at other places where they could put their money, he said.

“You see cycles of capital coming in and out.

That’s something we’ve got to be looking at. If investors deem New Zealand not to be a good place to put their capital, not a good place to operate, then capacity issues arise.”

New Zealand was in an unusual position internationally when it came to earthquake insurance, he said.

“We are in a relatively lucky position because earthquake insurance has been freely available and relatively cheap. For a lot of other countries in earthquake-prone areas, they can’t buy it or

IF INVESTORS DEEM NEW ZEALAND NOT A GOOD PLACE TO PUT THEIR CAPITAL, NOT A GOOD PLACE TO OPERATE, THEN CAPACITY ISSUES ARISE. it’s too expensive, or not available. In California, Japan, the uptake of insurance for earthquakes is just not there. It’s something we’ve become accustomed to but shouldn’t take for granted.”

Johnson said a lesson to be learnt from other countries was for insurers not to become “the meat in the sandwich” between Governments and consumers. “In other jurisdictions, insurers have been the scapegoats.”

She said, under normal conditions, insurers would be pulling out of flood-hit Flockton, in Christchurch.

“I think we’ve been very responsible working beside government and council to come up with what the solution would be. But if that [risk] doesn’t get mitigated… insurance is about unexpected loss, if something is expected, that’s not insurance. For us we have to be careful. We can send a pricing signal but the other signal governments around the world seem to like is capacity. If we pull out, people won’t build there. That’s using us as the big stick and our reputation is shot as well.”

TREND: CONSOLIDATION IAG’s acquisition of Lumley was not likely to be the last merger activity the insurance industry in this country would see, the panel said.

Chapman said there was room for more merger activity. “We’ve seen a lot happen in the broking sector. As the broking fraternity gets older, retires, looks to sell their businesses on to someone else, there’s been the emergence of two very big broking players.”

Continues overleaf…

www.covernotemag.co.nz

15

Feature: Insurance mega trends

WHERE DOES INSURANCE SIT IN THE VALUE EQUATION FOR THE END CONSUMER WHEN THEY ARE TRYING TO FIND MONEY FOR MORTGAGE, KID’S UNIFORMS, PUT FOOD ON THE TABLE?

…Continued

There were a lot of global insurance players who were not yet operating in New Zealand, but could, he said. “They are capable of coming into this market and being sizeable players, should they choose.”

Johnson agreed: “Fundamentally, markets that are well structured will have niche players and larger players. There’s roles for all and ultimately the customer chooses.

In the intermediated space, you don’t have the market power and portfolios can move quickly.”

She said New Zealand should end up with a spectrum, from large players through to those who were very specialised.

The mergers would happen among those caught in the middle.

“Where you get in trouble is if you’re in a company in no man’s land – not niche but not large enough to use scale to price or get capacity globally for capital, you get stuck not meeting anyone’s value proposition.

That’s where we’ve got more danger – that’s not a New Zealand problem but any country and any type of industry. I think that’s why there’ll be consolidation. In any market structure, if you’re struck in the middle, you’re either going to go smaller to play niche or get bigger.”

16

July/August 2014

cream profits then not have the capital behind them in the bad times…they take what they can then when bad times happen, they exit. Is that good for a sustainable, profitable economy?

We’ve seen what happens when the insurance wheels cease to move.”

Chapman said a lot of international broking houses already had distribution and client contact and could step up to compete. “It’s not a very big step for them to put up a bit more capital and start writing risk themselves.That’s a challenge the insurance industry faces.”

Heath said a certain number of companies would come and go. “I’ve seen them come in,

CHALLENGE: VALUE FOR MONEY Heath said any conversation about the value of insurance had to consider affordability for customers. “It’s not necessarily the cheapest price - that doesn’t deliver value - but I don’t think we can ignore the fact that over the last three years, the journey we’ve taken customers on, house premiums are double what they were two or three years ago.”

Rising interest rates would also hit a lot of households in the pocket, he said.“[The changes to insurance premiums have] happened all in a period of time when we’ve had historically low interest rates.”

Heath said that with the OCR rising, many households would face a 50% increase in mortgage interest costs over the next two years.

“The average New Zealand household’s wallet hasn’t expanded by 100% in the past two years but now they’ve got to soak up another 50% increase in mortgage payments. Where does insurance sit in that value equation for the end

NEW ZEALANDERS WERE NOT GOOD AT UNDERSTANDING RISKS. WE DON’T SEEM TO HAVE THE THAT IDENTIFICATION OF ASSESSMENT OF RISK. consumer when they are trying to find money for mortgage, kids’ school uniforms, put food on the table?”

He said a lot of talk about granular pricing related to concerns that prices would rise.

“That’s really negative.”

He said many underwriters used pricing as a way to mitigate harsher underwriting practices, and to provide insurance to people who would otherwise not get it. “[Without higher pricing] they wouldn’t write business there, or would stick a significant excess on there. At the end of the day, if someone values

it enough, they will pay for it. It comes back to the value they see in insurance.”

New Zealanders saw house insurance as a grudge purchase, he said. “As a population, we’re quite comfortable with spending 10% of the asset’s value on insurance when it’s for a vehicle but when it’s a house, [insurance] is less than 0.2% of its overall value but it’s seen as a real grudge purchase. We need to look at how to change the nature of the conversation and say ‘this is what you’ve been working for all your life, why don’t you protect it?”

There was a danger some niche insurers

would come in with the specific aim of targeting price, he said. “It will be price, not necessarily value. They will look to pick the eyes, cherrypick the most profitable parts and leave mainstay insurers with a larger pool of less profitable business.”

Johnson said more work needed to be done to help consumers understand the transfer of risk that insurance companies were undertaking.

“The minute you start to just endorse a price game, you aren’t allowing the richness of conversation about what we are really in the business of.”

New Zealanders were not good at understanding risks, she said. “We don’t seem to have that identification of assessment of risk – whether it’s out on the water wearing life jackets, in the car, in the house.”

Heath said price comparison sites would not take over the market completely because there was a segment of the public that wanted good advice with their insurance purchases.

“Look at the UK, where motor insurance tends to be more commoditised, with 60% to 70% originated through an aggregator site. But when it comes to house and contents, it’s only 10%.”

The switch to sum insured policies had been a huge change, he said, and it was something that many consumers continued to grapple with. “It’s not a light switch, something you do and in 12 months say we’ve moved on, and changed it.

Consumers are still getting their heads around it, wanting to talk to people and understand who can help.”

Aggregator sites would create issues, he said, and prompt innovation. But he said there was still a clear role for people who provided good quality advice to help consumers navigate an increasingly complex process.

www.covernotemag.co.nz

17

regular basis. rsvp to Jolynn Gock at rsvp@cl-nz.com OutPlease and about by 26 March 2014.

Drinks and nibbles at Britomart Country Club April 2 2014

Pat Wilson, Shane Muller and Dave Harvey

Janine Mostert and Jolynn Gock Cunningham Lindsey

Murray McChesney NZI, Louise Hattingh NZI and Angela Redfearn AON

Tim Hay VERO and Ian Powell Mike Henry Insurance 18

July/August 2014

Faye Cracknell NZI Claims, Elaine Reddington NZI and Deborah Light NZI Claims

Natalya Meredith ACE Insurance and Denise Kinghorn ACE Insurance

Ed Buttler, Brian Ainger and Jim Livett Cunningham Lindsay

Out and about

AIG executives with the players Nina Croft, Kate Fryer, Shanna Parsons, Jennifer Calder, all Marsh

Ron Curin AIG, Stephen Donald and Fraser Walker AIG

Auckland Rugby Event MC Andrew Mehrtens with guest speaker Stephen Donald

Sir William and Lady Judi Gallagher

Peter Hailes (Crombie Lockwood), Fraser Walker AIG, Michael Murray Crombie Lockwood, Steve Rogers Aon

Marc Delzenne Marsh, Harley Napier MA Risk Solutions, Jared King AIG

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19

Out and about

NZI Top Broker Conference Byron Bay, May 28-30.

20

July/August 2014

Out and about

I

n an ever-changing world, our customers and their needs are constantly evolving. What will tomorrow’s customer expect of our industry and how will we go about meeting and exceeding those expectations? Remaining relevant to new and existing customer groups will be key as options for customers broaden and become more readily available.

With technology moving at a rapidly increasing pace, NZI chief executive Karl Armstrong said the conference was designed to examine the impact that was likely to have on emerging markets and channels.

There was a line-up of exceptional speakers covering a range of industry and business-related topics along with some special guests to further inspire and entertain.

www.covernotemag.co.nz

21

Feature: Merger given go ahead

MERGER GIVEN

GO AHEAD A

Commerce Commission decision to unconditionally approve IAG’s purchase of Lumley General Insurance will reduce competition in the insurance market, the Insurance Brokers Association says.

The Commission granted clearance for the $1.845 billion acquisition, as part of a wider acquisition by IAG’s parent of the Australian and New Zealand underwriting businesses of Wesfarmers, Lumley’s parent.

It had twice extended its deadline to make a decision. The deal had already been signed off by the Australian Consumer and Competition Commission and New Zealand’s Overseas Investment Office. It was given the green light by the Reserve Bank in early June.

The merger had been opposed by a range of industry players, including IBANZ and Suncorp. TOWER chairman Michael Stiassny told that company’s shareholders the level of market dominance the merger would provide would create a significant risk for the industry.

But, revealing its decision, the Commerce Commmission said it was satisfied the deal would not substantially lessen competition for personal and commercial insurance products.

It said the newly-merged company would still have to compete on quality and price.

“Lumley has a small presence in personal home, contents and motor vehicle insurance, where three main insurance providers (IAG, Vero, Tower) will continue to operate in

22

July/August 2014

BY THEIR NATURES ALL MERGERS CREATE A LARGER COMPANY WITH A GREATER MARKET SHARE. HOWEVER THAT DOES NOT MEAN THAT A SUBSTANTIAL LESSENING OF COMPETITION IN THE MARKET NATURALLY FOLLOWS. New Zealand in addition to a number of other companies providing general insurance products,” the Commission said.

