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he real challenge for business today is keeping up with the changing environment in which they operate. Despite being a sector generally acknowledged as being slow to change, insurance must now face up to disruption and a changing regulatory environment. There are valid reasons why insurance should take a careful, considered approach to change. Being based on legal contracts, priced on years of past experience, sudden change does not sit well for such a business model. Society needs insurance to operate and it needs certainty that the protection will be there through the good times and the bad times. Radical change can bring unintended consequences that expose clients to unacceptable risk. Customer outcomes are a key driver for competition these days and governments are keen to regulate where the customer (voter) is concerned. In a country such as New Zealand, natural disasters are an ever present risk; the performance of insurance is therefore regularly in the spotlight. Combine this with the fact the insurance is seen as part of financial services and there is inevitably going to be a focus on the outcomes for clients. The Code Working Group was recently created as part of the review of financial adviser legislation and they have already indicated customer outcomes will be a primary focus when developing the new advisers' code of conduct. IBANZ members have of course always recognised the need for a code, and IBANZ has regularly updated their code to ensure it meets current best practice. The challenge now is moving to the next level and in particular what benchmark will be seen as appropriate for those advising on risk management and insurance programmes. How will the necessary competence be measured? What minimum standard is required to ensure positive customer outcomes? How will the existing experience of brokers be acknowledged without requiring a compulsory qualification? These are challenges IBANZ and the Code Working Group will need to tackle. To achieve success, a team effort will be required. IBANZ is up for the challenge and initial indications are that the Code Working Group is open to a joint approach. We look forward to making it happen.
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Features 7. Risk as a gateway to business success 11. FENZ act changes to rural fire liability risks and some insurance implications 18. Lessons from legends
19. Mick Miller returns to NZI
Back on New Zealand shores, Mick Miller has been reflecting – both professionally and personally – on his recent years in India and the insurance market to which he’s returned.
10. Spotlight on VERONICA CRESS Barrister Veronica Cress first became interested in
insurance law when she realised it was a key component of many of the big cases that most captured her attention.
20. Defending yourself in the cyber age 24. Fleet operators can manage their premiums by better managing their risk 28. Disclosure – Let’s get real 32. The generational divide How will it impact the insurance industry?
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COVERNOTE - BEYOND 2020! The team at Benefitz has been working with IBANZ and preceding organisations for close to 30 years to produce the quarterly issues of Covernote. Our longevity publishing the magazine is something we are very proud of. During 2017 we have been setting the foundations for the magazine to stay relevant to the industry for a long time into the future.
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The December 2017 issue will signal the launch of CovernoteLive the innovative new online version of the magazine. It is no secret that the way the world is communicating is changing. Marketers now see the online world as an essential part of the mix, so that is something we are responding to with the launch of CovernoteLive. This new marketing tool will secure Covernote's future as a combination of the valued printed magazine and the innovative new online magazine.
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In recent years insurance has lagged behind other sectors in terms of adoption of IT. This technological lagging means that insurance as an industry is currently ripe for technological disruption. Technology | Business
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[June 2017 Issue]
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[June 2017 Issue]
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To find out more about CovernoteLive contact Robert Johnson: - firstname.lastname@example.org or Phone 0274-970-712. Industry told it must manage climate risks, not hope to avoid them.
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Floods, high winds, storms, cyclones â&#x20AC;&#x201C; when it comes to weather weâ&#x20AC;&#x2122;re all in for a rocky ride. Scientists predict that climate change will see major catastrophic weather events increase dramatically over the next decades, and those who live in areas already prone to flooding or slippage should expect the worst. The chaos caused by ex-Cyclone Debbie earlier in the year highlighted how vulnerable many New Zealanders are....
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Of all the new technologies emerging over the horizon, Blockchain is ,QWHUQHW RI 7KLQJV probably the least glittery. Robots, artificial intelligence and virtual READ MORE reality have each featured in an array of Hollywood blockbusters, though, to my knowledge, there has never been a box office film made about distributed ledgers. Should the technology fulfil its potential, as experts believe it will, there may be more publicity. For every Matrix or Minority Report hitting the silver screen, the public may be just as excited to see Citizen Chain....
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NOT SO FAST, DR NAYLOR... By Melville Jessup Weaver
Dr Michael Naylor of Massey University recently released a report A Perfect Storm in Insurance: How to survive the looming waves of disruptive technology. 7KH UHSRUW FRQVLGHUV D UDQJH RI QHZ WHFKQRORJLHV WKDW Naylor believes will combine to disrupt up to 80% of insurance job activities and see motor insurance premiums drop by over 90% by 2030.
ARE YOU: â&#x20AC;˘ Frustrated working for someone else? â&#x20AC;˘ Ready for an exciting new challenge? â&#x20AC;˘ Wanting 100% ownership of your business? â&#x20AC;˘ A quality insurance broker? IF YOU HAVE AN EXISTING BUSINESS DO YOU: â&#x20AC;˘ Want to level the playing field? â&#x20AC;˘ Need a new quality web based broking system? â&#x20AC;˘ Need access to more markets for your clients? â&#x20AC;˘ Want to increase the value of your business?
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PREPARATION IS THE STRONGEST DEFENCE. At AIG weâ&#x20AC;&#x2122;re building strong partnerships, learning more about our customers, and helping them prepare for the future. aig.com | @AIGRugby
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received from reinsurers. Some properties affected by the Canterbury earthquakes are now more READ MORE susceptible to damage from liquefaction. This increased vulnerability is called increased liquefaction vulnerability (ILV). EQC has settled many ILV claims by making payments to cover the cost of repairing the land. However, it has been reported that EQC has declined to meet the costs of enhanced foundations....
EARTHQUAKES HIT HY PROFIT
Opinon | Cyber Advice | NZI [March 2017 Issue] Kaikoura earthquake claims plus additional Canterbury claims have resulted in a drop in Suncorp New Zealandâ&#x20AC;&#x2122;s contribution to the overall Group READ MORE SURĎ?WV WKH FRPSDQ\ VDLG LQ D VWDWHPHQW WRGD\
CANADIAN BUYER FOR TOWER &DQDGLDQ Ď?QDQFLDO JLDQW )DLUID[ )LQDQFLDO LV VHW WR DFTXLUH RI 7RZHU LQ D GHDO ZRUWK 0LOOLRQ 7KH DQQRXQFHPHQW VDLG DQ RIIHU RI SHU Tower share was unanimously supported by the Tower board.
The environment is central to our perception of New Zealand, and we trade on our 100% pure image. Yes, historically, environmental insurance has not formed a core part of a companyâ&#x20AC;&#x2122;s insurance programme. As demonstrated by the recent water contamination crisis in Havelock North, widespread pollution can have an enormous impact on a community, from individual health WR Ď?QDQFLDO ORVV GXH WR EXVLQHVV FORVXUH GHFUHDVHG WRXULVP GHFUHDVHG PDQXIDFWXULQJ output and other knock-on effects. How many businesses were prepared with insurance DQG D ULVN PDQDJHPHQW SODQ WR SURWHFW WKHP"
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WHO PAYS FOR INCREASED LIQUEFACTION VULNERABILITY UPDATE FROM LIQUIDATORS DAMAGE? Grant Thornton, the liquidators of failed insurer
EMERGING ENVIRONMENTAL ISSUES IN NEW ZEALAND
[June 2017 Issue]
UK start-up pay-as-you-go car insurance broker Cuvva is set to launch a new category of insurance aimed at car owners who use their cars infrequently.
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By Karl Deutschle
BIG CHANGE AHEAD FOR INSURANCE
A New Zealand insurance industry commentator says technological change is coming that will force many insurers out of business. Michael Naylor, of Massey Universityâ&#x20AC;&#x2122;s School of Finance, KDV UHOHDVHG D UHSRUW ORRNLQJ DW WKH LPSDFW RI DQ ,7 UHYROXWLRQ RQ LQVXUDQFH
[June 2017 Issue]
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Who pays for increased liquefaction vulnerability damage? Assignments of insurance claims and their effect on insurersâ&#x20AC;&#x2122; reinstatement obligations Learning from complaints
17/11/16 1:22 PM
INSURER REJECTS TAKEOVER REPORTS
MPS VOICE CONCERN OVER QBE has rejected speculation it is considering a takeover offer, after a German newspaper reported FIRE SERVICE LEVIES $OOLDQ] LV WDUJHWLQJ WKH JURXS LQ D ELOOLRQ GHDO READ MORE A law has been passed that will reform New Zealandâ&#x20AC;&#x2122;s fire service and change its funding structure â&#x20AC;&#x201C; but it did not have unanimous parliamentary support. The Fire and Emergency New Zealand Act was passed in early May, establishing Fire and Emergency New Zealand. The burden of the cost of the new entity is set to fall on people who have insured their property, which has upset the insurance industry. It had called for the service.... QBE has rejected speculation it is considering a takeover offer, after a German newspaper reported $OOLDQ] LV WDUJHWLQJ WKH JURXS LQ D ELOOLRQ GHDO
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Decision may reflect change in understanding of market: Researcher Suncorp has been left disappointed by a Commerce Commission decision to stop its subsidiary’s attempt to buy Tower, but one insurance commentator says it is good news for the market. The Commission said there was a real risk that consumers could be left with higher insurance premiums and less cover if the merger of Vero and Tower, the country’s second and third-largest general insurers, had been allowed to go ahead. It would have given Vero 30% of the total insurance market. "The merger would remove Tower as the only independent competitor to Vero and IAG with the scale, brand strength and experience to compete effectively across the breadth of personal insurance markets,” Commerce Commission chairman Mark Berry said. Berry said other smaller insurers did not offer the "level of constraint" on the market that Tower imposed. "Without the competition that Tower provides, there is a real risk that consumers would end up paying higher prices for insurance cover while receiving lower quality, such as reduced insurance coverage," Berry said. Suncorp New Zealand also has a stake in AA Life and AA Insurance through a joint venture with the NZ Automobile Association. Combined, Vero and AA Insurance control 25% of New Zealand's insurance market. Canadian firm Fairfax Financial Holdings had earlier made a play for Tower with an offer of $1.17 per share but bowed out when Vero offered $1.40. Suncorp New Zealand chief executive Paul Smeaton said he did not believe the proposed acquisition would have substantially lessened competition. He said the decision was
disappointing. Tower’s chairman Michael Stiassny told media the firm would have to consider whether a capital raising was needed. It had planned to split the company in two in November to ring-fence its quake-related business. It has been suggested that such a move would require $75 million in capital. Vero still has a 19.99% stake in the company. It has been rumoured Suncorp may look to unwind that shareholding. But Michael Naylor, Massey University’s general insurance expert, said Suncorp had been wrong to suggest the market was competitive. He was surprised Tower’s board had allowed Fairfax to take its offer off the table without approval from the Commerce Commission for Suncorp’s bid. "Suncorp and IAG already dominate the New Zealand general insurance market in a way which is rare in other industries. Given that Tower is the last remaining general customer player of any size in the New Zealand market, its possible purchase by Suncorp would
destroy any chance for greater competition." He said even without the Canterbury claims, Tower was still financially weak. “Certainly its market share seems to be slipping. There are also legal issues around the possibility of stripping off Canterbury claims as the increasing faulty repair risk may not be able to be legally separated.” He said Tower probably did not have the capacity to invest enough to prepare itself to survive the technological transformation of insurance that was to come. “This involves creating a new IT admin system while still running its current creaky system. Basically, it needs a new owner who is prepared to invest in systems and customer relationship rebuilding. The obvious choice would be to reapproach Fairfax and ask if they would reconsider their old offer. Otherwise the board needs to market the company to nonAustralian insurers.” He said he supported the Commerce Commission’s view but wished that it had applied similar reasoning to the deal that combined Lumley and IAG. “The Commerce Commission report seems to indicate that they believed industry analysis given to them for the Lumley deal around ease of market entry and have belatedly discovered that that analysis was faulty. “In my Tower submission I did make the point that the larger issue of ‘dynamic efficiency’ was more important than ‘static market share’. However the Act only allows the Commerce Commission to consider the effect of short-term market share within two years. Within an environment of disruptive innovation this is silly, so the Commerce Commission went to great lengths to discuss why New Zealand market entry is so hard.”
Is time running out? The Insurance Council of New Zealand has urged residential Canterbury customers to contact their insurers if they have an outstanding 2010/2011 earthquake claim and are unsure on how the Limitation Act will affect them. In 2015, ICNZ advised Canterbury residents that the main residential private insurers would not rely on the Limitations Act before September 4, 2017. At that time and even today, there are different interpretations of how the Act applies in different cases. Given the uncertainty surrounding how the Act applies, insurers and EQC have taken a range of positions. “We encourage any homeowner with an outstanding Canterbury earthquake claim to contact their insurer to discuss the individual circumstances of their claim,” said chief executive Tim Grafton. “Residents with Canterbury claims can have peace of mind on this 4
issue by getting something in writing from their own insurer so they can continue to focus on reaching settlement. If customers are in any doubts about their position, they should speak to their insurer. “There is no need to worry about rushing to court and incurring costs to protect your legal position when you can simply make a call to your insurer to understand its position on its Limitation Act rights in relation to your claim,” he said. The Limitation Act applies to any claim made in the courts, not just insurance claims. It gives a defence where more than six years have elapsed since the act or omission giving rise to the claim. The intention of the Act is to ensure that claimants do not cause undue delay bringing claims to court and provides certainty to defendants.