“While Lumley’s presence is larger in commercial insurance… a number of providers will continue to operate in New Zealand, including Vero, QBE, Zurich, Allianz, AIG, ACE and others.”

Commerce Commission chairman Mark Berry said: “By their nature all mergers create a larger company with a greater market share.

However, that does not mean that a substantial lessening of competition in the market naturally follows.”

What is considered a substantial lessening of competition depends on the facts of each case.

As part of determining whether there would be a substantial lessening of competition, the Commission assesses the ability of other market participants to compete effectively and the ability of prospective participants to enter the market.

The Commission makes its judgement with regard to the Commerce Act’s purpose to promote competition in markets for the longterm benefit of consumers.

New Zealand chief executive for IAG, Jacki Johnson, welcomed the decision but did not

want to comment at length until Reserve Bank sign-off was complete. “Both Lumley and our own intermediated business, NZI, have wellestablished competitors in New Zealand and our view has always been that the increment to IAG’s personal and commercial lines business from the transaction will not substantially lessen competition.”

In its original submissions to the Commerce Commission, IAG had pointed to strong competition in the insurance market. It said brokers were a big part of that.

“For intermediated insurance offerings, broker recommendations are particularly important… Unlike other intermediaries that may have exclusive or preferential arrangements with insurers, brokers are seen to be independent and buyers of commercial insurance place a great deal of stock in the broker’s advice.”

It said in commercial insurance, nearly all customers had a relationship with their broker, not a particular insurer, so could switch easily.

Brokers would move their customers away from overpriced products, it said. “This is the case with even modest increase in price, if those increases do not represent additional value for the customer.”

www.covernotemag.co.nz

23

Forum 2014

CATCH THE NEXT WAVE This year’s IBANZ Forum is focused on providing insurance professionals the knowledge and understanding they will need to succeed in the future.

• • • • • • • •

Do you understand what skills will be essential in the future?

How well do you understand the insurance big picture?

Can you explain risk management, the role of insurers and re-insurers?

Can you talk sensibly with clients about the future economy and the impact on business?

What are the emerging risks and how is insurance responding?

The NZ insurance sector is changing, what do the key players think our future holds?

How is regulation going the evolve and what will you need to comply?

You can’t grab the next wave unless you utilise the fabulous technology tools which are increasingly taking over all aspects of our world. They are in your hand; at your fingertips, but are you and your staff using them well - if at all?

The answers to these questions and many more at the 2014 IBANZ Forum.

24

July/August 2014

Photo: thinkstockphotos.com

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Cover story

26

July/August 2014

COVERED IN A CRISIS R

ecent events in Nigeria have publicised another location where the threat of kidnap is a real and present threat.

For most New Zealanders the perceived risk of abduction or extortion is remote and is centred on a few “trouble spots” around the globe.

While developing countries undoubtedly present a higher risk of abduction and kidnappings for monetary gain, product and commercialised extortion risks to businesses and individuals are more prevalent in developed and economically healthy democratic countries.

By targeting individuals or an organisation’s products, processes, IT systems, or intellectual property a business can be compromised and other critical assets impaired.As technology develops, extortion methods are becoming broader in nature and the methods used are more sophisticated.

With an estimated 40,000 reported kidnappings a year, it is thought that the need for organisations to maintain confidentiality is actually masking a much larger problem, with the actually unreported incidents perhaps being as high as 200,000 incidents per annum.

While obtaining accurate statistics is challenging, AIG’s experience shows a rise in the number of incidents as well as a shift in the style of extortion and the location that these incidents occur. Data from the 130 countries where AIG conducts business showed that, in 2013, New Zealand, Australia, USA, Canada and Britain accounted for nearly 20% of AIG’s total kidnap and extortion claims.

Once the preserve of large multi-national organisations, insurance for kidnap, ransom and extortion is now attracting interest from a much wider range of businesses as the threat of crime becomes broader in scope and wider in geographical reach.

For businesses - and even families and individuals – the threat of extortion or kidnap is a real and growing danger.

AIG’s financial lines manager Ryan Clark says the increase in the frequency of incidents is driving demand as companies seek to protect their business against the risk of kidnap and ransom and employers provide additional protection that can safeguard their employees’ health, safety, security and wellbeing needs. “Today, many New Zealand businesses are underinsured against this type of risk, possibly believing that the risk is more remote than is actually the case.”

In response, AIG has expanded the level of protection available to individuals and businesses. Their kidnap, ransom and extortion product, developed with more than 35 years’ experience, offers

WITH AN ESTIMATED 40,000 REPORTED KIPNAPPINGS A YEAR, IT IS THOUGHT THAT THE NEED FOR ORGANISATIONS TO MAINTAIN CONFIDENTIALITY IS ACTUALLY MASKING A MUCH LARGER PROBLEM.

a solution for most external malicious risks. Now called Crisis Solution, this cover supports companies and individuals through a broad range of covers including: • Express kidnap: Costs associated with the taking and detaining of an insured person for a period of less than 36 hours.We also assist with cover for robbery including ATM hold ups.

• Assault: Costs associated with death or disablement arising from a physical attack on an insured person by a third party that happens at the insured’s premises • Disappearance: Investigation expenses associated with locating a missing person • Hostage Crisis: Costs arising from a hostage situation where a non-monetary demand is made.

• Extortion: Costs arising from extortion threats to an organisation’s products, processes, IT systems, intellectual property or other critical assets.

Cyber extortion and product extortion, previously available via extension, are now covered as standard. “Crisis Solution has developed to address the needs of organisations that bear any risk Continues overleaf…

www.covernotemag.co.nz

27

Cover story

Scenarios …Continued

from any external threats,” Clark says. “It is now more relevant to a much wider range of New Zealand businesses, whether employees are located in New Zealand or overseas.”

Cover is aligned to a series of expert 24/7 services provided by leading global crisis management and response consultancy NYA International. NYA has more than 24 years’ experience of managing incidents of abduction, kidnap for ransom, piracy, extortion, wrongful detention, malicious product tampering and other crises around the world.

“Any incident covered under this policy requires specialist assistance. This is especially true in the case of kidnap – should a New Zealander be abducted, a number of parties – including the government – will be involved, but a private consultant will operate without conflicts of interest, and is therefore guaranteed to act in the best interest of the victim and their families.” said Clark.

NYA also work with companies to mitigate their risk exposure, reducing the likelihood of a crisis incident.

Countering any concern that kidnap, ransom and extortion insurance encourages abduction and extortions by assisting in the payment of ransoms, AIG New Zealand’s CEO Cris Knell points out that this type of crime is becoming more widespread and the rising trend in incidents will likely continue whether insurance is available or not.

“The frequency of incidents is rising even in countries such as Italy and Singapore where ransom payments are illegal. AIG has the ability to ensure that companies can be helped to manage through a kidnap or extortion event. Our aim is to ensure that the business is protected and more importantly the people who work for those businesses are secure. This is paramount.”

Top Countries for Kidnap for Ransom: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

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Nigeria Pakistan Afghanistan Iraq Mexico Colombia Venezuela Honduras Philippines India

July/August 2014

New Zealand, February 2013: A New Zealand food and beverage company received a hand written letter in the post stating that their product had been tampered with. The letter included a demand for $30,000 to be delivered to a specific location the next morning. The police were notified and a formal investigation launched. An NYA consultant provided remote response.

The next morning, no attempt was made to retrieve the demand (the area was under police surveillance). The client also worked with various industry bodies/PR consultants to prepare for a potential contamination. All stocks were locked down and tested for contaminates – all with negative results.

No other threats/demands were received and the threat was assessed to have been a hoax, but the response still incurred significant costs that were covered by AIG. Nigeria, January 2013: Two employees of an international construction company were returning to their work camp with a police escort when attackers fired at both vehicles and disable the victims’ vehicle. The police escort returned fire, killing one kidnapper and wounding two others, but failed to prevent the abduction of the victims. The kidnappers demanded NGN100m (c. $718m) to release the victims. The company contacted AIG’s crisis centre hotline and NYA was deployed immediately to both Nigeria and the insured’s European headquarters. After 20 days of negotiation, the victims were released in good condition after a payment of US$125,000 ($147,000). AIG reimbursed the insured $195,000 to cover the ransom payment, the victim’s medical and rehabilitation costs, payment to local officials to assist in delivery of the ransom and additional costs incurred by the insured to secure the victims’ release.

USA, March 2012: A large multinational corporation received a letter stating that if an extortion payment of $2m is not paid within five days, the extortionist would detonate bombs at their corporate headquarters as well as some of their retail outlets. NYA were deployed, and provided a full risk assessment, coordinating its efforts with local law enforcement as well as the FBI. After several follow up calls and communication with the extortionist, the FBI was able to arrest a disgruntled former employee without any further incident. Their insurance policy reimbursed the insured for over $550,000 for PR, media and NYA costs as well as additional security costs incurred in the response to the threat, including outside security personnel and bomb detection dogs.

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Ask an expert

Personal lines QUESTION… My client suffered damage to their dwelling (ash and soot falling and adhering to their dwelling requiring water blasting) when their neighbour’s property was destroyed by a fire. Water run-off from the fire brigade entered a drain, which emptied into my client’s ornamental pond. The ash in the water killed the water lilies in the pond, which were required to be removed and replaced. A claim has been lodged with the underwriter for the costs involved in water blasting the house and also under the landscaping extension for the costs involved in the removal of the water lilies.

The relevant extension states: “LANDSCAPING This policy is extended to cover the reasonable costs to restore or reconstruct the garden or lawn within the boundary of the home, provided: 1. the garden or lawn was damaged or destroyed by an event that is covered by this home policy, and 2. the home was damaged by the same event, and 3. a claim is payable for damage to the home.

The most we will pay is $2500 for any event...”

The underwriter has declined the claim, saying: “In this instance the loss was not due to our insured’s house being damaged but due to the fire damage to the neighbouring property.”

As an “event” is defined as “any one event or series of events arising from one source or original cause”, I have argued that the claim is valid. The fire caused the ash and soot damage to the dwelling and also the water used in extinguishing the same fire caused the damage to the pond - the original source or cause being the fire. The underwriter has declined to expand on their declinature, replying simply that a formal declinature will be sent.

Can I have your views on whether I am interpreting this clause correctly or not?

REPLY… Crossley Gates, DLA Phillips Fox I think your concerns are valid.

Paraphrased, the extension requires: 1.That the garden is damaged by an event covered under the Home policy.

In order to be damaged by an event, the damage can’t be the event. Here the active and efficient event that caused the damage is the neighbouring fire. This is a peril covered under the Home policy (I imagine).

2. The house was damaged by the same event (neighbouring fire).

3. The claim for damage to the house is covered.

Therefore, it looks like the extension responds. It also satisfies what I understand the underwriting intention to be: if the covered peril damaging the house also damages the garden the extension applies.

REPLY… Paul Lightfoot I agree that based on what has been revealed, cover should be available.

The accidental loss was the damage from the ash, the fact that this was from the neighbour’s house is irrelevant. Also check the definition of “garden”, it does not exclude the water feature then it should be covered.

Suggest to the insurer that they run it past the ISO (by phone) before committing to deadlock

30

July/August 2014

Consequential loss – business interruption QUESTION… My client suffered a total loss to an insured building. The insured’s tenant was set to leave the premises one week after the fire as the lease had expired. There was no replacement tenant at the time of the loss. The insured was receiving a rent of $53,000 per year plus TOC of around $12,000.

This rent was negotiated as an arms-length transaction. In the claim, the insurer has reassessed the rent using a registered valuer at $38,000 plus TOC. After speaking with a local real estate agent and our client they are both adamant they could still have obtained a rent of around $53,000 plus TOC. I disagree with the insurer’s proposed settlement and will be interested in other opinions.

REPLY… Crossley Gates, DLA Phillips Fox If the fire had not occurred, your client was only going to receive one more week’s rent at $53,000.

Your client may have been able to sign up a new tenant at that rental (or better), or may not have been able to. The only way of assessing that is expert advice on market rentals for that type of premises at the time.

The insurer has obtained advice from a registered valuer. Market valuations are not a positive science and can’t be proved right or wrong. If you client believes the valuer’s assessment is incorrect, the only way to challenge that is for your client to pay for its own registered valuer to go through the same exercise and see what his assessment is. If it is different in your client’s favour, I suggest the two valuers meet to discuss it without prejudice in order to see why they differ and whether they can narrow those differences.

Usually, some element of compromise is required all around to settle these types of arguments.

REPLY… Brett Fawcett, Cunningham Lindsey I would add that if the client did not have a tenant signed up and ready to lease the premises it would inevitably have received zero rent for a period.

This must be recognised as an adjustment to the standard rent received.

How long would it have taken to get a new tenant signed up and paying rent? Perhaps the valuers might have a valid opinion.

Do you have a question for our experts?

If so, visit iNavigator, www.inavigator.co.nz, or the IBANZ website, www.ibanz.co.nz - and let us know.

www.covernotemag.co.nz

31

Mercer and Marsh join forces

MERCER AND MARSH JOIN FORCES FOR EMPLOYEES M

ercer and Marsh have combined forces to offer Mercer Marsh Benefits, the largest benefits brokerage and related advisory business in the country.

It follows a global initiative by the two companies to address employee benefit cost growth.

Mercer’s New Zealand managing director Martin Lewington said employee benefits and health programmes were becoming more complex and costly in New Zealand.

“Controlling the costs of employee benefits programmes will be increasingly challenging, with the New Zealand life market going through a significant pricing correction. Successive and steep premium increases have made benefits like disability insurance, salary continuance and health insurance more expensive to offer but employers are acutely aware of the continuing need to providing them.”

He said Mercer Marsh Benefits would provide a seamless process from advice on workforce risks and benefit design to placement, administration and claim, which had not previously been possible for Marsh or Mercer to deliver in isolation.

New Zealand country head for Marsh Grant Milne said the move would allow Mercer and Marsh to offer businesses access to a greater pool of resources and expertise to help manage their people risks.

“We no longer operate in an environment where it is just the employer choosing the employee and this is where benefits and rewards make a huge difference,” says Milne. “The new power of Mercer Marsh Benefits will really enable forward-thinking organisations to stand out from the crowd by offering their people the best benefit and reward options available.”

32

July/August 2014

WE NO LONGER OPERATE IN AN ENVIRONMENT WHERE IT IS JUST THE EMPLOYER CHOOSING THE EMPLOYEE AND THIS IS WHERE THE BENEFITS AND REWARDS MAKE A HUGE DIFFERENCE

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Perth 08 9324 1963

Adelaide 08 8232 7645

Darwin 08 8981 7510

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33

News

Vero CEO talks about value of corporate leadership L

eading one of New Zealand’s largest insurance companies through the impacts of the global financial crisis and the Canterbury earthquakes has been a challenging and rewarding experience for chief executive, Gary Dransfield.

Dransfield candidly discussed his views about leadership challenges, strategic flexibility and the impacts of digital technology at a business lunch in Auckland on April 30.

“I believe the key objective of the leaders of insurance companies today should be to ensure our corporate cultures and strategies consistently deliver stakeholder value,” said Dransfield.

Dransfield said a key challenge for leaders was getting the balance right between providing autonomy while being directive. Inevitably that means a greater sharing of power and responsibility with the people reporting to him.

An important lesson learned by Dransfield and his leadership team was the necessity of a highly adaptive and flexible corporate strategy.

He also acknowledged that digital technology and social media were changing the way companies interacted with their customers, as well as the expectations that customers had of insurance companies.

“I doubt any financial services company can lay claim to capabilities that are unique or fundamentally different from their competitors.

“What makes the difference amongst companies is the way their leaders and their teams decide which capabilities they will develop and how they will be utilised to achieve competitive advantage.

“It is the blend of capabilities that provides competitive differentiation – not the individual components.”

Another lesson learnt at Vero is that

34

July/August 2014

IT IS THE BLEND OF CAPABILITIES THAT PROVIDES COMPETITIVE DIFFERENTIATION - NOT THE INDIVIDUAL COMPONENTS. advances in digital technology and increased customer access do not guarantee effective communication and a satisfactory customer service experience.

Some corporate leaders go to great lengths to succinctly and cleverly communicate their opinions and strategies. Others prefer a more indirect approach.

Insurance companies are genuine in their efforts to promote the value of insurance and assist customers with policies and claims, Dransfield said.

“For many customers those efforts are successful and they were satisfied with their insurance experience.

“I believe strategic clarity is essential for a sustainable insurance business and a leadership priority. I also believe customer clarity and

confidence about insurance product value are essential and a priority.

“Rapid changes in technology are leading to massive increases in the volume of information being produced – but not necessarily the quality.

“The American political forecaster, Nate Silver, summarises this well when he says a lot of information is just noise and that is drowning out important signals or messages.

“We need to understand that people do not want an insurance policy.

“They want protection.

“We have to break the association of insurance with things that go wrong.

“The reality is that the positive aspects of life in New Zealand are only made possible by the presence of a strong and efficient insurance industry,” Dransfield. said.

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35

Feature: Product contamination

36

July/August 2014

Product Contamination

- No one is immune, so are you prepared?

Ron Curin and Suzanne Brown, AIG

L

ast year’s food safety scare in the New Zealand dairy industry illustrated how one single product contamination threat could spiral into a serious international event with the potential to destabilise an industry, its trading partners, the export markets and even the country as a whole.

The impact of a product recall incident can create long-lasting damage to brands and business reputations. It may even lead to a lack of public confidence that could tarnish a whole industry sector.

Today, growing public awareness and changes to food safety regulations - including a review of the Food Act 1981 in New Zealand and the tightening of the Australia New Zealand Food Standards Code – have resulted in more intense scrutiny of food safety and how businesses operating in the food and beverage industry manage their risk. Moreover, the ability of a company to respond quickly to prevent harm to their customers in the case of a contamination event can mean the difference between success and survival.

Regardless of size, industry, location or reputation, a company can be left in ruins if a recall event is not managed properly. It’s important that a business acts to prevent a recall event turning into a full blown crisis.

Every month, there is an average of five product recalls across Australasia, two in New Zealand alone and it’s likely that many companies will face a recall event at some point in time. It’s important that companies understand the risks they face and take steps that can reduce or even eliminate them.

By taking a proactive risk assessment approach to identify areas of threat, a business can be better positioned in future to manage an event and protect their brand, reputation and balance sheet.

In fact, where a business can be seen to have skilfully handled a recall event, they may not only minimise the potential harm to the public,

THE IMPACT OF A PRODUCT RECALL INCIDENT CAN CREATE LONG-LASTING DAMAGE TO BRANDS AND BUSINESS REPUTATION. IT MAY EVEN LEAD TO A LACK OF PUBLIC CONFIDENCE THAT COULD TARNISH A WHOLE INDUSTRY. but also demonstrate care, reliability and professionalism to their valued wholesale and retail partners and customers.

There are several key steps that a company can take to protect their financial and reputational exposure: Work out where the risk is and the potential costs of a loss.

Identifying the source of a risk and estimating the magnitude of a potential incident can help to mitigate or even eliminate some areas of risk. Knowing what a “worst-case scenario” could look like if an incident Continues overleaf…

www.covernotemag.co.nz

37

Feature: Product contamination

COMMON CAUSES OF PRODUCT RECALL: …Continued

occurred will help focus the development of safety programmes and procedures and provide comfort that the company’s insurance cover is appropriate.

AIG has developed NOVI, which can help a business with this process, enabling companies to better understand their potential risks and exposures to a recall event. NOVI is a product recall cost estimator that can calculate a company’s probable maximum loss for a recall event. More information can be found at www. aig.co.nz/NOVI Develop a risk management plan It’s really important to have stringent product safety programmes and solid recall procedures. In our experience we’ve found it best to think of a company’s plan not as a formal recall plan but as a step-by-step risk management programme that blends recall with business continuity and crisis management planning.