Mental health exclusions axed Travel insurance policies are dropping exclusions for mental health conditions. Cover-More Australia and QBE Insurance have both removed their exclusions in policies which denied cover to people who cancelled or changed their plans because of mental illness that developed after they bought a policy. “We recognise the critical importance of incorporating specific cover for people with mental health conditions into our policies," CoverMore group chief executive Mike Emmett told media. The move applied to policies in New Zealand and Australia. A spokesperson for the insurer reportedly said the company was considering how it dealt with existing mental illness. QBE amended its policy after Victorian student Ella Ingram won a discrimination court case after she was twice declined because she had to cancel a claim due to mental illness. The Victorian Civil and Administrative Tribunal found that QBE’s exclusion of all claims made because of a mental illness, regardless of the type, severity or circumstances of the illness, was not reasonable. It also rejected QBE’s claim that it would suffer an unjustifiable hardship if it removed the general exclusion clause from the travel insurance policy. She had no pre-existing illness when she booked her trip but was diagnosed with major depression and given medical advice to cancel her travel.
The insurer said it would not offer cover for existing mental illnesses. Southern Cross Travel Insurance chief executive Chris White said his firm had removed the exclusion at the start of October last year. “We treat mental illnesses in the same way as we treat all other pre-existing conditions, applying the same medical assessment and underwriting criteria and making an appraisal based on the travelrelated risk. In the event that a customer were to experience a mental health event for the first time while travelling, we would treat this as an unexpected medical event – just as we do with medical events unrelated to mental health.”
Cyclone costs hit $109m Two cyclones that swept through New Zealand during April and caused residents of Edgecumbe to be evacuated resulted in insured costs of $109 million, the Insurance Council of New Zealand reported. Provisional data released in June had 8043 claims costing $84.4 million and the final data has now upgraded claims to 9186 and costs to $108.7 million. That makes these events the most damaging since the lower North Island storm in February 2004. The remnants of the cyclones dubbed Debbie and Cook hit Edgecumbe the hardest and resulted in 15% of the claims by number and 50% of the value of claims received nationally for these events. “This brings the total to date for significant weather events for 2017 to $199 million, which means this year already is the most damaging
year since the Wahine storm of 1968 and we are well on the way to 2017 being the most expensive year for weather events since our records began,” said chief executive Tim Grafton. There were 7075 house and contents claims costing $79.4 million, 1346 commercial material damage and business interruption claims at $22.4 million and 653 motor vehicle claims costing $5.2 million. “The weather bombs we’ve had this year highlights the importance insurance plays when disaster strikes. We would hope that uninsured renters are now taking steps to ensure their contents are protected to see them through these types of events and for homeowners that they check their sum insured is enough to rebuild in the event of a total loss,” Grafton said.
Indian insurer eyes opportunities New India Assurance, an insurer owned by the Indian Government, is looking to expand in New Zealand and is looking for new avenues for business. The insurer has been in New Zealand for the past 12 years, but its management said there was still a lot of potential for growth. Its chairman, Gopalan Srinivasan, said the company had kept a low profile in this country, but there was a need to
create more awareness of insurance and insurance products here, especially those from India. When the New Zealand company was established, then-chairman and managing director Rajendra Beri said the company would initially compete in the motor and property insurance market, although other services including fire and general accident would also be offered.
“While our activities as a re-insurer began 53 years ago in Sydney and 51 years ago in Fiji (as at June 2005), it has taken us a while to enter the New Zealand market, which, although small, offers rich potential for growth,” he told media at the time. “Although Indian in origin, our target would be the wider New Zealand market through brokers and direct services to companies and individuals.” www.covernote.co.nz
Insurers work through quake claims Private insurers have now paid out more than half a billion dollars in claims from Kaikoura’s November 14 earthquake, with $108 million paid to customers in June alone. “Progress is moving at a rapid pace and we have a high level of confidence that the majority of people will have received settlement offers by the end of this year,” said Insurance Council chief executive Tim Grafton. “51% of all residential buildings had been assessed by the end of June, compared with 39% in May, 32% in April and 19% in March. Insurers continue to focus on the most damaged areas, and we are pleased that assessment progress is at 73% for the Upper South Island as at end of June.” Private insurers have received more than 43,000 claims, of which over 31,000 are for residential properties. Insurers are acting as agents for the Earthquake Commission (EQC) and are managing most of the building and contents claims. The total value of insurance claims for the November 14 quake, as at June 30, is $1.88 billion. Most of the losses are in commercial claims at $1.39 billion, with residential claims amounting to nearly $474 million. In terms of residential settlements, 36% had been fully or partially settled by end of June,compared with 29% in May, 21% in April and 11% in March,” he said. The time between assessment and settlement offer for residential properties is typically between four and 12 weeks. For commercial claims, 67% by number had been fully or partially settled by the end of June, compared with 62% in May, 57% in April and 44% in March. In dollar terms, more than $363 million of commercial material damage claims have been partially or fully settled.
Insurers blame panel beaters for claims delays A panel beater skill shortage is causing delays in repairing insurance customers’ cars, not insurer red tape, the Insurance Council said. Research released by the Collision Repair Association (CRA), an industry body covering hundreds of panel beaters from around New Zealand, shows the average time taken to repair a vehicle is around six days, of which more than two days is lost in administration between the insurer and vehicle repairer. CRA general manager Neil Pritchard said the level of red tape required for each repair was unnecessarily high and meant the customer was without their vehicle for longer than they should be. "Under the current model, the typical repair process requires the insurer to accept a claim for repairs, assess the vehicle, then authorise the panel beater to quote on the repairs. Once the estimate is accepted, the panel beater can begin repairs. "The issue is there is no industry standard covering the documentation required for an 6
insurance claim and some insurers are regularly making requests for additional information after the estimate has been submitted by the repairer. "The time taken up with completing this extra paperwork can be as long as the repair itself. For the customer, this means their car is off the road for up to twice as long as it needs to be," he said. He said the longest wait times were with IAG, NZI, State and AMI. But the Insurance Council rejected the claims. “Neil Pritchard from the Collision Repair Association’s claim that bureaucracy is slowing down car repairs is an empty beat-up to disguise the failure to address his industry’s skill shortages,” said Insurance Council chief executive Tim Grafton. “He has a short memory, because earlier this year his organisation approached the Insurance Council to partner in joint communications regarding their skills shortage causing delays in car repairs. Pritchard is creating tension
between the smash repair industry and insurers that is unnecessary.” Grafton said the allegation insurers were slow to process vehicle claims was inconsistent with CRA’s own research, which insurers had received and showed an improvement from the previous year in the score for the claims process. “The CRA needs to wake up to the real issues with delays in repairs. They need more skilled staff who know how to work with high tech cars and they need more staff in repair shops in the major cities where we have seen an increase in both cars on the road and crashes” he said. “There will always be cost negotiations between panel beaters wanting more profit and insurers wanting to keep costs down so that insurance remains affordable for everyone. All insurers are asking for is the evidence of the damage to support the recovery of the costs which is no more than any other business requires when paying for services.”
RISK AS A GATEWAY TO BUSINESS SUCCESS I
n a study conducted in early 2017, Suncorp New Zealand has benchmarked New Zealand’s Business Success factors in its inaugural Business Success Index and examined the attitudes of New Zealand businesses to growth, risk and success. CoverNote talks to Suncorp New Zealand CEO Paul Smeaton about the research findings. HOW DID ‘FROM RISK TO REWARD’ COME ABOUT? Insurance is about managing risk, and as a major insurance company, our job is to help our customers understand the risks they face and be there for them in the event of a loss. But risk shouldn’t only be seen in a negative light, and when managed properly, risk can lead to reward. The fact is that for a lot of businesses, the opportunities for growth, the real leaps to success, come through taking calculated risks. So we wanted to understand what risk meant to New Zealand businesses, whether they saw risk as a threat or an opportunity and how we can help them better calculate and mitigate risks to be more successful. WHAT CAME OUT OF THE RESEARCH? We talked to over 400 New Zealand businesses about their attitudes to risk but also what they thought about growth, what factors were influencing their success and what might be holding them back. And we found something that we thought was really surprising - 78% of New Zealand businesses value work-life balance as much as growth. The From Risk to Reward research suggests it’s time to redefine growth on our own terms, and that’s a conversation we’re starting to have around the country with New Zealand businesses. SO WHAT DOES SUCCESS MEAN TO NEW ZEALAND BUSINESSES? One of the key findings was that Kiwi businesses want to work smarter, not harder. About 58% of businesses want to focus more on productivity and efficiency than growth. Quality of life is a prized asset for New Zealand businesses, particularly SMEs, which make up 97% of New Zealand businesses. So we want to explore how to enable that sort of smarter, more innovative business culture that’s focused on success – and not just growth. We’ve indexed the top factors that influence business success, and we’ll be benchmarking that to see how it changes over time.
TELL US ABOUT THE SUNCORP BUSINESS SUCCESS INDEX. We identified 23 factors that might help a business succeed and asked how important they are for growth and success. UMR Research then used multivariate analysis to create the Suncorp Business Success Index – a metric that is designed to monitor what factors Kiwi businesses think are the most powerful for helping them succeed or the biggest things holding them back. (See graphic below) WHAT DID THE RESEARCH SHOW WHEN IT COMES TO HOW NEW ZEALAND BUSINESSES FEEL ABOUT RISK? New Zealand businesses are conservative, but most believe that growth and success are inextricably linked with a certain level of risk. I think it’s really key that we start to engage with that attitude in the insurance industry, because otherwise we’re talking at cross-purposes with
our customers. We’re focussed on protecting risk, but they’re looking at the best way to take risks. That’s a slightly different conversation, and the risk management and mitigation strategies that enable businesses proceed through risk-taking to growth are not necessarily the same things that we look at on a daily basis. WHAT ROLE DOES INSURANCE PLAY IN BUSINESS SUCCESS? Interestingly, our research showed that businesses don’t see insurers as a business partner when it comes to taking and mitigating business risk. So I think there’s an opportunity to redefine our role. Our research showed that businesses want insurers to provide costeffective risk solutions, but there are bigger opportunities for us to develop stronger relationships with businesses and really understand what they need and how we can support them. Brokers have such a big role to play in that conversation because they work so closely with businesses to understand their risks and can help them understand how we as an industry can support them. For more information or to join the community, visit fromrisktoreward. co.nz or follow From Risk to Reward on LinkedIn. www.covernote.co.nz
VERONICA CRESS INSURANCE SPECIALIST BRANCHES OUT B
arrister Veronica Cress first became interested in insurance law when she realised it was a key component of many of the big cases that most captured her attention. “Early on, within the first few years of becoming a lawyer, I realised there was this connection between insurance and most of the civil litigation work that I wanted to do,” she says. Run-of-the-mill insurance cases could include everything from professional negligence to product liability. But sometimes the insurance element was a deeper level - another layer operating within the high-profile litigation cases that ended up before court. “But unless you have an insurance background, you don’t know that’s there,” Cress says. She has been practising law for the past 20 years, specialising in civil litigation. It is constantly challenging and changing. Within the course of her work, Cress says she gets the chance to try out other professions. If she was looking at case of professional negligence, for example, it would require a deeper examination of what a reasonable person in that position would have done, putting herself in the shoes of those in that industry. “It’s an opportunity to get into pretending to be some other profession,” she says. She might have to try on the role of a tax adviser or an engineer, depending on the case. “You go through the exercise of understanding a small part of that job really well. It’s almost like being able to be a different character from Game of Thrones every week.” She had also been able to see how useful insurance was to people who took out cover. “When lives are changed by tragedies, insurance can make a difference to the outcome of their lives from then on. There’s that human element. I could go on all day about why I love insurance. There are lots of things. Some of them are simple and obvious. Some are more complex and bizarre.” She said insurance combined business and human elements in a rewarding way. Recently, she made the decision to go into business on her own, after 10 years with DLA Piper. She was a partner for five of them. Cress said the new independence of being a barrister sole had allowed her to forge connections in the insurance industry. “I’ve been able to get out and meet people. I’m finding people interested in the same stuff.” The move to independence was a traditional career path for a senior lawyer, she said. “My association with DLA Piper was 10 years - a long period of time - but the reason it went on for 10 years is that every few years they presented an opportunity for me to work for them in some other strategic way. IAG borrowed me for a specific task and I ended up staying three years. I also worked in the overseas offices of DLA Piper in Thailand and Australia because they needed help with things they didn’t have the resource to deal with.” Cress is preparing to work with a broader range of clients who need her services, including insurers, brokers and other professionals, as well as dealing with pure insurance law issues.“I want to focus more going forward on helping a range of people with liability issues.” She also serves on a New Zealand Law Society Standards Committee responsible for considering complaints about the conduct and competence of law practitioners in the Auckland region. Outside work, she is interested in Muay Thai kickboxing and has trained and fought in Thailand.