There is a major divide between companies that have a formulated and robust plan and those that tend to be more reactive to an event without a well thought through plan. Without a plan and a framework, companies can see a situation slip away from them and quickly escalate into a crisis. By adopting a simple four-point plan, a business can be better positioned to face an incident. These elements are: • Fast, accurate investigation • Robust assessment and decision making • Well thought out strategy and • Effective communications.

Routinely test, update and validate your recall procedure effectiveness.

Regular testing ensures that all employees understand the process, identify any gaps in that process and are conversant with their individual responsibilities are in the event of a recall event.

Just like a sport, more practice ensures that the end result is usually better. Mock recall simulations and training are a great way of testing how well a company’s risk management programme shapes up and can improve the outcome as the employees become more familiar with the part they play.

Keep up-to-date with what’s happening in the industry and be aware of emerging trends.

The food and beverage industry will continue to and evolve and with this change we will see heightened challenges. Over recent years

38

July/August 2014

PRODUCT CONTAMINATION - MICROBIOLOGICAL - PHYSICAL - CHEMICAL MISLABELLING (EG UNDECLARED ALLERGENS) PACKAGING DEFECTS PRODUCT TAMPERING

(ACTUAL OR ALLEGED)

we’ve seen changes in the use of cheaper and (sometimes) lower quality imported ingredients, more complex supply chains, increasing allergy exposures (or at least public perception of exposures), as well as better and more accessible technology to detect contaminations.

Additionally, an increased focus on food safety standards and accompanying legislation will continue to develop and it’s important to stay abreast of these changes.

Make sure your suppliers adhere to your high safety and quality standards.

The most robust of internal plans can quickly collapse if suppliers do not adhere to the same high standards that you hold your own business to. One area that we have seen companies make a difference with is the adoption of an approved supplier programme. Having a better understanding of a company’s suppliers cannot be underestimated.

The right insurance is a critical part of your overall risk management framework.

Recall insurance provides cover for recall costs, loss of gross profits and rehabilitation costs following either accidental or malicious contamination. As well as protecting your company’s financial health after a recall incident, it’s critical that an insurer has the resources and expertise to assist with the right advice, support and guidance to identify the risks to a company well before they become a problem.

An insurance policy is more than just protection provided to businesses when things go wrong, and product recall insurance can

support customers with additional services to provide a complete crisis management solution.

The focus goes beyond financial compensation and rehabilitation following an event, reducing a client’s risk of an event by providing “preincident” risk-management consulting prior to an incident, and expert response consultants should a recall event occur.

Through the knowledge gained from helping other businesses through product recall incidents, a good insurer can work with customers to prevent and manage recall incidents, ensuring that they do not escalate into a crisis. For some customers, a full loss prevention service will form part of their product recall insurance programme, and the resulting recall programme will form a key part of their overall risk management framework, including their vital business continuity plan.

Today, customers and regulators expect both high safety and governance standards, including assurance that a company has the correct procedures in place should they face a product contamination incident. Product recall insurance complements a comprehensive product safety programme, minimising the potential impact of a product recall incident, and ensuring a swift, effective and assured response should one occur.

One of these could $ cost 2 million.

Food and beverage companies can now calculate their exposure with the NOVI Product Recall Cost Estimator. Only from AIG. SM

A single contaminated ingredient can cost millions of dollars in product withdrawal and replacement, business interruption, loss of reputation, and loss of earnings.

But understanding the risk ahead of time can help minimise the impact.

Our NOVI Product Recall Cost Estimator boils down your client’s potential risk exposure to a single number, so that they can make informed decisions to protect their customers, supply chain, and bottom line. Talk to your clients today about requesting a free and confidential estimate with NOVI. www.AIG.co.nz/novi

AIG Insurance New Zealand Limited is a subsidiary of American International Group, Inc. The use of this NOVI Product Recall Cost Estimator is subject to the terms and conditions on the NOVI website and the NOVI Report. For additional information, please visit our website at www.aig.co.nz.

www.covernotemag.co.nz

39

Feature: Becoming a digital front runner

THE

WAY

TO BECOME A DIGITAL FRONT RUNNER

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July/August 2014

By David Lamb, PwC partner and insurance leader.

M

any insurance businesses worldwide are scrambling to keep pace with the increasing impact of digital in their marketplace, yet the ways in which they’re responding are too slow.

Far from just being another channel, the impact of digital is rapidly transforming what customers expect and creating new opportunities for growth.

As people live longer and have more wealth to protect, insurance businesses could – and in many ways should – have a prosperous future.

But is this potential being realised?

What we see in both developed and emerging markets are high levels of underinsurance, and in a number of cases, agents concentrating on relatively well-off and middle-aged customers as they offer the easiest win rates and highest commissions. Others, including younger and less wealthy people, are far less likely to be targeted.

The difficulties of reaching a broader market are compounded by the fact that many young people don’t see life, health insurance or superannuation as relevant to them. The same goes for many lower income consumers, who believe that insurance is either unaffordable or policies are not designed for them.

As customers come to expect cover solutions that better reflect their individual circumstances and aspirations, insurance and brokerage businesses are seeking to move from a productfocused to a customer-centric approach. But this demands a level of customer engagement and understanding that many industry players lack because they don’t have the data or experience.

Looking at financial services as a whole, PwC’s latest Digital IQ survey shows that while nearly 70% of financial services companies are using analytics in strategy, product development

and marketing, more than half believe that moving from data to insight is proving to be a major challenge.

Further challenges centre on reducing often long lead times between initial interaction and signing-off policies as insurers profile their customers, advise on options and confirm underwriting risks. Lapse and churn rates are likely to increase if this approach continues at a time when people have come to expect what they want, when they want it, and where they want to receive it.

So how do New Zealand industry players become faster, cheaper and operate in a more flexible way to grasp this digital potential? The key objective should be a business strategy for the digital age.

A number of global insurers have recently introduced apps as part of their business strategies, enabling them to reach a wider group of younger, digital savvy customers. These apps have allowed a different approach, with near instantaneous service for these customers. One such app recently released in New Zealand allows drivers to benefit from lower premiums based on their individual driving performance –a completely new and innovative approach for the New Zealand industry.

In a market facing rapid and relentless change, it’s time to approach systems and wider business development and operational overhaul in a different way, in which the focus on planning and design gives way to speed, agility and the quality of testing and adaptation.

One option might be to develop start-ups that run alongside existing capabilities. These “greenfield” operations could be up and running quickly and then tested, adapted and expanded to meet rapidly evolving demands. Other

THE KEY OBJECTIVE SHOULD BE A BUSINESS STRATEGY FOR THE DIGITAL AGE. possibilities include acquiring or partnering with companies that already have the necessary capabilities.

These approaches could allow much greater flexibility and room for innovation on the one side, while reducing costs, design and execution risks on the other. The main determinant of successful change is no longer planning and design, but how to interpret changing expectations, move quickly to market, gain feedback and swiftly adapt.

A quick-to-market solution will enable insurance and broker businesses to compete on equal terms with the mobile companies, internet providers and other new entrants looking to make quick inroads into the market and integrate new operations with existing business platforms, with the benefit being that overall capabilities are steadily updated.

The businesses that come out on top will be constantly on the move, with the insight to hone-in on opportunities and the agility to mobilise. Scale and size is still an advantage, but it’s now necessary to be fast as well.

www.covernotemag.co.nz

41

New product

approach to professional liability cover

N

ZI Professional Risks’ new, comprehensive and cost-effective liability product provides a unique opportunity for brokers to tailor cover to meet the liability needs of their clients in one simple, convenient and integrated policy.

NZI Pro Select contains the full suite of professional liability cover, with sections for professional indemnity, directors and officers, broadform, statutory, employers, employment practices, and internet liability, as well as fidelity, workplace legal defence costs, and liability consequential loss.

Brokers can select the sections of the wording their client requires, with separate sums insured for each or an aggregate sum insured for further premium saving. The only parameters are that they must select a minimum of five sections, and this must include either the Professional Indemnity or the Directors and Officers section.

NZI Professional Risks manager Katie Young said NZI Pro Select was unique in its flexibility

42

July/August 2014

to adapt to individual clients’ requirements.

“Unlike other packaged products in the market, clients can select the lines of cover that are relevant to their business. For example, if someone is self employed and has no staff,

BROKERS CAN SELECT THE SECTIONS OF THE WORDING THEIR CLIENT REQUIRES, WITH SEPARATE SUMS INSURED FOR EACH OR AN AGGREGATE SUM INSURED FOR FURTHER PREMIUM SAVING.

they won’t need employers liability employment practices liability or fidelity cover, so they can choose to omit these sections from their policy, and as such, not pay for covers not required,” she said.

Young said that with litigation becoming increasingly common, there was a need for every business to have comprehensive liability cover, no matter the size of their operation.

“We’ve ensured Pro Select is available to any business from sole trader to large corporate – they don’t have to meet any criteria in size or turnover.”

Other features of NZI Pro Select include an enhanced broadform liability section containing new covers and some higher sub-limits to existing automatic extensions, as well as professional indemnity, directors and officers, statutory liability and employers liability all being costs in addition — with liability sum insured mirrored by a separate defence costs sum insured.

Pro Select is exclusively available from NZI Professional Risks.

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43

Advertorial

Creating value THROUGH GOVERNMENT AGENCY COLLABORATION Under the Government Procurement Reform Programme (GPRP), the Ministry of Business Innovation and Employment (MBIE) has been tasked with Procurement Functional Leadership (PFL). The Government Procurement Branch (GPB) of MBIE is a leader and partner in enabling world-class strategic procurement practice within and for the New Zealand Government.

Across the state sector, government procurement spend is $30b. Successful management of this spend is critical to the efficiency and effectiveness of government services and the economic growth of New Zealand, and makes an important contribution to the Government’s Business Growth Agenda.

One of the ways this has been achieved is through all-of-Government contracts. GPB has unlocked significant value through a number of all-of-Government procurement contracts in categories such as office consumables, motor vehicles, recruitment, legal services and electricity.

Now more complex areas of spend, such as building materials, consultancy, banking and risk financing are in the process of being developed.