WHEN LIVES ARE CHANGED BY TRAGEDIES, INSURANCE CAN MAKE A DIFFERENCE TO THE OUTCOME OF THEIR LIVES FROM THEN ON. THERE’S THAT HUMAN ELEMENT. I COULD GO ON ALL DAY ABOUT WHY I LOVE INSURANCE.
FENZ ACT CHANGES TO RURAL FIRE LIABILITY RISKS AND SOME INSURANCE IMPLICATIONS By Veronica Cress The Fire and Emergency New Zealand Act 2017 (FENZ Act) has from July 1 significantly changed the liability landscape for rural fires in New Zealand. Brokers should understand how rural fire liability exposures have changed and consider some insurance cover issuesat policy placement and renewal. CHANGES TO THE LIABILITY LANDSCAPE Repeal of the Forest and Rural Fires Act 1977 The Forest and Rural Fires Act 1977 has been repealed by the FENZ Act. As a result, it is no longer necessary to include extensions of cover for the two civil liability risks under the 1977 Act that were often included in liability policies prior to 1 July 2017. The repealed liability risks were: • Strict liability under section 43. Under section 43 of the 1977 Act, the person responsible for causing an escape of fire was strictly liable to the fire authorities and other property owners for firefighting costs and property damage caused by the fire. • Levies imposed on landowners under sections 45, 46 and 46A. If fire authorities were not able to recover firefighting costs under section 43, they had power to levy landowners in a rural fire district under sections 45, 46 and 46A of the 1977 Act. FENZ Act focus on criminal offences The FENZ Act represents an intentional shift by government away from civil liability cost recovery towards a more heavy-duty criminal offence and penalty regime. The stated purpose of the new regime in section 3(d) is “to improve fire safety”. The government’s rationale for the change is that serious criminal penalties ought to deter risky fire behaviour. However, it remains to be seen whether the move to a criminal model will achieve that objective. Criminal offences and penalties are scattered throughout the FENZ Act and broadly fall within three categories. • Serious criminal offences for intentionally risky behaviour with fire that increases the likelihood of fire spread and harm to people or property. The maximum penalties for these offences are: (a) imprisonment for up to two years, and (b) fines of up to $300,000 for individuals and $600,000 for organisations. (These offences are discussed in more detail under a separate heading below.) • Infringement offences for breaches the FENZ Act or regulations. The detail of these offences has not been included in the FENZ Act and will be provided in future regulations. However, the
penalties for infringement offences will be either: (a) an infringement fee (of up to $1,000 for an individual and $5,000 for an organisation), or (b) a fine if a charge is prosecuted through the District Court. • Other offences for a wide range of intentional conduct that is more serious than infringements of the FENZ Act or regulations but not in the most seriously criminal category. The penalties for these other offences are wide ranging and include both imprisonment and financial penalties. These offences are concentrated in sections 156 to 159 of the FENZ Act but scattered throughout many different parts of the Act. Criminal liability for serious offences The most serious criminal offences in the FENZ Act for intentional behaviour that increases the likelihood of fire spread and harm are contained in sections 60, 61 and 53 to 58. Sections 60 and 61 are the two provisions of the FENZ Act that most closely resemble the repealed section 43 of the 1977 Act. However, one of the key changes is the addition of a mental intent requirement that must be proved to the criminal standard of “beyond reasonable doubt”. Under sections 60 and 61 it is a criminal offence to “knowingly or recklessly”: • cause or allow a fire to get out of control and spread or • leave a burning or smouldering substance in the open air without taking the required precautions. (The required precautions are taking reasonable steps to reduce the likelihood of harm or damage from fire and notifying Fire and Emergency New Zealand (FENZ) as soon as practicable.) Sections 53 to 58 create serious criminal offences for “knowingly or recklessly” lighting fires in the open air in breach of the various fire restrictions and prohibitions that may be imposed by FENZ under the Act. Those fire restrictions can relate to fire seasons, geographical areas and activities. Civil liability to property owners in negligence and nuisance Now that section 43 of the 1977 Act has been repealed, those who suffer loss from rural fires will only be able to recover compensatory damages from the people responsible for the fire if they can establish a cause of action under the common law. The three causes of action most often relied on by property owners seeking to recover compensatory damages for rural fire losses under the common law are: www.covernote.co.nz
FEATURE • Negligence if the person responsible for the fire had knowledge of a hazard that could cause foreseeable harm and failed to take reasonable precautions against it. • Nuisance if the fire was part of a continuing or recurring act or event that unreasonably interfered with the use or enjoyment of other land; and • Rylands v Fletcher (although technically a special category nuisance) if there was a single escape of a harmful substance from land that was being used in an ‘unnatural’ way. In every case, proof of reasonable foreseeability is required in addition to the other necessary elements of each cause of action. As a result, successful recovery of compensatory damages for rural fire losses will now require
more of a plaintiff situation than simply proving the cause of a fire, as was previously the case under section 43 of the 1977 Act. Civil liability for FENZ firefighting costs It is currently unclear whether FENZ can recover firefighting costs in the civil courts now that section 43 of the 1977 Act has been repealed. As a general rule, public body fire services cannot recover compensatory damages in the civil courts for doing the very job that they have been created by law to perform. However, public bodies may arguably be entitled to compensatory damages if they suffer property damage or incur firefighting costs in their capacity as property owners. If so, this could be a significant risk for Insureds operating near properties owned by the Department of Conservation or the Ministry of Defence, for example. Criminal liability to pay reparation Under section 32 of the Sentencing Act 2002, a sentence of reparation may be imposed if a criminal offence causes a person to suffer loss or damage to property or consequential loss. Section 12 states that if a court is lawfully entitled to impose reparation, it must do so unless it would result in undue hardship for the offender or other special circumstances would make it inappropriate. It is not yet clear whether reparation orders will be made to compensate property owners who are affected by fire offences under the FENZ Act. However, it is reasonably clear that FENZ should not be able obtain reparation orders for firefighting costs. The two main reasons for this are outlined below. • First, reparation for indirect consequential loss can only be awarded under section 32 to a person who suffers direct property loss or damage. In contrast, FENZ firefighting costs are indirect consequential costs incurred protecting the properties of others. • Second, FENZ is a public body and fighting fires is the very function that FENZ is required by statute to perform. The New Zealand courts have declined reparation orders to compensate the police for investigation and operating costs on this basis and the same reasoning should apply to prevent reparation orders for FENZ firefighting costs. The position in relation to property owners affected by rural fires is a less 12
clear. The Supreme Court has indicated in previous cases that reparation orders may not be appropriate in cases involving complex causation issues or in which the amount of loss is in dispute. Many major rural fire scenarios are likely to fall into this category. However, in cases where the cause and quantum of a property owner’s loss is reasonably clear, an order for reparation is in my opinion likely to be made. INSURANCE CONSIDERATIONS Public liability insurance Public liability insurance is recommended for defending civil liability claims by property owners for property damage, firefighting costs and other consequential losses. However, it will be important to understand the liability risks faced by each Insured. • Sum insured: Special extensions of cover are no longer required for civil liability under the 1977 Act. However, it will be important to ensure the policy limit for civil liability is high enough to cover all potential civil liability exposures. • Liability assumed by agreement: Some Insureds may have existing contractual arrangements in which they agree to be strictly liable for rural fires (based on the section 43 of the 1977 Act). This is particularly common in the forestry sector. However, now that the 1977 Act has been repealed, these agreements may trigger policy exclusions for liability assumed by agreement. Insureds should review and, if unsure, obtain legal advice on their existing contractual arrangements. Statutory liability insurance Statutory liability cover may be useful for defending Insureds against some of the criminal offences contained in the FENZ Act. However, there are some limitations to bear in mind. • Reasonable care conditions are likely to be breached by some of the more serious criminal offences under the FENZ Act. Most of the serious criminal offences in the Act require the offender to have acted “knowingly” or “recklessly”. A FENZ Act fire offence committed “knowingly” is likely to satisfy the strictest subjective test for recklessness referred to by the Court of Appeal in Cee Bee Marine and other insurance cases of “deliberately courting a known risk without taking reasonable care” However, each case will depend on the particular policy wording and the factual circumstances of the fire. • Reparation orders can in principle be covered under a statutory liability policy. However, it is not yet clear whether reparation will be ordered for FENZ Act offences. Until we receive a firm ruling from the courts either way, the wisest course would be to assume that reparation orders will be made in some cases. • Fines that may be imposed under the FENZ Act cannot be insured as a matter of principle. However, in the health and safety context, sentencing judges have reduced fines by between 10% and 15% to recognise the responsible approach taken by an offender who purchases statutory liability insurance. A similar discount ought to be pursued for fines imposed under the FENZ Act on the same basis. On July 1, the FENZ Act changed the liability landscape for uncontrolled rural fires in New Zealand. Those changes will have an impact on both the people responsible for causing rural fires and the people who suffer property damage or incur fire suppression costs as a result of them. The repeal of the strict liability cost recovery mechanisms in the 1977 Act will make it more difficult for those affected by rural fires to recover compensatory damages for their loss. It will no longer be enough to just prove the cause of the fire. There are some legal uncertainties around whether firefighting costs may be recovered under the common law and whether reparation orders will be made in relation to criminal offences under the FENZ Act. However, until those legal uncertainties are resolved by the courts, the prudent course would be to recommend public liability insurance, statutory liability insurance and policy limits high enough to cover all potential rural fire risks.
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THE TOP 10 RISKS TO THE INSURANCE INDUSTRY ARE A GREAT EXAMPLE OF OVERLAPPING OPPORTUNITIES By Karl Deutschle
f there’s one industry that knows all about risk, it’s insurance. And yet even this age-old sector has proven it isn’t immune from the disruption felt throughout the world – in every sector, by every business. In PwC’s new 'Reinventing insurance, one step at a time' survey, we asked New Zealand’s insurance industry what’s been on its mind and gauged how this differs from insurers around the world to get a distinct lay of the land in New Zealand. Top of mind for our insurance industry is change management, rising from second place in 2015, when we last conducted this survey. How quickly the sector has been able to adapt to a wealth of technology, societal, regulatory and economic changes has been a sticking point, and it will continue to be a challenge of the near future. Speaking of technology, that very challenge was a new entry among New Zealand insurer’s top 10 risks, jumping to second place in our latest 'Reinventing insurance, one step at a time' survey. It’s a sign of how quickly technological advancement is moving that keeping up is now an essential conundrum the industry is facing. And third in our list of biggest risks is competition. Competition in New Zealand is particularly fierce. Globally, this only ranked as the eighth most pressing problem, and it stands at a lowly 11th place in Australia. So what’s left? Rounding out our top 10 list are cyber risk, reputation, regulation, human talent, investment performance, social change and cost reduction. It’s some list on paper. In reality, it’s the way these challenges intersect that will cause particular issues. They all overlap, meaning a single risk
cannot be confronted alone. Take our top-rated risk, change management, for instance. One of the ways insurers are trying to enable sustainable transformation is through technology – our second most-pressing risk. Many are approaching this by upgrading their IT infrastructure and refreshing the legacy systems of old through cloud technology and APIs. Others are using robotic process automation, artificial intelligence and other emerging technologies to improve the speed of digital customer service. Then comes our third biggest risk – competition. Particularly in New Zealand, InsurTechs are showing incumbents a new, customer-focused way of providing insurance products and services. These FinTech offshoots are unhampered by ageing technologies, are agile enough to change direction on a dime and are finding their set-up is ideal for shaking up the entire insurance sector. Bringing these three risks together and competition is forcing change through technology – a cauldron of all New Zealand’s greatest challenges in one. A FINE BALANCING ACT However, even with so many challenges, all is not lost. Those in the insurance sector can be encouraged by the fact that many of these challenges overlap. So while the risk of inaction on some challenges is notably high, significant opportunities are there too. That’s because so many intersecting risks make it possible to take action on multiple at once. Take the right steps with technology, for example, and insurers can improve their competitive edge, ensure the right skills are nurtured in
What are the biggest risks insurers are facing?
the company, account for cyber risk, protect their reputation and manage change – five of the top 10 challenges posed in 'Reinventing insurance, one step at a time' 2017. Insurance businesses can look at how many of their top concerns they can confront at once. It’s certainly not easy. Insurers have arguably never had more plates to spin and risks to account for all at once. But it helps to know that the effort spent keeping one plate in the air helps towards the momentum of another. With clever strategy planning, there’s no reason why all of today’s risks can’t be addressed. ARE WE READY FOR CHANGE IN NEW ZEALAND? However, all this paints a broad picture of risk; the ultimate effect of them all combined is determined by how prepared we are as an industry to face them. We also posed this question to our respondents in the 'Reinventing insurance, one step at a time' survey. The results were interesting, as they showed that New Zealand insurers rank themselves around the bottom quartile of countries surveyed in terms of preparedness. Naturally, this is below the global average and many of our Asia-Pacific neighbours, with Australia, Japan and China all ranking much closer to the global average in terms of their preparedness. And yet when it comes to preparedness, we also share the space with much of the English-speaking world. Canada, the United States and South Africa all have similar levels of preparedness to New Zealand, while our local insurers felt more prepared than their counterparts in the United Kingdom and Hong Kong. Although New Zealand insurers may feel less prepared to navigate the
risks ahead of them than the rest of the world, that could well be a sign that they’re more realistic about the transformation challenge than some of their colleagues overseas. One thing is very clear: change management is absolutely crucial in a fast-moving, digital world underpinned by rapid changes in customer expectations and regulation. But the opportunity is there. If insurance incumbents can confront their roadblocks to change management and become more flexible and agile, many of the overlapping risks can be met. The ability to manage change with consumer tastes can protect reputation and improve competitive edge; adapting to the technology environment can lead to scalable, successful implementation; preparing for a shifting (or even a consistently low) interest-rate market can lead to better investment performance and improved underwriting profits; and being ready for change in the regulatory environment can make businesses prepared for the implementation of IFRS 17 – Insurance Contracts, the review of the Financial Advisers Act and the proposed changes to the EQC Act, to give just three examples. Change favours the prepared mind, so what is your business doing to prepare itself?