ALL-OF-GOVERNMENT RISK FINANCING AND INSURANCE We want a solution that will not only offer competitive pricing and deliver value for money to government, but will also: • Increase quality, encourage innovation and build sustainable practices and solutions; • Reduce cost volatility across government; and • Build and enable the progressive development of risk management and risk financing across government.

HOW DO WE PROPOSE REALISING OUR OBJECTIVES? Currently, agencies procure their insurance arrangements independently, with some areas of collaboration.

We believe this isn’t the most effective approach to the financing of government risk.

By collecting data that helps us best understand the risk profiles and appetites across government agencies, our intention is to progressively develop the maturity of agencies’ risk financing arrangements, compared to where they stand today.

This encompasses the creation of marketable clusters and “superclusters” of agencies; designed to deliver better economies of scale and capability.

WORKING WITH THE RISK FINANCING AND INSURANCE INDUSTRY Our proposed approach to market strategy entails: • engaging an independent specialist to peer review our solution at critical milestones; • inviting the intermediary market to participate in an open RFP with the purpose of creating a pre-qualified panel; and • presenting clusters/super-clusters to this panel sequentially over time, seeking risk financing solution(s) on a per cluster/super-cluster basis.

We believe this approach recognises: • varying risk profiles and appetites across government; • the need to manage change incrementally; and • the integral role of industry.

MBIE recognises the complexities associated with such a technical subject matter and the importance of an ongoing open relationship with industry. Of utmost importance is the security of any solution(s) that will deliver peace of mind and resilience over the long term.

We wish to work collaboratively with industry to enable a better understanding of government as a risk profile and as a customer and, in turn, enable better realisation of our objectives.

We’ll continue to engage with stakeholders as we look to refine our insurance solutions. We value the industry’s input and we’re keen to get your feedback throughout this process. If you have any questions or comments, or if you would like to discuss this project further, please contact Greg Fowler at (04) 901 8231 or via our dedicated email address risk.coe@mbie.govt.nz or visit us at www.procurement.govt.nz.

44

July/August 2014

One in five ready to cheat insurers: Report

ONE IN FIVE READY TO CHEAT INSURERS: REPORT M

en are more likely than women to try to cheat their insurers, research shows, and to expect insurers to do the same to them in return.

Southern Cross Travel Insurance research found 21% of men thought that with any type of insurance, it was acceptable “all” or “some of the time” to inflate the amount they claimed, to cover a policy excess.

Another 11% thought it was okay to claim for pre-existing damage to an item that occurred before they travelled.

Only 17% of women felt it was okay to inflate a claim and 9% were willing to claim for preexisting damage.

Southern Cross chief executive Craig Morrison said it was common to see claims that had been inflated.

“It’s something we have trained experts watch out for. People don’t realise that getting caught out could result in a void policy or even a criminal record – with serious implications for getting any future insurance coverage,” he said.

“The worst thing about this type of behaviour is that, you know when you’re being honest but, unless we have the documentation to back up your story, how do we? As a result, we are forced to look at all claims more carefully and in doing so ask a lot of questions.”

Morrison said it was disappointing that so many people lacked faith in insurers.

“Firstly, for an insurer to attempt to avoid paying a valid claim is ethically wrong, but secondly it breaches the legal contract the insurer has made with their customer.

Customers should be assured that if the claim fits within the terms of the policy the insurer must pay out there’s no question about it.”

He said people needed to make sure they had evidence to back up their claims.

“When it comes to providing proof of a mishap, don’t delay. If your credit cards are stolen, cancel them then there is a reported record of the incident.

Do your best to get a paper trail.

If your bus company cancels and you need to pay for another night’s accommodation, or miss a connecting flight, try to get a cancellation email or even a text to show us.”

He said the core purpose of the survey was to find out if people really understood the claims process.

“It was a revelation to us that 55% of those surveyed thought it was okay to claim the replacement cost, rather than the current value of a lost or damaged item. So if you thought you were going to get a brand new laptop, rather than the current value of your five-year-old one, it’s natural you’re going to be disappointed in your policy.”

PEOPLE DON’T REALISE THAT GETTING CAUGHT OUT COULD RESULT IN A VOID POLICY OR EVEN A CRIMINAL RECORD - WITH SERIOUS IMPLICATIONS FOR GETTING ANY FUTURE INSURANCE COVERAGE. He said the flow-on effect to having this level of scrutiny applied to claims was reflected in how customers felt about the claims experience.

The survey found 42% of men thought travel insurance companies “always” or “most of the time” looked for excuses not to pay valid claims, compared to 31% of women.

www.covernotemag.co.nz

45

Strong capacity drive competition

STRONG CAPACITY DRIVES COMPETITION S

oftening property pricing worldwide generated overall insurance market declines in the first quarter of this year, the latest Marsh Global Insurance Market Quarterly Briefing reveals.

The Marsh Risk Management Global Insurance Index dropped to 100.4, its lowest level since the third quarter of 2012, and the fourth quarter in a row that it declined.

Falling property insurance rates were driven by ample capacity and a scarcity of major events in the quarter, the report said.

Latin America reported the biggest drop in rates on renewal, at 7.6%.

Both Britain and the United States reported their largest quarterly declines in more than twoand-a-half years, at 2.5% and 5% respectively.

In the Asia-Pacific region, rate reductions of up to 20% were common for commercial business.

Latin America and Asia-Pacific reported property insurance capacity at very high levels, and an abundance of supply driving carriers to compete aggressively on price.

While the US and Continental Europe saw a slight increase in casualty rates, the casualty market

46

July/August 2014

LATIN AMERICA AND ASIA PACIFIC REPORTED PROPERTY INSURANCE CAPACITY AT VERY HIGH LEVELS AND AN ABUNDANCE OF SUPPLY DRIVING CARRIERS TO COMPETE AGGRESSIVELY ON PRICE. continued to favour insurance buyers, with rates remaining generally stable overall and decreases being recorded across Latin America, Asia-Pacific, and in Britain.

“The first quarter saw marked evidence of additional capacity flowing into the global market, primarily from existing players looking to increase their market share in particular lines of business or growing territories,” said David Batchelor, president of Marsh’s International Division. “And continuing competitiveness in the reinsurance market also added fuel to pricing reductions in primary markets.”

The professional liability market remained

stable overall, with rates on average flat or declining by up to 10% in Australia, France, Germany, India, and Korea, depending on the quality of the risk.

Italy and Spain were the only countries in the Eurozone to experience a rate increase for financial institutions coverage during the first quarter, with rates on average flat to up 20%.

Total insurable values continued to increase modestly, as economies recover from the global financial crisis. Buyers that provide property underwriters with complete and accurate data are best positioned for more favourable terms at renewal.

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47

Earthquake court

ICNZ pans ‘earthquake court’ proposal E

veryone who takes out insurance in New Zealand would end up funding Labour’s proposed Earthquake Court, the Insurance Council of New Zealand says.

The opposition party says, should it be in power after the election, it would set up a special court to speed up insurance claims for Cantabrians.

As of May, 9755 over-cap insurance claims were still pending settlement. In another 1508 claims, people are undecided on their offers, and 1368 claimants are yet to receive an offer. EQC has a further 6273 claims yet to be resolved.

The party’s leader said the backlog was stopping people moving on and was clogging up the court system. The Earthquake Court would deal with claims up to $1 million and would be free to use for those taking a claim against an insurer.

But ICNZ chief executive Tim Grafton said it might have the opposite effect of what was intended and could mean claims took even longer to be resolved.

“The idea of creating a situation where effectively you are forced by the state to pay people to sue you is totally rejected and would set a very bad precedent for the future. The supposed justification for this misguided policy is Labour’s statement that 10,000 insurance claims have not been settled. The reality is that 87% of the 22,500 over-cap claims with insurers have been settled or agreement reached with the customer, there is only a very small fraction of claims that may be in dispute.”

He said: “About 1500 customers have still to make decisions on the offers made by insurers but the majority are waiting for their land settlement offers from EQC before deciding, very few are in actual dispute.

“Where there is a dispute there are free services available to people to resolve maters without having to go to court. First, there is the internal disputes resolution service with the insurer, next there are the external, registered disputes resolution services and in addition to this there is the Residential Advisory Service that insurers help fund.”

He said people with problems were

48

July/August 2014

AS OF MAY, 9755 OVER-CAP INSURANCE CLAIMS WERE STILL PENDING SETTLEMENT. IN ANOTHER 1508 CLAIMS, PEOPLE ARE UNDECIDED ON THEIR OFFERS, AND 1368 CLAIMANTS ARE YET TO RECEIVE AN OFFER. encouraged to use independent services. “In many cases, the disputes are not legal issues but technical matters relating to differences about engineering assessments of damage.”

Grafton said: “Clearly the current resolution procedures available are working because at the end of December 2013 there were 2600 customers with undecided claims but by the end of March 2014 the number had reduced to 1500 with a further 1100 customers agreeing to a resolution with their insurer or claims management company. Where matters have gone to court, there are about 175 active earthquake cases before the High Court, of which about 70% have been brought by one

lawyer.

“Encouraging people to go to court by making it free means people may abandon the already free disputes resolution services regardless of the merits of their case to the uncertain outcome of the courts. This would put a halt to the customer’s recovery progress until the court has determined their cases.”

He said many people just wanted to get on with repairing or rebuilding their homes. “This misguided policy may create some confusion and further delay resolution as some may think they’ll await the outcome of the election to see whether some State-sanctioned court action may result in a future windfall,” he said.

Case study

21st century fallout from 1936 Act Lawmakers almost 80 years ago probably did not foresee the consequences of their handiwork, highlighted by the Bridgecorp case.

By Crossley Gates, DLA Phillips Fox

Y

ou have probably read about Section Nine of the Law Reform Act 1936 in recent months as a result of the New Zealand Supreme Court’s decision in BFSL 2007 Limited v PD Steigrad (commonly referred to as the Bridgecorp case).

This section is obviously not new, being part of a 1936 Act. As the name of the Act implies, the purpose of it is to change the law at the time (usually arising from court cases) because parliament came to the view that it was unsatisfactory in some way. The Act is not aimed at insurance law, although section nine does have an impact on insurance law.

The Bridgecorp case revealed that impact was greater than was originally understood.