Karl Deutschle is a Partner at PwC and the Insurance Sector Leader. www.covernote.co.nz
HOW EMERGING TECHNOLOGIES CAN BE APPLIED IN INSURANCE RISK MITIGATION W
hile insurance tech and new ways of automating customer acquisition and claims processing are topical, there are also significant opportunities to apply technologies such as machine learning techniques to reduce risk. My team at IBM Research is applying mathematical modelling to better understand how policyholders can mitigate and respond to weather events and natural disasters. When combined with recent advances in machine learning or artificial intelligence, these 16
innovations have the potential to help the insurance industry respond faster and improve the customer experience when events occur. Increasingly, the insight from this immense computing power is available to brokers on mobile devices, allowing home and business owners, and their insurance advisors, to be more proactive about mitigating risk. Applying these models to counter bush fires and hail damage to crops were two scenarios I discussed at the recent Mathematics-in-Industry New Zealand workshop hosted by Massey
University. The workshop brought together students and researchers with backgrounds in mathematics, statistics, engineering and computer science to apply maths to solve real industry challenges â&#x20AC;&#x201C; and as we saw in Christchurch earlier this year, fire is a very real threat in New Zealand. My team set out to ask how families and communities could be better informed about their personalised bush fire risk and empower them to reduce it. Several factors have significant influence on
By Dr Melanie Roberts, IBM Research
the fire impact, including weather (temperature, wind speed and wind direction, humidity, etc.), the slope of the ground, the vegetation and the distance to the house. One important part of bush fire risk is the exposure to embers. Embers are typically the key cause of house damage and loss – not radiant heat nor direct ﬂame contact. The ember risk to homes is a factor of three components - the number of embers reaching the property, the likelihood that these embers will ignite the property (directly or indirectly), and the likelihood that embers will not be extinguished. We have used information about the weather and distribution of vegetation in a region to calculate the risk of embers impacting a property if there were a fire. Workable models need a granularity down to the individual property, with insights relevant to the homeowner. By understanding the risk posed to an individual property and building that information into models available on a mobile app, families can better understand their individual risk and empower them to reduce it. We can further assist families in making changes through recommendations for action, personalised suggestions for how different options will help them reduce or manage their risk.
A user is able to explore the comparative benefit of different actions to improve their fire readiness, reducing the fire impact rating specific to their property. Mitigation measures might
modelling can help us make insurance-related decisions is the impact of hail storms on our agricultural sector. In the USA, hail storms are responsible for an estimated US$1.2 Billion (1997 adjusted terms) in losses annually. While there is little that can be done to prevent weather damage, there is potential for technology to help insurance companies assist farmers to recover faster from hail storms through improved assessment. Traditionally, crop-loss assessment is performed by an adjuster manually inspecting crop samples in the field. However this is can lead to delays, high associated costs and inaccurate results. The overestimation of losses can range from an average 10.6% to as much as 65%. An alternative approach is creating crophail damage models to identify the expected damage from available information about the crop and hail storm. Our expertise with weather forecasting enables us to recreate a hail storm, which can tell us about how much hail is in the storm, the velocity of the stones and how big they are, among other factors. This information can be used to forecast the damage to different crops. Hail damage to crops is a complex event. There is not one feature of the storm alone that accurately predicts the extent of damage. Moreover, different crops will be impacted differently by the same storm. For example, we know that wheat is more susceptible to hail damage than either corn or soybean crops. Accurate and timely assessment of crop-hail damage is important for the fair compensation of insured farmers and to reduce overall insurance losses. Manual adjustment methods are timeconsuming and costly, while existing damage
ACCURATE AND TIMELY ASSESSMENT OF CROP-HAIL DAMAGE IS IMPORTANT FOR THE FAIR COMPENSATION OF INSURED FARMERS AND TO REDUCE OVERALL INSURANCE LOSSES. include accessibility of fire-fighting equipment, use of less flammable building materials, clearing vegetation, or installing water storage and sprinkler systems. The data and model results are stored in the cloud, making the app accessible and a useful tool for community education, policy development and town planning. Users need only enter their property address but can choose to provide additional details for improved personalisation. Another scenario where mathematical
models are usually linear, based on a single factor and handle uncertain,or ‘noisy’ data poorly. IBM has been developing a multi-factor estimation of crop-hail damage that will allow an automated assessment and accurate forecasting of the expected impact on agricultural areas. Such automated processes will enable more accurate claims processing, improve customer satisfaction and reduce insurance losses.
LESSONS FROM LEGENDS “It’s the same across business and sport,” he continued. “The synergies between AIG and the All Blacks are remarkable. Both are built on a ‘team first’ culture based on bone deep preparation, coupled with the determination and innovation to aspire to be the best team in the world in their respective business.” On preparation, Sir Clive said, “If you are well prepared, then this breeds confidence and you are far more likely to perform better in pressure situations. As a coach and leader this is something that I spend a lot of time on – in the classroom going over scenario after scenario - so that in pressure situations you are able to think correctly.” Former All Black captain Sean Fitzpatrick echoed this sentiment. “Success is built on preparation. Without preparation, it is very difficult to succeed in business or in sport. To be the best you can, you need to prepare.” Speaking on the same panel as the rugby legends, Kevin Hogan, CEO of AIG’s global Consumer business added, “At AIG, we bring these values to life through action. Our executives don’t build businesses; they build organisations – teams. And the teams build the business.” Former All Blacks captain Richie McCaw believes that while success is important, learning from your mistakes is also key, and the best of times can be directly linked to your worst times. Speaking at AIG Raising Your Game - an event held in conjunction with NZME - McCaw said, “People ask me if 2007 was my worst moment playing for the All Blacks. I firmly believe had we not gone through what happened in 2007, [our success in] 2011 and 2015 wouldn’t have happened. I look back on it now and although it was tough, it’s probably the best thing that happened to me and the team.” AIG’s Head of Global Sponsorship, Danny Glantz, said that it was these values behind the performance of New Zealand Rugby’s national teams that Rugby legends and AIG Ambassadors Sean Fitzpatrick, Sir Clive Woodward, Richie McCaw, Steve Hanson and drove the sponsorship from the start. “It Sir Graham Henry, share the stage for the first time in history at AIG’s Gala Dinner on Thursday 22 June. was more than a sponsorship to AIG. It was also about how we could learn from New Zealand Rugby and bring the traits that have led to the incredible performance in sport and the parallels that exist in business. Speaking at AIG’s business breakfast on 23 June, Sir Clive Woodward success of that organisation back to AIG.” At the end of the tour, the legends were philosophical when looking said, “I believe that great teams are made of great individuals. The real key to teamwork is getting each individual in the team to become the best that back on the drawn three-match test series between the All Blacks and they can be. If you get everybody in your team really putting in the hard the British & Irish Lions. “It was an amazing achievement by the Lions, fabulous for the world game and also great for the All Blacks, as it will steel yards, then your job as a leader becomes much easier.“ Sir Graham Henry agreed. “A culture of self-improvement and their focus for a “three-peat” in Japan in 2019,” Sir Graham said. Sir Clive innovation is the backbone of the team. Teamwork involves connecting added, “Having coached teams that have beaten the All Blacks and lost to with each other and helping, encouraging and demanding that your the All Blacks, one thing that will never ever change is that you never beat teammate takes up the challenge and nails that self-improvement,” he said. the All Blacks; you just score more points than them!"
n June and July, rugby fans were treated to the best the game has to offer as the best rugby players from England, Ireland, Scotland and Wales faced our country’s top talent in the British & Irish Lions tour of New Zealand. For AIG, major global sponsor and Official Insurance Partner of the All Blacks and Maori All Blacks, as well as the Black Ferns, who also played at home in June, the Lions tour was the focal campaign for their sponsorship in 2017. As players on the field showed why they belonged in their world-class teams, AIG used the opportunity to talk to clients, brokers and employees about the ‘how’, discussing themes of preparation, innovation and teamwork. AIG’s Ambassadors Sir Clive Woodward, Sir Graham Henry, Sean Fitzpatrick and Richie McCaw - four legends of the game - were key to this discussion, explaining the drivers of consistently successful
MICK MILLER RETURNS TO B
ack on New Zealand shores, Mick Miller has been reflecting – both professionally and personally – on his recent years in India and the insurance market to which he’s returned. NZI’s former General Manager Claims, Mick was seconded to SBI General Insurance Company Limited (SBIG) as Senior Vice President Claims for three years and three months – his original two-year contract extended by 15 months. The company is a joint venture between IAG and the country’s largest bank, the State Bank of India (SBI). India is one of five Asian target markets where IAG sees huge potential and seeks to expand its business arm. Bronwyn Ayres (ex-Lumley) has succeeded Mick in his SBIG role; she took over on 1 July on a two-year secondment, following two years in Vietnam. While he was away, Mick was involved in SBIG’s response to natural disasters, which included deadly Cyclone Hudhud in 2014 that saw the company outdo many established Indian insurance players in its timely settlement of 851 claims. “There was at least one natural disaster every year during moonsoon, with Cyclone Vardha and the Chennai floods being the largest events in the past two years,” he says. “Again, SBIG Claims led the market.” Mick enjoyed the challenges of the growing Indian insurance sector and was proud to play his part in SBIG returning a profit for the first time in its history. “It’s a very complex business over there, with IAG being a minority shareholder trying to influence outcomes rather than instruct.” There’s no doubt the Mumbai years made an impact on Mick and he says he’ll miss the people, their friendly culture, the fantastic food and the once-in-a-lifetime experiences. Mick left his mark on SBIG too, and that’s not just a reference to the “several various farewell functions” held in Mumbai and Delhi. SBIG’s Suman Pal, Lead – National Claims Service, says Mick left an imprint on the company with his “powerful executive presence”. “He taught us not to be afraid to take risks but also to take responsibility when things went wrong. It was about challenging the status quo for the betterment of the organisation and our competitive advantage.”
DEFENDING YOURSELF IN THE CYBER AGE
by Ryan Clark,
National Manager Liability, NZI
e are living in the cyber age and the use of information technology presents some real security challenges for businesses today. Yet still 88% of Kiwi business owners are unaware they can insure their business against cyberattacks. This is putting their livelihoods and business reputation at risk. Cybercrime is increasing and will continue to do so as hackers make use of the weaknesses and loopholes in operating systems and organisations to destroy or steal data and other important information. Ransomware - malicious software designed to block access to your computer system until a ransom is paid - is the fastest growing cyberthreat of all, targeting users from small businesses through to corporates. Attackers are demanding more and more from their victims, with the average ransom demand in 2016 rising to US$1,077 from US$294 a year earlier. Symantec has gone on to identify at least 16 different ransomware variants – that is different families of malware - the majority of which are developed by competing criminal gangs. In New Zealand we are currently seeing around 108 ransomware attacks 20
a day and that’s set to keep rising. Recently carried-out research by FAU University found that 78% of people claim to be aware of the risks of unknown links in emails, and yet click on them anyway. These clickbait links are used to forward the user to a page that requires payment or registration. They have catchy or provocative headlines and, for most users, are difficult to resist. FAU found that up to 56% of email recipients and around 40% of Facebook users clicked on a link from an unknown sender. The reason? Simple curiosity. PWC’s recent survey cited 91% of New Zealand’s CEOs as being concerned about cyberattacks – that’s an increase of 77% since 2016. Furthermore, 94% of CEOs said they feel that cyber breaches will negatively impact trust in their industry. As a country we’re still lagging behind in terms of the take-up of cyber insurance. Businesses need to think beyond just bricks and mortar. Kiwis are just as vulnerable to a cyberattack as the rest of the world. There is a very clear disconnect between New Zealand businesses and cyberattacks being deemed a relevant threat.