The original purpose of section nine was to address an insolvency law issue. It creates a statutory charge over a negligent party’s liability policy in favour of the victim of the negligence.

This is to ensure the proceeds of that policy are received by the victim should the negligent party become bankrupt or go into liquidation.

Otherwise, the proceeds of the policy will be distributed amongst the general creditors of the negligent party rather than being received entirely by the victim.

The predecessor to section nine in an earlier Act was originally limited to motor vehicle insurance, but was widened to apply to all insurance when it was incorporated into the Law Reform Act 1936.

The existence of section nine and the right it creates to go behind the negligent party and, effectively, pursue an action direct against the negligent party’s liability insurer, is well-known.

This right is often used in leaky building litigation where a defendant is bankrupt or in liquidation, but had liability insurance in place when the alleged negligent act took place. In this situation, the party seeking recompense from the defendant can bring an action against the defendant’s liability insurer direct.

However, the extent of the charge and the impact it can have on a liability policy that provides other benefits, for example defence costs cover, was not appreciated until the Bridgecorp litigation commenced. The issue was highlighted by the directors of Bridgecorp facing civil proceedings for an amount considerably in excess of the sum insured under their directors’ and officers’ liability policy. As the company was in liquidation, section nine was available to the plaintiffs to pursue the liability insurer direct. If the proceeding was successful, or even only partly successful, the sum insured was likely to be exhausted by the amount of the liability.

The liability insurer became concerned (correctly) that in this situation the defence costs it had already met and would be continuing to meet, would become payable on top of the sum insured contrary to the expected limit of exposure under the policy. This led to the directors seeking a declaration from the court about the correct interpretation of section nine.

Late last year, the New Zealand Supreme

Court had the final word. It determined that the charge does apply at the date of the negligent act, albeit the quantum of it is not determined until the court issues its judgment or there is a settlement. This means that when the amount of the damages being sought exceeds the sum insured under the liability policy, the liability insurer runs the risk that when liability is determined, it will exceed the sum insured and the whole sum insured is swallowed up by the statutory charge. This, of course, leaves no cover left under the policy to meet defence costs.

Whether this was the intention of parliament all along in 1936 is unclear. As most liability policies have, historically, a combined sum insured for both liability and defence costs, this creates a problem for both the insured and the insurer. Where the insured faces a claim for an amount that exceeds the sum insured under the insured’s liability policy, the insurer may refuse to meet defence costs. Whether this position is contractually open to the insurer is presently unclear. The Supreme Court referred to this issue in its judgment but, frustratingly, refused to make a ruling on it until the issue was squarely before it in a Court case. The insurer faces the possibility of paying more under the policy than the sum insured.

As most insurance brokers will know, insurers have addressed this issue by amending the most vulnerable liability policies by creating separate cover for liability and defence costs and separate sums insured for each.

As the statutory charge can only attach to the moneys available to meet the liability, this leaves the sum insured for defence costs uncharged by section nine. Time will tell whether this is a workable long-term solution to what was possibly an unintended consequence of a reform enacted 78 years ago.

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49

A dispute resolution perspective

FEE DISCLOSURE FOR INSURANCE BROKERS Is the current approach a professional one?

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July/August 2014

A dispute resolution perspective

It’s time to get on the front foot about what you’re charging your clients, writes Trevor Slater of FSCL.

T

he question of fee disclosure by insurance brokers has had much debate and discussion.

When I say “fee’’ I mean the charges added to the premium set by the insurer before it is presented by the broker to their client. In simple terms, the extra the client is paying for the broker’s service.

THE CURRENT SITUATION The industry is divided on this question and the methods of disclosure vary from broker to broker.

Some brokers do not make mention of any additional costs and the invoice is presented to their client as if the cost or premium is the amount charged by the insurer. I understand this is uncommon but is still happening in some brokerages.

At the other end of the scale, some brokers set out on the invoice the premium charged by the insurer and then itemise all additional costs. I understand this is also somewhat rare.

The most common approach I have seen is an invoice with a single cost on it noted as being “the cost of your cover” with some additional information on GST and the fire levy. At the bottom of these types of invoices (in various font sizes) you find words like “the above costs of cover may include a broker’s fee – details available upon request”.

LEGAL AND COMPLIANCE CONSIDERATIONS I’m not going to examine and debate the legal issues in relation to fee disclosure by brokers. This would be far better addressed by IBANZ or legal counsel who specialise in this field. However, it would be remiss of me not to make some comments.

• Disclosure of fees is covered under the Fair Trading Act and more recently the Financial Advisers Act. Financial dispute resolution schemes (FSCL & ISO) can also consider complaints about fee disclosure.

• The Commerce Commission has prosecuted financial advisers for non-disclosure of fees, albeit no insurance brokers as far as I am aware.

• The FMA has stated it has had a few concerns about this type of practice and ‘‘it’s on our radar’’.

• Dispute resolution schemes will take into consideration not only the law but also what is fair and reasonable and good industry practice when considering a complaint.

THE QUESTION OF PROFESSIONALISM There is unfortunately no doubt that the insurance industry is not held in the highest esteem. Just ask a person in the street what they think about insurance or look at any article on insurance in the national newspapers and you will find most responses will be negative.

INTERESTINGLY, THE ONE BROKER I HAVE MET WHO DOES DO A FULLY ITEMISED INVOICE TOLD ME HIS CLIENTS THINK IT’S FANTASTIC AND HE HAS NOT LOST A CLIENT BECAUSE OF DOING SO. While I do not agree with this view and often find it is based on a lack of knowledge and understanding I believe this is the main challenge the industry faces – changing the way people feel about insurance and the people in it. The way to do this is to operate professionally.

An accountant or solicitor will provide you an invoice that contains fully itemised charges. Both of these industries are considered by most as professional and are trusted more than most insurance companies, advisers or brokers. Yet for some reasons that escape me, insurance brokers who hold themselves out to be professional rarely do the same.

Interestingly, the one broker I have met who does do a fully itemised invoice told me his clients think it’s fantastic and he has not lost a client because of doing so - This is not to say there aren’t others.

Brokers also need to consider how a consumer would react if one of the press decided to do an investigative report on insurance broker fees.

What would be the reaction when the press discovers some brokers don’t fully disclose and others use “fine print” to cover themselves? It would undoubtedly cause the reaction “that’s typical of the insurance industry”.

The second challenge is the increase in compulsory regulation. Put simply, if the insurance broking industry does not take a self-regulatory approach to this problem and form a common approach then I believe the regulator may well impose additional compliance requirements.

The issue of fee disclosure by insurance brokers is one that needs a common, professional approach by all brokers.

I have yet to hear an argument that convinces me that anything but full fee disclosure should be the norm. The response of “it’s not compulsory” or “my competition is not doing it” is not a professional approach and will only result in further criticism of the industry and potentially increased regulation.

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51

Professional

Professional Development: Professional IQ College

College

Principals’ Update

W

hat a busy time it has been with the rebrand of the College and the ongoing review of our programmes and the NZ qualifications.

As a College we are constantly trying to improve our courses and workshops. We are currently reviewing all our online short courses to bring them up to date with current policy wordings, exclusions etc. At the same time we are developing a couple of new ones which will be available in July. One is the Advice Process for Brokers. In the financial sector this is called the six step process and while Brokers don’t think they do it in actual fact a good broker when gathering information about their client needs, actually does this process without thinking about it- you just don’t call it the sixstep process. So look out for that in the next few weeks.

The broker support, broker certificates and the diploma in insurance have attracted good enrolments. The online short courses you enrol in and the workshops can go towards these PIQ qualifications but it is more cost-effective to enrol in the whole programme starting with the online short courses. Please call me to discuss the suitability for you or your staff. Phone Lesley 09 306 1735.

If you have a new to broking or a broker support person starting I recommend the Introduction to Insurance online short course.

This course gives a broad introduction to the world of insurance broking see article on page 55 for details. Check out the details on our website www.professionaliq.co.nz Introduction 52

July/August 2014

PROFESSIONAL IQ COLLEGE IS ABOUT TO LAUNCH INTO THE REALMS OF SOCIAL MEDIA SO WATCH OUT FOR OUR FACEBOOK & LINKEDIN PAGES. to Insurance - Prof Development - Courses and Training - IBANZ / PIQ Congratulations to all the Fast Trackers who have been working hard under the stewardship of Sophie, our tutor. Many of you have completed Set A and have attended the Set B and C workshops so should be well on your way to completion of the full level 5 qualifications by the end of the year.

Update on the new qualifications: NZ Certificate in Financial Services Level 4: The qualifications is almost complete and probably by publication of Covernote it will have completed the NZQA process. We anticipate being able to enrol students in this by end of July. The level 4 is suitable for broker support personnel, new to the industry brokers, claims handlers, administrators etc.

NZ Certificate in Financial Services Level 5: is still at NZQA however we have begun to develop the modules and assessments. I don’t anticipate this to be complete until at least

September. In the meantime the current Level 5 is still available and will cross-credit into the new qualification if you don’t finish before the transition period is over.

Professional IQ College is about to launch into the realms of social media so watch out for our new Facebook page and LinkedIn page. We will post interesting discussions and competitions for you to enter with some great prizes.

In-house CPD programmes I have had some enquiries for in-house programmes for professional development. We can put together a programme for your staff so they can meet their professional development needs. If there is only one or two of you, team up with other brokers in your region and get a group together so we can come to you. If there are ten of you in one place we will bring the workshop to you and we can look at costeffective pricing so give me a call to discuss and get your people their CPD points.

Groomed to Fail Lesley Southwick, Principal

I was reading the other day about success.

The book started out talking about how we are programmed to fail: 98% of us will end up dead or dead broke by the time we are 65.

Only 2% of the population are successful.

Some of us have a hard life, we may have had a difficult childhood or didn’t do well at school - there are many excuses we make for not succeeding. In the end it really doesn’t matter why, it only matters how we finish.

There are lots of excuses to not do something, to not train: • Too busy • It costs too much • I have family commitments • I didn’t succeed at school The list is endless but in the end it’s about choice. If you really want to succeed you have to make a step change. Dani Johnston in her book First Steps to Success talks about her mentor and the four rules he had that she had to abide by if he was to work with her.

Rule number one: No excuses: People spend more time creating excuses than creating results.

Rule number two: No opinions or suggestions: Insecure people offer opinions and suggestions as decoys, trying to make people think they know more than they do. How do you know if your opinions work? By the results.

Rule number three: Follow directions: Become teachable. If you pay attention to the ideas of successful people you will succeed. Ninetyeight per cent of the population tries to compete instead of sitting down, shutting up and listening to successful people.

Rule number four: Get training.You need to work harder on yourself than you do on your business. Be consistent about the training, invest in yourself consistently. Don’t wait for the training to come to you or for when it is convenient for you - just do it, get training.

What I’ve learned is success is never convenient but neither is failure.

Pick which one you want and learn to succeed with inconvenience. So take a risk, take an opportunity when it comes your way, invest in yourself get trained.

Your Opportunity With this in mind, here’s an opportunity to invest in yourself. As part of the new College programme we are offering an opportunity to invest in yourself and your clients. The Professional IQ Business Growth workshop in July will enable you to make more money and have time to yourself.

It will help you identify the gaps in your business and give clarity on the actions you need to take to grow your business. You will then have the opportunity to offer this to your clients.

This is one of the new innovative ways we can help you to succeed so invest in yourself and enroll now.

A Strategic Framework For Business Growth In this overview workshop

Professional you will learn the key elements to growing a sustainable business.

Gain an understanding of the factors that can enable you to make more money and have time for yourself.

College You will hear: • Five elements to success • Some key insights to marketing that you may

not know • The key elements impacting business today • The fundamentals of strategy • How culture can impact profitability by as

much as 189% • and much more.

This two-hour workshop on July 3, from 6pm, is designed to help you identify the gaps in your business and give clarity around the actions you need to take to grow your business.

You will have the opportunity to meet other likeminded business-owners and learn from them. Gain ideas that can immediately be implemented and have a positive impact on your business.

Professional

College

The success of your business is dependent on the decisions and actions you take today. Sign up for this information packed workshop today. www.professionaliq.co.nz

www.covernotemag.co.nz

53

Professional

Professional Development: Professional IQ College

College

Spotlight on CPD

T

he Team at Professional IQ College, and some of their associates, have been having discussions about the Introduction to Insurance short course, yes this humble 3 CPD Point Assessed Course has caused discourse in these very offices!!

So what’s the issue? It’s an introduction isn’t it? For Newby’s maybe, beginners? Oh, you might say, it’s definitely not for the experienced brokers or support staff like me, or that’s what you might say having read the title.

You see, I think this is a gem of a course and I think it’s misrepresented. Yes, I would like to see it included in every induction course in every insurance

related company in NZ and No it’s not just for the inexperienced, the school leaver, the poor Newbys, not at all, it has a wider audience that is you, the experienced and seasoned.

The point of order is the title. I think it’s obscuring the fair feast that lies within its covers and something has to be done. So we’re going to hold a competition.

Anyone who buys this course during July and August are invited to re-name it, give it another title. If we choose your title you will receive $150 (incl GST) towards training with PIQ College. You must agree for your photo being published in the next edition of Cover Note and to go on our new Facebook and Page too. The Terms and Conditions of this promotion can be found on our website.

Got your CPD plans sorted? This 3 point short course is an absolute gem.

The problem with Introduction to Insurance

is its title; it’s just so boring isn’t it? It tells us absolutely nothing about what’s inside.

But this booklet is an absolute must- for every person working in the insurance industry • it refreshes and consolidates, and yes, it does introduce, to the extent that everyone should read it.

So let’s get into it, what is so good about this booklet once we get past that title?

In only 35 pages you are expertly taken on the insurance journey: through - the development of insurance and the statute insurers, EQC and ACC, onto - market segments and how they make money, along to - the claims process including loss adjustment, onto - products and principles, and around - to reinsurance and regulation.

Finally, you’re left with a useful glossary with terms like aggregate deductible, umbrella and vicarious liability.

CPD: You’re not the first - it’s centuries old!

C

PD has a pedigree that can be traced back over 300 years to Sheffield UK, world famous for its steel and cutlery.

A green city, Sheffield sits on five rivers in an amphitheatre of seven hills in the north of England where there’s local limestone, iron ore and coal, all essential for iron and steel making. For centuries, Sheffield attracted artisans and tradesmen from across Europe who forged iron and steel into objects of destruction and desire.

So what’s the connection between Sheffield and CPD? Well, let’s peel back 300 years and look at life then.

And be glad you didn’t live in the 1700s because life really was terrible for most people especially if you had no title.

Common land had been seized/ stolen from ordinary folk so they had nowhere to grow food or keep livestock; on top of that, the climate had become very cold so if you had land you’d be lucky to grow anything at all. We all know

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July/August 2014

what’s going to happen next, and yes, men, women and children starved in huge numbers across the whole of Europe. Followed by revolution.

So this is what the artisans and tradesmen were talking about when they met in Sheffield, the haves and the have nots, the daily grind and what to do about it.

They wanted change - and they had passion - so in 1791 they set up what they called a club and gave it a name.

The Sheffield Society for Constitutional Information was the first radical reform club in England.

They demanded economic reform so a man could feed his family after working 14 hours a day, political reform so every adult had the right to vote and they demanded religious reform to worship as they thought was right and proper. In their spare time they taught each other the skills you needed to find work in Sheffield. This was the embryo of CPD.

BE GLAD YOU DIDN’T LIVE IN THE 1700S BECAUSE LIFE WAS TERRIBLE FOR MOST PEOPLE - ESPECIALLY IF YOU HAD NO TITLE.

WORKSHOP SCHEDULE JULY Date

Title

Presenter

Time

Course Description

8/07/2014

Arson, Fire & Liability

Andrew Hooker

9.30 - 11

One of the many risks considered by the insured’s when buying insurance is fire. In this workshop we take a look at some insurance principles around fire as a cause of loss, and some of the common causes, and liability issues and pitfalls that can occur as a result of fire.

15/07/2014

Build Me an Insurance Program

Kevin Allen

9.30 -12.30

What should an insurance programme look like?

What types of cover, whose policies best suit the client situation, how do you know what is best for the client? This interactive workshop starts with a clean sheet of paper and builds an insurance programme from scratch for a given situation.

Working in groups you will decide on what cover is appropriate for the situation. So, come prepared to discuss and learn whether you are a junior or intermediate broker this workshop will help accelerate your career.

22/07/2014

Finance for Non-Financial Bruce Managers: Understanding Edmonds Financial Statements

9.00 - 3.00

Every company has to prepare financial statements. For most SMEs this is a necessary evil to keep the tax man happy. However if you understand how financial statements work you can use the information provided to assist in running your business, and understand customers better, enabling better provision of services, including broking and advice.

29/07/14

Placing Insurance Effectively

Graham Sanders

9.30 - 12.30

Learn about how to improve your skills as a broker - buy and place insurance effectively - ensure your client gets the best possible service from you - apply professional standards to your every day work.

19/08/2014

The Law and You: A Broker’s Guide to Your Legal Obligations

Crossley Gates

9.30-10.30

Learn about the law relating to an independent insurance broker’s duties to his or her client and hear examples of recent cases where the courts have found brokers negligent.

26/08/2014

Contract Works for Medium to Large Projects

Graham Sanders

9.30 - 11.30

Contracts works is not an off-the-shelf product.

This workshop will increase your confidence in building cover for medium to large complex projects. Presented by an experienced contract works specialist this is a must for anyone who has clients who manage medium to large construction projects.

AUGUST

www.covernotemag.co.nz

55

Contacts: IBANZ Corporate Company List

COLLEGE BOARD 2013/2014

IBANZ BOARD 2013/ 2014

Richard Russell (Chair) Branch Director Crombie Lockwood NZ Ltd PO Box 34 Invercargill 9840 Tel: 03 218 8994 Fax: 03 218 8996 Mob: 027 258 8433 richard.russell@crombie. co.nz

Tony Butson Rothbury Group Limited PO Box 1120 Queenstown 9348 Mob: 021 332 605 tony@butson.co.nz

Triton Plaza North Shore City 0757 Tel: 09 477 0277 Fax: 09 478 0277 Mob: 021 707 025 nick.cressey@ibi.co.nz

Tony Bridgman (Vice President) Executive Director Marsh Ltd PO Box 2221 Auckland 1140 Tel: 09 928 3015 Fax: 09 309 9891 Mob: 021 873 399 tony.j.bridgman@marsh.com

Allan Daly Managing Director Avon Insurance Brokers PO Box 3923 Christchurch Mail Centre Christchurch 8140 Tel: 03 3710301 Fax: 03 3666589 Mob: 0275 358128 allan@avoninsurance.co.nz

David Crawford Chief Executive Officer Insurance Advisernet NZ Ltd PO Box 74557 Market Road Auckland 1051 Tel: 09 926 2062 Fax: 09 524 2226 Mob: 021 905 537 davidc@insuranceadvisernet. co.nz

Duane Duggan (President) Head of Insurance Legal Crombie Lockwood (NZ) Ltd PO Box 91747 Victoria Street West Auckland Tel: 09 3574805 Fax: 09 623 9901 Mob: 021 833 286 duane.duggan@crombielock wood.co.nz

Ruth Steele Brokerage Manager Seneca Group Ltd PO Box 305415 Triton Plaza Auckland 0757 Tel: 09 476 1670 Fax: 09 4761679 Mob: 021 590 698 ruth@senecagroup.co.nz Gary Young CEO IBANZ PO Box 7053 Wellesley Street Auckland 1141 DDI: 09 306 1734 Fax: 09 307 0960 Mob: 027 543 0650 gary@ibanz.co.nz

Nick Cressey (Immediate Past President) Director Insurance Brokers (International) Ltd PO Box 305019

Peter Lowe General Manager NZ Willis New Zealand Ltd PO Box 369 Auckland 1140

COVERNOTE? Each issue of CoverNote is packed with vital information, news, commentry and advise for the insurance industry from experts within the industry. To keep abreast with all the issues affecting New Zealand’s insurance broking industry just email robyn@ibanz.co.nz

CoverNote is published quarterly

by IBANZ, the Insurance Brokers Association of New Zealand.