DON’T LIE TO INSURERS: HELP YOUR CLIENTS UNDERSTAND THE NEED TO BE TRUTHFUL
By Karen Stevens
Insurance & Financial Services Ombudsman
here’s no such thing as a ‘bit of a lie’ when it comes to insurance,” says Insurance and Financial Services Ombudsman Karen Stevens. “Often consumers do not appreciate that the consequences of lying can be dire. Claims are declined and the flow-on effects are cancelled policies and names registered on the Insurance Claims Register - and this can affect any future insurance which, in turn, can affect home or business ownership.” Over 22 years, the IFSO Scheme has built up an extensive complaints database, which the industry and consumers can learn from. This includes a multitude of cases involving varying degrees of dishonesty. “The current law in New Zealand makes a distinction between situations where someone makes a fraudulent claim or is dishonest,” Stevens said. “But the bottom line is, clients must tell the truth; the effect of a fraudulent claim or dishonesty are more serious than most people think.” When investigating complaints involving dishonesty or fraud, the IFSO Scheme looks at the policy and whether the insurer has been able to provide evidence to the legal standard. “Some claimants ask to have their names removed from the Insurance Claims Register,” Stevens said, “But if the insurer has correctly declined the claim or avoided the policy, we can’t give claimants what they want and it will affect their future insurance.” Brokers and insurers have a key role in educating clients about the importance of accuracy and telling the truth. Stevens said: “By warning clients and learning lessons from past complaints, you can help your clients avoid potentially devastating consequences.” Here is a summary of the legal approach to fraud and dishonesty, with 22
*not actual names
some case studies to illustrate how this is applied to claims. FRAUD AND DISHONESTY AT CLAIM TIME The consequences for clients • Claim declinature • Policy avoided or cancelled • Claims flagged on the Insurance Claims Register • Must disclose to other current and future insurers – serious impacts for ability to obtain future insurance and, therefore, ability to own a business or have a mortgage • If the policy is joint, all innocent policyholders affected • Recovery of previous payments made on the claim (including income cover). WHAT IS FRAUD? When investigating complaints involving possible fraud, the IFSO Scheme applies the following legal test. Was there: 1. a representation which would give misleading impression to reasonable reader/listener; 2. a misrepresentation made in support of the claim; • a misrepresentation deliberately made by the insured, he/she knew it was incorrect; or • was deliberately reckless about its truth or falsity; 4. not de minimis; and 5. made with the intent to gain a benefit to which he/she is not otherwise entitled under the policy.
CASE STUDY – 125383 (2014) Joe’s* Christchurch rental property was damaged in the September 2010 earthquakes. Joe made a claim to his insurer and EQC for the damage and a claim to the insurer for loss of rent. In October 2010, the insurer paid Joe $43,291.25 for the out-of-scope damage and $24,500 for loss of rent. Joe began arranging and undertaking the repairs himself. In January 2011, Joe emailed the insurer, stating that the cost of repairs far exceeded the $43K payment.The property was further damaged in the February and June 2011 earthquakes and the house was determined to be a total loss. In December 2011, the insurer offered to pay Joe $147,997.52 (GST incl), in full and final settlement of the claims. However, Joe wanted reimbursement for the repairs he’d completed prior to the total loss. When asked to provide invoices/receipts, Joe provided a number of invoices for the repairs in the names of five different people or companies, totalling $91,500. However, he later admitted to writing the invoices himself as he did not have any receipts or invoices for the work he had done (he said about $25,000 after each earthquake). The insurer declined Joe’s claims on the basis of fraud and cancelled the policy, and sought to recover the payments it had already made to Joe. Joe said that the claim was not fraudulent as he did not try to get payment for anything he was not entitled to. He had actually completed the work but did not have any proof of the amount he had spent and he spent his own time on the repairs. The insurer believed Joe’s invoices were more than he spent on the repairs. IFSO Scheme investigation Was there: 1. a representation which would give misleading impression to reasonable reader/listener; Yes – the invoices which Joe admitted to creating appeared to be from others who had done work for him 2. a misrepresentation given in support of the claim; Yes – the cost of any completed work was directly relevant 3. a misrepresentation deliberately made by the insured, he/she • knew it was incorrect; or • was deliberately reckless about its truth or falsity; Yes - Joe knew the invoices were not real 4. not de minimis; Yes – the actual costs of the repairs were central to the claim 5. made with the intent to gain a benefit to which he/she was not otherwise entitled under the policy; Yes • It was clear that a significant amount of work was undertaken on the house. • Joe would only have been entitled to be paid by the insurer for work he carried out on the house if there had been an agreement to that effect. But there was no agreement. • The invoices were from various people to ensure the insurer would pay the claims without question. The insurer was entitled to rely on the policy and the common law, to cancel the policy and decline to make any further payments for the claims. This had serious impacts for Joe and his wife because they had a mortgage on both the rental house and their family home and the house was virtually unsellable. Remedies for Fraud Fraud is a breach of the duty of utmost good faith.This means an insured forfeits all benefits under the policy. The policy is void from the time of fraud. This means an insurer can decline the claim and recover payments previously made on a fraudulent claim. WHAT IS DISHONESTY? At claim time, the duty of utmost good faith requires an insured to be honest. If an insured is dishonest, an insurer can rely on the same remedies as for fraud. Some policies also refer to obligations to be honest, and can provide different remedies.
When investigating complaints involving possible dishonesty, the IFSO Scheme applies the following legal test: 1. would a reasonable person consider the conduct dishonest according to ordinary standards; and 2. did the insured realise that his/her conduct was dishonest according to those standards? CASE STUDY – 135077 (2016) Mr and Mrs Smith* notified their insurer that a pouch contacting jewellery had gone missing over the weekend. The loss included five rings valued between $2,800 and $19,600, and two sets of earrings valued between $3,500 and $5,400. Mr and Mrs Smith reported the loss to the police. The insurer accepted the claim and informed Mr and Mrs Smith that they could either replace the jewellery, up to a value of $34,450, or receive a cash payment of the indemnity value of $22,962.50. Mr and Mrs Smith asked for a cash payment for the indemnity value but said they would like the remainder of $12,237.50 when they replaced the jewellery. The insurer made the indemnity payment. A month later, Mr and Mrs Smith provided the insurer with a handwritten invoice for three items of jewellery for $35,209 and requested the insurer pay the remaining $12,237.50 under the claim. The invoice listed their son, Roger*, as the seller. The insurer declined the claim and sought recovery of the payment on the basis that Mr and Mrs Smith had made incorrect statements and breached their duty of utmost good faith. The insurer relied the following statements: • Mr and Mrs Smith said the loss occurred over the weekend when their young grandson was visiting. They said that they thought their grandson might have done something with the jewellery, but had looked all over the apartment and had not found it. • Mrs Smith told the insurer that she had called her grandson’s mother, Diane*, and asked whether the grandson had accidently put it in his backpack, and Diane said he had not. • Mr Smith told the insurer that he and Mrs Smith never talked to Diane and had asked Roger to talk to her. • Diane confirmed that Mrs Smith had not spoken to her about the jewellery, nor had Roger. • Roger confirmed no one had asked him to talk to Diane. IFSO Scheme investigation Mrs Smith must have known that she did not talk to Diane. This could not have been a mere mistake in the circumstances, but instead, the case manager believed it was a deliberate attempt to mislead. Accordingly, the case manager found Mrs Smith realised that her conduct was dishonest, according to ordinary standards. Therefore, the insurer was entitled to rely on a breach of the common law obligation of good faith, to decline the claim and recover the payment. HOW YOU CAN HELP YOUR CLIENTS AVOID FUTURE ISSUES The IFSO Scheme’s top tips for helping clients avoid issues with fraud and dishonesty are: • Remind clients about the importance of giving correct information • Encourage clients to take care about the information they provide; when in doubt, find out • Tell clients they must not tell lies (including white lies), be flippant, or guess • Explain the consequences (both for the claim and broader future consequences) if they do not tell the truth. Stevens said, “These cases demonstrate how important your role is in assisting and educating clients. Just imagine if Joe or Mr and Mrs Smith’s broker had been able to warn them about the dangers of not telling the truth, how different the outcomes might have been for these clients.” www.covernote.co.nz
FLEET OPERATORS CAN MANAGE THEIR PREMIUMS BY BETTER MANAGING THEIR RISK by Ian Taylor,
National Manager Commercial Motor, NZI
ver the last year, NZI has been working with fleet operators to help them manage their risk and minimise premium increases. Rather than a blanket increase across commercial motor insurance, we’re taking a holistic view of our customers’ claims across different segments of the market and working with them to ensure fleet premiums reflect individual claim results. We know there are many factors currently impacting costs. The reality is there are more vehicles on our roads (and more accidents as a result), and newer vehicles too. Technology in vehicles continues to advance at a rapid rate, with electronics currently accounting for a quarter of a vehicle’s value - and this is estimated to soon reach as much as 40%! There’s more complexity in the paint colours and effects manufacturers are using and an increasing requirement for vehicles to return to authorised dealers for fault code resetting. On top of that, we’re experiencing increased labour costs and a shortage of skills. It’s not uncommon for repair shops to be booked out for 8 to10 weeks in advance. With that said, though, commercial fleet operators can still manage their premiums and reduce them over time if they can sustainably reduce the frequency and severity of their claims. Risk management focuses on identifying what could go wrong, evaluating which risks should be dealt with and implementing strategies to deal with those risks. And that’s where we come in. Warren Buffett once said, “Risk comes 24
from not knowing what you’re doing.” Risk management is about people and processes and not necessarily about models and technology. Through our Fleet Risk Management Programme we work with fleet customers to help them get their fleet fit. We work with them on things like better monitoring and training of drivers; managing fatigue issues; and improving their risk awareness and safety culture as an organisation.
likely it is driver fatigue is a contributing factor. In 2015, fatigue was a factor in 43 fatal crashes and 119 serious injury crashes, making the total social cost $363 million. In fact, for every 100 drivers who died in road crashes involving fatigue, 21 passengers and 28 other road users died with them.* NZI and Lumley customers can take advantage of our free trial of Guardian to see how it works for them at no cost to their business.
THE MINISTRY OF TRANSPORT FATIGUE REPORT 2016 SAYS THAT THE MORE SERIOUS A CRASH, THE MORE LIKELY IT IS DRIVER FATIGUE IS A CONTRIBUTING FACTOR. Our trained consultants analyse a company’s performance and make recommendations as to how they can reduce their risk. We provide support to our customers with driver performance, efficiency and crash management to help them perform better and be safer on and off the road. One of the innovative programmes NZI offers uses the Guardian System’s lifesaving technology to prevent accidents caused by driver fatigue and distraction. The Ministry of Transport Fatigue Report 2016 says that the more serious a crash, the more
To help customers choose the right programme for their business, we’ve developed an online tool that looks at industry type, fleet size, technologies in place and what their biggest concerns as a business are. So encourage your clients to use the fleet fit plan tool on our website https://nzifleetfit.co.nz/ get-a-fleet-fit-plan/index.php and take advantage of our programmes – they’re making a real difference to fleet operators’ bottom lines. Source: Ministry Report on Diverted Attention 2016
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ARE KIWI BUSINESSES PREPARED FOR INTERRUPTION?
By Bryan Tedford,
National Portfolio Manager Business Continuity & Asset Protection, NZI
usiness interruption insurance has never been more important for Kiwi businesses. NZI’s figures show that in Auckland just 60% of businesses that bought business property insurance also purchased business interruption cover. In the smaller regions that number is as low as 30%. A 2015 media release issued by the Insurance Council of New Zealand reported that only one in four small to medium–sized enterprises was adequately insured, and across New Zealand 23% of business owners did not have any insurance at all. New Zealand’s fragility means that business interruption cover is even more critical. Over the last decade the country has seen an unprecedented amount of natural disasters. The survival of a business today depends on more than just replacing damaged buildings and goods. Businesses need to have the ability to pay for alternative accommodation, ongoing bills and other costs including salaries and lost profits, when recovering from a fire, disaster or other major event. One in four small businesses would not survive if they had to close their doors for three months. Business interruption insurance can pay the business owner a predetermined amount of money for a set period of time when earnings can’t be made to help cover overheads including wages, rent and any finance payments until they get back on their feet. Kiwi business owners need to be educated about business interruption
cover to make sure their sum insured and cover is adequate. Contingencies such as new distribution partners and other business needs should also be factored in case a loss occurs to a key stakeholder. As a global economy, one of the key issues affecting businesses today is protecting the supply chain. Business transactions are more complex than they once were and there is more likelihood of something going wrong. It is a growing concern for businesses and affects almost every industry. It is consistently ranked by businesses as one of their greatest threats. Supply chains can be affected by many things, including cyberattacks, telecommunication outages, IT issues, natural disasters and even world events. The top causes of supply chain disruption were unplanned IT or telecommunications outages, loss of talent or skills and cyberattacks or data breaches. A further dimension to insuring business property has come with the digital age. Business owners must now think about protecting their digital and online assets as well - websites, e-commerce facilities and digital networks. If a business gets hacked and cannot operate or its customer data gets stolen, there is going to be a cost involved to manage both the situation and the business’s reputation, as well as getting it back up and running. Having the right contingent business interruption cover is the best line of defence. Resilience is all about being able to overcome the unexpected.
EQC REFORM WHEN EQC WAS ESTABLISHED IN THE EARLY 1990`S, THEY DID NOT EXPECT THREE MAJOR EARTHQUAKES IN SUCCESSION IN THE ONE REGION.
here is finally some clarity for those awaiting details from the EQC Act reforms. The proposed changes come after a weighty review that was often mired in complexity as the interests of private insurers and claimants were considered and implications of such changes were weighed up. Finance minister Steven Joyce and minister responsible for the Earthquake Commission Gerry Brownlee announced the proposed changes to the act in June. “This review has provided us the opportunity to consider how the scheme could work more effectively for future natural disasters,” said Joyce at the announcement of the changes. Brownlee said the reforms would simplify the relationship between the EQC scheme and private insurance and help provide faster and smoother resolution of claims following a major event. The key reforms are: • Increasing the monetary cap from $100,000 to $150,000 for EQC building cover. • Clarifying EQC land cover is for natural disaster damage that directly affects the insured residence or access to it. • Standardising the claims excess on EQC building cover at $1,000. This currently ranges from $200 to $1,150 depending on the size of the claim. • EQC no longer providing any residential household contents insurance. • Requiring EQC claimants to lodge claims with their private insurer who would pass the claim on to EQC (if the property is insured). The reforms have been met with muted applause by those in the insurance industry. Insurance Council NZ (ICNZ) chief executive Tim Grafton said the reforms represented a good first step towards creating a better scheme. He said he was heartened that Government had listened to industry concerns over land compensation. “This means that where land damage has occurred, separate funding to the building cover is available to fix the land or access to the property so the house can be repaired or rebuilt.” John Sloan, an insurance adviser with many years’ experience in the field of risk management, said the proposed EQC Act reforms were “quite convincing”.
He said they “partly solved” the issues that the EQC faced in the wake of the Christchurch earthquakes. But he was careful not to apportion full blame to an organisation that he said was never designed to deal with such large-scale, repeated catastrophes. “When EQC was established in the early 1990's, they did not expect three major earthquakes in succession in the one region,” he said. “They also expected the dual cover of EQC and private 'top-up' to work seamlessly with no demarcation disputes.” The split between private insurers and EQC cover has been one of the main hurdles to satisfactory resolution for claimants after the recent disasters. Sloan said the model wasn’t fully tested before and the flaws became very evident under the pressure of the mountain of claims. He said the review only partly solved these issues, but the demarcation split was not resolved. He said the cap increase from $100,000 to $150,000 was reasonable but questioned why the review panel has not considered a higher rate or even the possibility of chopping out private insurers altogether. He said the reform covering land was welcomed, but the standardised claims reform was “not very brave as $1000 is still comparatively low” and the removal of residential contents insurance “pragmatic”. Contents insurance has been removed from the purview of the EQC scheme and Grafton said this was a sensible move because rehousing people is the key consideration after a natural disaster. “Private insurers will meet all contents claims and having a standardized excess helps simplify the claims process.” Grafton was concerned that EQC would continue to assess the damage post-earthquake, even though insurers became the first port of call. “The area where we have difficulty is that we believe insurers should be responsible for assessing and settling all house claims, as we have been largely doing for the Kaikoura earthquake.” He said insurers wanted to make things simpler for their customers, but this requirement would make matters more complicated. He would like to see the model that was used post-Kaikoura earthquake become the basis for the management and assessment of future claims. The Government aims to release a draft EQC reform bill late this year or in early 2018, and the changes should be implemented in 2020. www.covernote.co.nz
DISCLOSURE – LET’S GET REAL By David Whyte,
Chair of Camelot Group and Suitebox and former managing director of AIG Life Australia and general manager of AIA in New Zealand.
he issue of what to disclose on an insurance application form has been a frequent source of heated debate, discussion and dispute. In industry terms, non-disclosure of material facts – those that would have influenced an underwriter’s decision - has been used as a reason for declining claims in the past. Some progress has been achieved. Declining a claim on the basis of an undisclosed issue that is unrelated to the cause of the claim has been less contested by insurers in the recent past. That’s not to say that non-disclosure has gone away as an issue, but reports from the dispute resolution providers suggest that insurers are adopting a more pragmatic approach when faced with non-disclosure. No doubt there will be cases cited where an insurance company has behaved in exactly the opposite fashion on a particular claim – just proves the previous statement wrong! However, no insurer willingly or lightly declines a claim for any reason, and in particular for non-disclosure, knowing that there is likely to be a controversial and confrontational response from a highly disgruntled client. This unhappy client may also have a broker or a financial adviser, and this only adds to the reluctance of most insurers to avoid a claim. But the ad hoc expediency is still on a case-by-case basis. This approach is papering over the cracks, as the fundamental aspect of non-disclosure – inadvertent or otherwise – needs to be addressed, as it has in other OECD territories. Concerns range from fraudulent and deliberate attempts to mislead insurers at one end of the spectrum, to claims departments apparently looking for any possible way to reject a valid claim. No doubt there are occasions when both occur, but these are the exception rather than the rule, and all stakeholders need to move forward to a regime where disclosure rules do not penalise the innocent, nor leave insurers exposed to meeting invalid claims. Careful attention to the wording of terms and conditions will help, as will spelling out in plain English the nature, meaning and impact of any exclusions applied at standard policy level, as well as any applied at the underwriting stage. But there needs to be more consumer-friendly parameters around the disclosure/non disclosure treatment in the transaction of the contract. And that treatment likely needs to be in a legal and regulatory format. Balancing price and claims sensitivity is a complex process, and despite the best attentions of our actuarial colleagues, companies don’t always get it right. However, there is precedent elsewhere to provide some comfort and to point us in the right direction. Falling into line with Australia isn’t always a good thing, but in this instance, New Zealand has to bite the bullet. Without going into detail (reference Financial Ombudsman Service Circular #15 Spring 2013) the ability of an insurer to avoid a claim due to non-disclosure has been rendered more onerous than previously. Like it or not, and there will be some objections from the industry, this amendment to current practice in New Zealand is on its way. There will no doubt be dire warnings issued about the consequences of adopting a more consumer-friendly approach and it is likely that more claims will be paid as a result of accepting the amended treatment of nondisclosure.
But there are too many incidents in the past where claims have been negatively impacted and rejected to maintain the status quo. Sure premiums will rise should claims increase as a result, but they will rise for everyone – that’s one of the fundamentals of insurance. And while it may come as a shock to some commentators that adviser commission is not the only expense that has an impact on retails premium pricing levels, the potential adjustments in claims experience are a strong argument for the industry to publish more detailed analysis of individual company statistics.
It’s pretty obvious that the controversy and the impact around nondisclosure on the life and health insurance industry can have serious ramifications for both the insurer and the insured. While the rapid advance in data management and data storage could conceivably lead to all clients being underwritten quickly and cost-effectively, irrespective of the levels of cover, age, pre-existing conditions, etc., the issue is less clear cut on the non-life industry. Certainly personal lines, travel, PA, etc., contain references to personal details, but with material damage and/or liability contracts, non-disclosure is more likely to relate to claims experience or undisclosed criminal activity. Clearly, the moral hazard exposes the insurer to greater risk, so any changes to the law in this context will need to be carefully crafted. At a recent industry conference I was informed that the Minister will be reviewing the law around non-disclosure later this year (subject to events in September) and the changes contemplated are likely to bring New Zealand into line with other jurisdictions. So that’s good news as our industry frequently gets lambasted by the popular press – often unfairly – when they attempt to sensationalise a claims story without being in knowledge of the full facts. However, making these changes to the current non-disclosure practices presents as an opportunity to shout from the rooftops that the industry is responsive to changing consumer needs and is ready to adjust and alter its practices where appropriate and sensible. Ultimately, any increased exposure and resulting adverse claims experience will arrive at the doorstep of the consumers – those most likely to benefit from the change.
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GROUP TO CRAFT CHANGE Under the new financial advice legislation, all financial advisers, including those who are currently working as registered financial advisers, will be bound by a code of conduct.
ngus Dale-Jones has been appointed as the chairman who will led the working group tasked with developing the new code. WHAT IS THE CODE WORKING GROUP AND WHAT WILL YOU DO? Currently, there are two committees - the Code Committee established under the Financial Advisers Act and the Code Working Group (CWG) established by the Minister pursuant to the Financial Services Legislation Amendment Bill (FSLAB). The CWG is responsible for drafting a new financial advice code that will replace the current code for authorised financial advisers when the Bill takes effect. WHEN WILL THE CODE COME INTO EFFECT? The provisional aim is to have the new code ready for approval by the Minister around August 2018, with licensing under the new legislation commencing shortly after that. The code is expected to be relevant to advice given from May 2019, although there is two-year transition period for the adviser competence requirements. WHO WILL IT APPLY TO? To answer that question, we have to rely on what is drafted in the FSLAB. Because that is not final legislation, answers might change.
However, the proposal is that the new code applies to all regulated financial advice, which is a far wider scope than currently. It is likely to capture the advice activities not only of those advisers who are currently authorised financial advisers (AFAs) but also RFAs, advice businesses and robo advice. The current distinction between category 1 and 2 products and between class and personalised advice are all removed, so all those activities become subject to the code. WHAT WILL IT MEAN FOR INSURANCE BROKERS? Well the good news is that IBANZ has already adopted much of the existing AFA code, even for advisers who are not AFAs. Some of those principles are likely to carry through to the new code. However, the precise impact on all advice - including that given by insurance brokers - will not be known until the CWG has conducted a consultation process. That will commence later this year, so it is really important that all parts of the advice sector are fully engaged in that process. ARE INSURANCE BROKERS LIKELY TO HAVE TO GET NEW QUALIFICATIONS? The CWG has published a preliminary document about how it will
KEY DATES CONSULTATION CONCEPTS: OCTOBER/NOVEMBER 2017 PRELIMINARY DRAFT: MARCH OR APRIL 2018 NEW CODE OF CONDUCT APPROVED: AUGUST 2018 NEW REGIME, INCLUDING NEW CODE, COMES INTO EFFECT: MAY 2019
WHO IS THE WORKING GROUP? • Angus Dale-Jones (Chair) previously a board member of the Professional Advisers Association (PAA). • Barbara Benson (Consumer and/or Dispute Resolution Representative) previously Manager, Teacher Education at the Education Council of New Zealand • Brian McCulloch (Consumer and/or Dispute Resolution Representative) is an independent consultant, an independent director at Utilities Disputes Limited • John Berry is the CEO of Pathfinder Asset Management • Graeme Edwards is the general counsel and company secretary at ASB Bank. • Paul Mersi is currently an independent consultant • Rebecca Vanderbom is the head of financial advice delivery and service, Milford Asset Management and an AFA. • Shane Edmond is the head of private client services at Forsyth Barr and a member of the current code committee. • Therese Singleton is the general manager, sales and advice, at AMP.
operate. That makes clear that a guiding principle for the development of the code will be a focus on customer outcomes. Decisions about when advisers need qualifications are therefore likely to be made in the context of whether a qualification is necessary to promote good customer outcomes. Again, your views during consultation will be extremely helpful in determining when and what qualification requirements should apply. HOW DO YOU THINK THE NEW REGIME WILL BE AN IMPROVEMENT ON THE EXISTING ONE? A central feature of the proposed regime is that all regulated advice will be covered by the code, not just advice from AFAs. That will hopefully make the advice world easier for consumers and advisers to understand, particularly as we move away from lots of different acronyms like AFA and RFA, and will likely encourage more consistent approaches to advice giving across the board.The draft legislation aims to improve the availability and quality of advice, so if that results in greater trust in and use of advice, that would be great. DO YOU EXPECT MUCH CHANGE TO THE INSURANCE BROKER MARKET?