All correspondence should be addressed to: CoverNote, PO Box 33-1630 Takapuna, North Shore City, Auckland.

Next issue is due out: SEPTEMBER 2014 56

July/August 2014

Stuart Speirs Director Abbott Group PO Box 3086 Christchurch 8011 Tel: 03 366 7536 Fax: 03 379 5395 Mob: 021 358341 Jason Smith Managing Director Property & Commercial Insurance Brokers PO Box 4 Feilding 4740 Tel: 06 323 8820 Fax: 06 323 8872 Mob: 027 293 8724 jase@pcinsurance.co.nz Ruth Steele (Vice President) Brokerage Manager Seneca Group Ltd PO Box 305415 Triton Plaza Auckland 0757 Tel: 09 476 1670 Fax: 09 4761679 Mob: 021 590 698 ruth@senecagroup.co.nz

IBANZ STAFF 2013/2014

WANT YOUR VERY OWN COPY OF

TO ADVERTISE...

Contact Robert Johnson on: e-Mail: robert@benefitz.co.nz Phone: 09-477 4702 Mobile: 0274-970-712

Tel: 09 356 9368 Fax: 03 358 3343 Mob: 021 909 148 lowepj@willis.com

DECISION FINA

L: IAG GETS GRE

EN LIGHT FOR

July/August 2014 The professionals’

ACQUISITION

...

magazine from

Gary Young CEO DDI: 09 306 1734 Fax: 09 307 0960 Mob: 027 543 0650 gary@ibanz.co.nz

Lesley Southwick Principal IBANZ College DDI: 09 306 1735 Fax: 09 307 0960 Mob: 027 459 9804 lesley@professionaliq.co.nz

Robyn Gosden Finance & Office Manager DDI: 09 306 1733 Mob: 027 275 2477 robyn@ibanz.co.nz

Sophie Kowalewski Academic Co-Ordinator DDI: 09 306 1737 Fax: 09 307 0960 sophie@professionaliq.co.nz

Karen Scard Membership & Secretarial Support DDI: 09 306 1738 Fax: 09 307 0960 karen@ibanz.co.nz

IBANZ 2013/2014

IBANZ

Steve Wardley Technical Support DDI: 09 306 1736 Fax: 09 307 0960 steve@ibanz.co.nz

COVERED IN A CRISIS PROTECTION

AGAINST THE THREAT OF KID NAP

Insurance bos map out mega ses tren

ds www.ibanz.co.nz

Physical address: Level Five, 280 Queen Street, Auckland 1010 Mailing address: PO Box 7053, Wellesley Street, Auckland 1141 Toll free: 0800 306 173 Website: www.ibanz.co.nz

Contacts: IBANZ Corporate Company List

IBANZ CORPORATE COMPANY LIST Abbott Group Adams Trimmer Insurance 1992 Ltd Adams Trimmer Nauman Insurance Ltd Addex Ltd Advice First Limited Affiliated Insurance Brokers Ltd AJIB Insurance Brokers Ltd Albany Insurance Services Ltd Allfinanz Risk Andrew Scragg & Associates AMP Services (NZ) Ltd Aon New Zealand Apex General Ltd API Insurance Ascot Insurance Brokers Ltd Atlas Insurance Brokers Ltd. Austinsure Ltd Avon Insurance Brokers Baileys Insurance Brokers Ltd Barley Insurances Limited Bay Insurance Brokers Ltd Benson Insurance Brokers Ltd Benton & Power Ltd Bill Boyd & Associates Ltd Boston Marks Group Ltd Bridges Insurance Services Limited Broker Direct Services Ltd BrokerWeb Risk Services (Auckland) Ltd BrokerWeb Risk Services (Bay of Plenty) Ltd BrokerWeb Risk Services (Hawkes Bay) Ltd BrokerWeb Risk Services (Manawatu) Ltd BrokerWeb Risk Services (Northland) Ltd BrokerWeb Risk Services (Southern) Ltd Card Marketing International Ltd Cartwright General Insurance Limited CBA Insurances Limited Certus Insurance Brokers NZ Ltd Commercial & Rural Insurance Brokers Ltd Crombie Lockwood (NZ) Ltd Dawson Ins. Brokers (Whakatane) Ltd Dawson Insurance Brokers (Rotorua) Ltd Edward Ruys & Co Ltd Elders Insurance Limited Emerre & Hathaway Insurances Limited Executive Insurance Services Ltd Future Agency Co. NZ Ltd FundAGroup Insurance Brokers Ltd Gary Jamieson Insurance Brokers Ltd Glenn Stone Insurance Limited Graeme England Insurance Services Ltd Grayson & Associates Ltd Gregan & Company Ltd Harden & Hart Insurances Ltd Hawke's Bay Insurances Ltd Hazlett Rural Insurance Limited Hugh Vercoe and Associates Ltd Hurford Parker Insurance Brokers Ltd Hutchison Rodway Ltd I C Frith (NZ) Ltd i2i Insurance Brokers Ltd Ian K Everett Ltd ICIB Limited ILG Insurance Brokers Inbroke Ltd Ingerson Insurances Ltd Insite Insurance Insurance Advisernet NZ Ltd Insurance Brokers Alliance Ltd Insurance Design Insurance People (Fire & General) Limited

Christchurch Whangarei Dargaville Auckland Wellington Wellington Lower Hutt Auckland Lower Hutt Auckland Auckland Auckland Auckland Manukau Whangarei Christchurch Auckland Christchurch Auckland Auckland Tauranga Christchurch Auckland Palmerston North Auckland Hamilton Christchurch Auckland Tauranga Napier Palmerston North Kerikeri Christchurch Wellington Ashburton Tauranga Auckland Alexandra Auckland Whakatane Rotorua Hamilton Auckland Gisborne Auckland Auckland Auckland Thames Auckland Auckland Auckland Papakura Auckland Napier Christchurch Morrinsville Hastings Auckland Auckland Wellington Auckland Auckland Auckland Auckland Wellington Pukekohe Auckland Invercargill Warkworth Auckland

Iremonger Insurance Brokers Limited JLT Holdings (NZ) Limited JRI Ltd Ken McNee Family Trust Lifetime Insurance Brokers Ltd Lloyd East & Associates Insurance Brokers Lowe Schollum & Jones Ltd Luxor Insurance Brokers Ltd MA Risk Solutions NZ Limited Mainprice King Chartered Brokers Ltd Malcolm Flowers Insurances Ltd Marsh Ltd Matt Jensen Insurance Brokers Ltd McDonald Everest Insurance Brokers Ltd Mike Henry Insurance Brokers Limited Montage General Insurance Ltd Multisure Ltd Neal P Sadgrove & Associates Ltd Nelson Bays Insurance Brokers Ltd (NBIB) Neville Newcomb Insurance Brokers Ltd Nexus Insurance Brokers Ltd North Harbour Ins Services (1985) Ltd Northco Insurance Brokers Ltd Northcrest Insurance Brokers Ltd Oamaru Insurance Brokers O'Connor Warren Insurance Brokers OFS Insurance Brokers Ltd Omni Fire & General Ltd Paramount Insurance Agencies Ltd Paterson & Co NZ Ltd Penberthy Insurance Ltd Peter C Cranshaw Insurance Broker Ltd PIC Insurance Brokers Ltd Presland Tocker Insurance Services Primesure Brokers Ltd Property and Commercial Insurance Brokers Protekt Insurance Brokers 2008 Ltd Provincial Insurance Brokers Limited PSC Connect NZ Limited Pulsar Insurance Agency R.U Covered Ltd Reid Manson Ltd River City Insurance Brokers 2000 Ltd RMA General Ltd Rosser Underwriting Ltd Rothbury Group Ltd Runacres & Asssociates Limited Seneca Insurance Brokers Ltd Sit & Blake Limited Smith Pitman Insurances Ltd South Pacific Insurance Brokers Ltd Sweeney Townsend & Associates Ltd Thames Valley Insurance Ltd The Insurance Brokers Ltd The Stoneman Group Thorner General Insurances Ltd Towes Insurance Brokers Ltd Trevor Strong Ins Ltd Vision Insurance (S.I.) Ltd Waikato Insurance Brokers Limited Wallace McLean Ltd Wanganui Insurance Brokers Ltd Wholesale Insurance Brokers Ltd Wilkinson Insurance Brokers Ltd Willis New Zealand Ltd Yesberg Insurance Services Ltd

Auckland Auckland New Plymouth Christchurch Christchurch Auckland Hamilton Auckland Auckland Auckland Taupo Auckland Taupo New Plymouth Auckland Auckland Auckland Auckland Nelson Auckland Auckland Orewa Masterton Auckland Oamaru Tauranga Dunedin Auckland Auckland Auckland Auckland Levin Auckland Cambridge Auckland Feilding Auckland Masterton Auckland Auckland Auckland Timaru Wanganui Warkworth Waipukurau Auckland Christchurch Auckland Auckland Wellington Auckland Rotorua Thames Auckland Wanganui Upper Hutt Te Aroha Auckland Ashburton Hamilton Auckland Wanganui Papakura Wellington Auckland Christchurch

www.covernotemag.co.nz

57

OUR POLICYHOLDERS ARE ANYTHING BUT RUN-OF-THE-MILL.

Our customers own unique, classic or prestige cars, motorcycles or travel in homes on wheels. They don’t fit neatly in a box which is why we don’t offer run-of-the-mill policies.

Your customers will feel appreciated with customised policies that tick all their boxes. And you’ll appreciate our high performance team who are super-fast and easy to deal with. That’s because we have no apron strings.

We’re fully autonomous in our no-fuss dealings with you. We write our own specialised, custom policies and terms, calculate rates, communicate one-on-one with you and pay claims quick-smart; all with a smile.

Call us for a friendly chat about quality, customised insurance you can trust.

Call us on 09 250 6009 or email admin@sual.co.nz

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