It is too early to tell, but it is likely that the code will encourage moves towards greater professionalism. WHAT CHANGE, IF ANY, DO YOU EXPECT GENERAL INSURANCE CLIENTS TO NOTICE? Again, the focus is on availability and quality of advice. Any ideas you have for improving the general insurance advice experience, please let the CWG know through its consultation process. ARE THERE ANY PROBLEMS IN THE GENERAL INSURANCE MARKET YOU'D LIKE TO ADDRESS? We'd like to know if there is anything inhibiting good customer outcomes. For example, are there incentives that result in sub-optimal advice outcomes, or are there advice process and documentation requirements that are ineffective? IS THERE ANYTHING ELSE THAT GENERAL INSURANCE BROKERS SHOULD KNOW? We are already speaking to IBANZ and will keep them fully informed. The CWG wants the general insurance sector to be fully involved in the code consultation process. www.covernote.co.nz
THE GENERATIONAL DIVIDE - HOW WILL IT IMPACT THE INSURANCE INDUSTRY?
The latest SME Insurance Index report from Vero - ‘Understanding differences between age diverse business owners’ explores the similarities and differences between baby boomer SMEs and the generations that come after, and looks at how the insurance industry might change as the boomer generation exits the market.
he baby boomer generation – roughly characterised in New Zealand as those who are between 50 and 71 this year – are passing the baton of the business world, and younger generations are now firmly making their mark on the economy. According to the Ministry of Business, Innovation & Employment, more than half of all self-employed SMEs in New Zealand are now under 50 years. “People under 50 are creating and establishing businesses that will become the future of our economy,” says EGM Customer Experience at Suncorp, Campbell Mitchell. “And our latest research has found that they want to do business in a different way to the 50s who have dominated the business world for so long. It’s important for insurance brokers 32
to understand and respond to the generational change that’s currently underway.” So what did the second edition of the SME Insurance Index uncover? MARKEDLY DIFFERENT ATTITUDES The research shows a generational divide between the attitudes of the baby boomer generation and those under 50 in everything from research to confidence. “It’s not that surprising that younger SMEs are almost twice as likely to use the internet to research insurance,” says Mitchell. “But when we looked at the research to see demographic trends, we were surprised to find no marked difference in behaviour or attitudes between SMEs who are 30 and under and those between 30 and 50.” SMEs under 50 emerged as generally more cynical about the value of insurance and the
differences between insurance companies, as well as significantly more price conscious than the boomer generation. “Those under 50 are less confident about their insurance purchasing but also less prepared to rely on professional advice,” says Mitchell. “I think that shows a clear lack of understanding of the broker proposition and a good opportunity for the brokers who will take advantage of it.” The SME Index also showed the generations under 50 are less likely to seek advice from professionals like financial advisers or lawyers. As with online recommendations or peer-to-peer review sites, advice and referrals from trusted networks are king for the emerging generations of business owners. But are their attitudes translating to different behaviour?
Not at this stage, says Mitchell. According to the survey, 59% of SMEs under 50 are still purchasing their insurance from a broker (compared with 56% in the 50+ age bracket). But overall the younger group is much less satisfied with their broker – 45% are highly satisfied compared to 63% of SMEs aged 50+, and 31% have identified themselves as not satisfied, compared to 22%. So why is it that, outside of the baby boomer generation, SMEs are increasingly unhappy with the service insurance brokers provide? THEIR EXPECTATIONS AREN’T BASED ON INSURANCE “It’s because the survey shows,” says Mitchell, “that they’re comparing insurers and brokers to other industries and finding that the service
levels aren’t what they expect.” The research shows that SMEs under 50 have service expectations that are set by new players outside of the insurance industry, including businesses like Xero or Powershop. “It’s a perfect storm,” says Mitchell.“The trend is there that SMEs under 50 are increasingly wanting to research and do business online, they’re willing to forego personal contact for a better deal and they don’t believe in the value of the purchase they’re making. “And at the same time the companies they deal with all the time - Uber, Airbnb, AliExpress - are enabling them to do business the way they want. Those services are no longer exceptional - they’re the norm - and the insurance industry should ignore that at their peril.”
Among SMEs under 50: •
27% didn’t know a broker could manage the claims process
26% didn’t know the broker would check up on changes to their business that might impact insurance cover
22% don’t know if a broker would inform them about changes to insurance or regulatory requirements.
A GLIMPSE INTO THE FUTURE “This research is a glimpse into the future for our industry, providing useful insights for brokers,” says Mitchell. The changes and risks the industry face are clear, but the SME Insurance Index also highlights some potential changes for brokers and advisers to consider to keep ahead of the game. “The beauty is that it’s simple changes, really,” says Mitchell. “Optimising your website for mobile devices, online transaction and communications platforms – those aren’t new technologies. We don’t need to reinvent the wheel.” The Vero SME Insurance Index outlines a clear need for brokers to redefine their service offering and benchmark it against businesses outside their industries, and make urgent changes to options they give their customers for transacting business. The changes are necessary, says Mitchell. Brokers can embrace the changes of a digital era to ensure that the broking industry remains relevant to and respected by a new generation of business owners.
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GATHERING DETAILED RISK INFORMATION MAY HELP YOUR CLIENTS SECURE FAVOURABLE TERMS
By John Lucas,
Insurance Manager at the Insurance Council
ew Zealand is amid a construction boom. Some property developers are now investing heavily in resilient building technology that embraces low-damage designs for seismic risk reduction as well as high standards of fire separation, fire suppression and energy use efficiency. Much of this new seismic design resilience is a way above the current minimums set out in the building legislation. The multiple earthquake events that New Zealand has experienced in the last nine years have identified many weaknesses in the design and build quality of our commercial buildings that support our economy. In many regions of New Zealand, building owners are now exposed to much larger balance sheet risks for earthquake damage because of the larger insurance deductibles that became the norm in 2012. Both the July and August 2013 Cook Strait and November 2016 Kaikoura earthquake events caused damage to many modern buildings in Wellington. The damage ranged from internal fit-out failure to floor and stairway element failure, through to non-repairable structural damage. Many Wellington buildings were shut down after the November 2016 Kaikoura earthquake and many are still being repaired today. Businessed operating from those affected buildings were displaced. In July 2017, the Insurance Council partnered with BRANZ,Wellington City Council and EQC to deliver a seminar to the construction industry about the high vulnerabilities for internal fit-out failure in moderate earthquake events. We learnt that problems are mainly due to non-compliance with
existing standards, and with no one checking the quality of the internal fit out work, New Zealand has ended up with a systemic problem that will have to be corrected over time with significant cost. The day after the seminar, the Insurance Councils Commercial Property Committee took a tour of a Wellington construction site at 20 Customhouse Quay. The building is of a unique design using criss-cross support frames and a glass facade. The site is on reclaimed land and the foundation piles were drilled down to 30 metres. The building is base-isolated and will be 14 levels high when complete. We were informed that so far this is the tallest base-isolated structure in Australasia. Buildings cannot be too heavy when base-isolated, so the structure is mainly steel that is far lighter than traditional concrete. The engineer conducting the tour explained that the base-isolators are designed to take a horizontal displacement of up to 600 millimetres and any direction and are effective in dampening large ground accelerations expected in large seismic events. Due to the steel-frame construction, the base-isolators themselves must be earth-bonded to prevent isolator damage in the event of lightning strikes. The criss-cross steel tube frames known as spandrels are fabricated off-site and have large-diameter pre-stressed reinforcing bars installed internally, and once bolted into position are then pressure-filled with concrete. These spandrels brace the structure and negate the need for sheer walls that are
usually heavy concrete construction and can fail in large seismic events. A failed sheer wall can make a building uneconomic to repair. Most of the steel used on this construction site was manufactured in New Zealand. On the lower floors, we could see the internal fit-out that included the mechanical plant for heating and ventilation, pipe work for sprinklers and plumbing, electrical cable trays and ceiling grid framing taking shape. It was clear to see examples of the seismic restraints systems that we saw at the seminar the previous day had been fitted. The building owners, Newcrest, are passionate about their new building and were keen to promote its design features and benefits to prospective tenants and insurers. Across the road from 20 Customhouse Quay there is another building under construction that is understood to be meeting high seismic design standards as well. The owners of this new building will no doubt want to promote the resilience features and benefits to insurers once it is completed. As brokers are the key interface between the building owner and the
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BROKERS CAN ADD ADDITIONAL VALUE TO THE INSURANCE TRANSACTION BY OBTAINING FROM BUILDING OWNERS DETAILED REPORTS ON ALL THE BUILDING DESIGN AND CONSTRUCTION INFORMATION WITH AN EXPLANATION OF THE TECHNOLOGY USED. insurance carriers, itâ&#x20AC;&#x2122;s therefore important that brokers are able to provide insurers with good information about these newer low-damage design buildings. The technology now being used in some types of construction is so new that many insurers are not going to be familiar with these new construction techniques. Brokers can add additional value to the insurance transaction by obtaining from building owners detailed reports on all the building design and construction information with an explanation of the technology used. Should New Zealand ever be faced with a firmer or contracted earthquake insurance market, then it would only be fair to building owners that have invested in low-damage designs to receive some additional benefit on their investment from their insurance. This will hopefully promote more developers and building owners to invest in low-damage design technology for future building projects. The same should be considered for businesses leasing space in low-damage design buildings as well as business interruption exposure being improved. Lessons learnt from the last yearâ&#x20AC;&#x2122;s Kaikoura earthquake event proves that not all new buildings reportedly built to high new building standard (NBS) ratings of greater than 120% are equal. NBS is not a good measure for earthquake resilience. We need to remember that NBS is a life safety standard in the building legislation which allows it to be acceptable for a building to become a constructive total loss so long as no one is killed or injured. The New Zealand economy and the insurance market cannot afford that type of rationale.
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How fast will technology change the industry?
he car insurance industryÂ is significant. In the USA, it generates US$220 billion in annual revenue and supports 277,000 jobs. For many P&C insurers, car insurance is more than 50% of their total cash flow. It is generally thought that the introduction of autonomous driving technology will have a substantial adverse impact on the vehicle insurance industry, leading to the eventual demise of the current industry. While this is true, the more important question is the speed at which that demise occurs and the shape of the decline curve - its decline dynamics. Many in the vehicle insurance industry have predicted a slow decline of profitability over the next 20 years, while some in the tech industry have predicted a sudden drop in the next five years. While the end result is the same, there is a world of difference between these two. It is impossible to accurately predict car insurance demise dynamics, but knowledge of the concepts of industrial demise can be useful to understanding. Cognizant found that few
insurance managers regarded changes in the automobile market as worthy of concern before 2030. Academic research, however, shows that disruptive change often occurs far faster than incumbents expect. Remember that modern mobile phones were only introduced in 2007, yet now dominate our lives. TELEMATICS AND TURNOVER RATES The lack of concern by many in the insurance industry is linked to the probable slow introduction of fully autonomous (100%) cars. Creating 100% autonomous driving systems, systems which can cope with issues like ice, snow, unlaned roads, dirty sensors, etc, is extremely difficult and therefore unlikely to be in use outside the main cities before 2025, or in the majority of cars before 2035. The first key concept which it is vital to understand is that this slow spread of 100% autonomous cars is unlikely to slow the demise of vehicle insurance profitability. This is because cars with a range of current technologies (80% cars), like adaptive cruise control and predictive braking, have been shown to have crash rates 20% to 30%
of fully manual cars.The introduction of 80% cars is thus likely to have a more substantial impact on crash rates than the introduction of 100% cars, and 80% technology is impacting on premiums for these high-end cars now, leading to the start of a decline in insurer cash flow. The industry, however, argues that even this threat is minor, as these 80% technologies will only be embedded in middle-end cars starting by 2021 and low-end cars starting in 2025.This implies that manual cars (non-80%) will still be the majority of cars sold in 2023. Some commentators argue that telematics will not be widely introduced because, based on current black-box telematics, they are too expensive for all but the highest-risk clients to install. This ignores the fact that increasingly cars are being manufactured with telematics preinstalled, and mass production is causing the cost to drop sharply. When Google first built their autonomous car, the LIDAR system cost more than $70,000. Today that same hardware can be purchased for $250 and is expected to fall to $90 soon, making it affordable for even lower-
CAR INSURANCE DECLINE DYNAMICS
By Michael Naylor end cars. In 2017, 83 million cars with smart functions will be sold. They are especially useful for commercial trucking or taxi fleets, where they aid use efficiency. The key variable is then the turnover rate (replacement of old cars with new ones). Based on the US over the past 11 years, cars with 80% avoidance technology and telematics will not constitute over 50% of the vehicle fleet until after 2030. It is therefore argued that the majority of cars on the road in 2030 will still be manual in the US, so the insurance industry has 15 years to react. It needs to be noted that the inclusion of telematics has increased the cost of cars, especially exposed components such as wing mirrors or windscreens. The installation of these has become more complex and expensive. This has led to a temporary rise in crash payouts. However, by about 2020, the rate of crashes will decline faster than component cost will rise. PROFITABILITY VERSUS PREMIUMS The second key concept is that there is a difference between the rate of spread of
autonomous cars and the decline of auto-insurance profitability. What needs to be clearly understood is that the demise of the car insurance industry is not about percentages of cars with X or Y type of technology, nor is it really about declines in premiums flows. Demise dynamics depends instead on profitability. The lesson from past episodes of disruptive innovation is that at the point when premium cash flow starts to decline by 5% or 10% per year, the natural reaction from insurers will be to cut premiums to retain market share. This quickly leads to “destructive competition”, where, in order to increase market share to hold premium income constant, companies compete until profit margins turn negative. Most incumbents have cost structures with large distribution costs so have little flexibility in reducing per sale costs. This means that insurance profits disappear when manual car numbers and premium flows are still at 70% to 80% or so of previous levels. This implies decreasing auto insurance profitability from about 2020 on. In addition, since the richest customers will
be the owners of the 80% cars, an increasing proportion of premiums will come from insuring the lower-income owners of the remaining manual cars. Insurers will thus have to compete for a shrinking pool of decreasing quality clients or those few who chose to manually drive as a hobby. The only firms with an incentive to stay in this type of market are specialist cover insurers. An additional trend in large cities will be the use of car-sharing apps. Already car ownership rates have peaked in key demographic urban categories.The net impact of this is still unknown, but since profit margins on fleet insurance deals are low, the impact could be noticeable. The conclusion is that the turning point for car insurers does not occur when 100% autonomous cars arrive on our roads in substantial numbers, which is a decade away. The insurers’ turning point occurs when a sufficient number of 80% autonomous cars exist to substantially cut crash rates and thus cut premiums and thus cut insurer cash flow. Some commentators will argue, correctly, that “car insurance will still exist for www.covernote.co.nz
decades”. I’m sure it will; people will still continue to drive manual cars for fun. My response is that horse insurance still exists, but I’m not sure that current insurers visualise their future in that way. TIPPING POINT The third key concept is that the crash rate of an individual car does not just depend on its own level of technology; it also depends on the technology of other cars. The 80% cars not only avoid crashing themselves, they detect and avoid straying manual cars. In a networked environment, manually driven cars can be identified well before the auto-car gets to them and they will be given a wide margin. Therefore, as the proportion of 80% cars rises, it becomes harder for even erratically manual cars to crash. This is not a linear process. Models derived from diseases and financial crises show that there is a “tipping point” where the environment changes rapidly from one where one type of behaviour dominates to one where another type of behaviour dominates. These models imply that that there will be a tipping point when about 45% to 55% of current cars have 80% technology, which will occur around 2023 to 2026. After that point cars with 80% or better crash-avoidance technology will only crash due to software bugs, hacking, poor maintenance, roadside objects or due to manual drivers. Within an exponential change, a forecast based on a linear projection of past trends is dangerous, as insurers are likely to be surprised and thus wrong-footed. ELECTRIC AND AUTOMATIC-DRIVE VEHICLES A related issue relating to turnover is the rapidly decreasing drop in the cost of electric vehicles (EV) against the cost of internal combustion engine vehicles (ICE).Tesla has been a EV innovator and, while still a niche player, is raising genuine concern amongst the incumbents. Realising that the main cost of EV was the battery pack, Tesla has built an extremely large battery factory which will reduce the cost of a family saloon to equal that of ICE models by 2020, EV range is also rising rapidly, with Tesla predicting a driving range equal to ICE cars by 2020, and double the ICE range by 2028. Tesla’s success has motivated competitors with BYD, Foxconn, LG Chem, Nissan, Dyson, Apple and Samsung, all making announcements to build large-scale battery factories. This manufacturing competition should accelerate cost reductions. Given that EVs have a fuel cost and 38
maintenance costs under 10% of ICE cars and EV cars have superior performance, it can be assumed that once they can be purchased anywhere near the price of ICE cars, EV cars will probably be purchased as fast as they can be produced. Current trends indicate that somewhere between 2020 and 2025 is the tipping point - the point at which it would make no financial sense to purchase an ICE vehicle for the average vehicle buyer. Note that these predictions do not lie in the success or otherwise of Tesla to meet production targets, nor do not assume that individual ownership will decrease. The prediction is based on the rapid maturing of EV manufacturing and established rate of cost decline. FoxConn, a contract IT manufacturer estimates it can make family saloon EVs at a price of $US15,000 by 2023. The fourth key concept is that the switch to EVs will create a one-off disruption which will jump the turnover rate substantially within the next 10 years. The main limiting factor will be the speed at which incumbent manufacturers can respond by switching production to auto-drive EVs at that price range. Assuming that all EV cars will come equipped with inbuilt advanced sensor and auto-drive systems, then the drop in insurance cash flow could substantially accelerate after 2022. Progress to date with automatic-drive systems has been slow due to physical issues with car telematics. These have been largely solved, so delays from this year will be primarily related to AI experience. Given the exponential rates of software improvement, it would be a brave insurance manager who would argue that autodrive cars will not be introduced rapidly. If the auto-drive software capacity doubles and cost halves every two years say, then why would crash rates and associated premiums not start to drop by 10%-15% per year? It needs to be remembered that any technology offering a substantial reduction in car crashes and in pollution is likely to be proactively embraced by both the public and regulators. RAPID INNOVATION SWITCHES The time it takes for an external disruptor to enter is shrinking; it took Uber four years to start to disrupt the Australian market. There is a lot of money currently going into InsurTech. Are vehicle insurers willing to bet their firms on the unlikeliness of disruption not occurring over the next five to 10 years? Examples exist of unexpectedly rapid
technology switches. For example, urban transport in cities went from 99% horses in 1900 to 95% cars by 1912. The lesson here is that once a disruptive technology reaches a particular tipping point, it doesn’t just take market share from the incumbent industry but rather completely replaces it. BARRIERS TO ENTRY The insurance industry has higher barriers to entry by new firms that other industries do.These include financial, data, experience, reliability, switching costs and regulatory barriers. However, the auto-insurance market has substantially lower barriers than other insurance areas, which reinforces its role as the leading edge of reform. Customers face few barriers to switching their car or house insurance, and telematic users like Octo or Tesla have the data and experience advantage. Bankruptcy of an insurer is, thus, not a serious problem for customers, nor are regulators as strict. Dynamic insurance also offers more in the P&C sector. For these reasons, auto-insurance will be impacted by external disrupters before other sectors are. I would argue that while InsurTech start-ups have currently entered via niche markets, there are only limited barriers to their expansion outside those sectors, especially if they have a substantially lower cost model. The major barriers to entry to the autoinsurance sector are (i) expertise in creating an automated end-to-end processing system, (ii) expertise in AI analysis of real-time big data, (iii) a large relevant data set, (iv) an ability to transform as successive waves of innovation roll in, and (v) experience with engaging and delighting customers. Incumbent insurers do not rank well in terms of these barriers. Large internet platforms do. As an important enabler of innovation, insurers could evolve with technology and even thrive. Some cars today can tell when you’re drowsy or if you don’t have a hand on the wheel or if you’re speeding, and so on. Given this flood of real-time data that cars can generate, the current model of charging annual premiums seems so last century. Dynamic insurance is the future.The dynamics are complex and debatable, but it is better for insurers to be prepared too early than to be rushing to catch up. Assuming no change is the risky choice.
Dr Michael Naylor is a senior lecturer in Massey University’s school of economics and finances who specialises in insurance.
INSURANCE LAW REFORM WELL OVERDUE By Crossley Gates, DLA Piper
nsurance brokers are aware of the two Acts of Parliament in New Zealand that reformed core insurance law: the Insurance Law Reform Acts of 1977 and 1985. These two Acts amended areas of the common-law (Judge-made law) New Zealand inherited from England. Although both Acts run to about 15 or so sections, most will be familiar with sections 9 and 11 of the Insurance Law Reform Act 1977. Section 9 addresses the late notification of claims (and ended up partly undoing the claims-made trigger for cover under a claims-made liability policy), and section 11 saves a claim for loss to property that was not caused by an excluded circumstance named in an otherwise applicable exclusion. Perhaps less well-known are sections 7 and 16 of the Insurance Law Reform Act 1985, which abolish the need for insurable interest and require mandatory disclosure of an Average clause in a policy, respectively. The two Insurance Law Reform Acts were proposed and drafted by the former Contracts and Commercial Law Reform Committee of the Law Society. That Committee was disbanded when the Government formed the Law Commission. It is an independent, publicly funded central advisory body established to undertake the systematic review, reform and development of the law of New Zealand. As long ago as 1998, the Law Commission published its Report 46, called Some Insurance Law Problems. It drafted a third Insurance Law Reform Bill to address the problems identified. The primary area identified for reform was the duty of disclosure when a policy is taken out or renewed.
The Commission stated: The first problem with the existing law concerns what must be disclosed. The test of materiality is whether the circumstance is one which would influence the judgement of a prudent insurer in determining whether to accept a risk and if so on what terms. How can the ordinary consumer be expected to know what circumstances would influence the judgment of a prudent insurer? … The second problem is that the insured’s disclosure duty is unaffected by the fact that he or she did not know and was not warned by the insurer of the nature or extent of the duty. … The third problem is allied to the second. An insurer is likely in a proposal form to ask specific questions of the prospective insured’s about, for example, claims history or health if the insured is seeking life or sickness cover or insurance in respect of medical costs. The law is quite clear that where an insurer chooses to ask the insured some questions, the insured is not excused from volunteering matters that he or she is under a legal duty to disclose but that are outside the scope of the insurer’s questions. The Government took no action. Fast-forward to 2004. The Law Commission issues its Report 87, entitled Life Insurance, after the Government requested the Commission to consider modernising the Life Insurance Act 1908. The Commission pointed out many issues with an act that was nearly 100 years old. It drafted a proposed bill. Perhaps in a less than subtle reminder to the Government about its earlier Report 46 and draft bill, it added the contents of that draft bill to its new draft bill,
entitled Insurance Contracts Bill, addressing both the earlier reforms and reforms to life insurance law. Now fast-forward to today. None of the 1998 problems have been addressed. Some of the issues with the Life Insurance Act 1908 have been addressed in the Insurance (Prudential Supervision) Act 2010 appointing the Reserve Bank of New Zealand the regulator of the insurance industry. Otherwise, the Life Insurance Act 1908 remains in force. Meanwhile, Australia reformed its law relating to non-disclosure in 1984 and England reformed the disclosure law New Zealand inherited from it in 2013. We are now approaching our third election cycle after the Canterbury earthquakes and still no reform. This maybe confirms one thing: there are no votes in insurance law reform. However, I am slightly encouraged to hear some murmurings from Government departments recently that the long-delayed reforms may come to the top of the ‘in-tray’ next year. That will be fitting, because it will be the 20th anniversary of the Law Commissions report advocating reform! Let’s hope it finally happens.
Crossley Gates is a partner at law firm DLA Piper. firstname.lastname@example.org
ASK AN EXPERT
Stolen truck neglect
Paying two premiums
My client left keys in a truck to make a delivery and the truck was stolen. The thieves crashed the truck into a couple of cars whilst it was stolen. The owners of the damaged cars are holding my client liable. We are denying liability as the truck was not in our control whilst stolen. The third party claims a friend in the insurance industry told him we are still liable. Is this the correct stance or does my client potentially have some liability to a third party in this circumstance?
A 19-year-old male client purchased a vehicle and 11 days later was involved in an accident and the vehicle was written off. He was not at fault. The third party was identified and no excess was paid. The annual premium was $2000. The client has since purchased a new vehicle, with the premium again being $2000. My client now has to pay twice the insurance premiums, the first from an accident that wasn’t his fault. Is it possible for this to be claimable against the third party? It seems unfair the client is effectively now paying twice the premiums?
REPLY… CROSSLEY GATES, DLA PIPER Your client was arguably negligent in leaving the keys in the truck, making it easy for the thieves to steal it. Is it reasonably foreseeable that the thieves would then crash the truck into some cars on the road such that your client now owed the owners of those cars a duty of care in tort, which he or she has breached and is therefore negligent? That is the legal issue here. If the answer is yes, then your client can be sued by the owners of the cars for negligence. If the answer is no, then your client is not legally liable to the owners of those cars. The law is that foreseeability is determined by reference to the proximity, in physical, temporal and other respects, between the happening of the relevant event (leaving the keys in the truck) and the damage it does to the owners of the cars. In a much-referenced case in England, a prison authority that negligently allowed a prisoner to escape could owe a duty to those in the neighbourhood of the prison but not to those far from the vicinity of the escape. This is because the negligent party may be under a duty to take care, but that duty is not owed to the world at large. Therefore it is possible that your client is legally liable. How distant from the negligent act was the collision with the cars? Was it in the neighbourhood or general vicinity? It is hard to come up with a hard-and-fast rule about this, but this may end up determining whether there was sufficient foreseeability. Sorry about the lesson in tort law; it is the only way to properly answer this question.
REPLY… CROSSLEY GATES, DLA PIPER Your client has lost the unearned portion of the first premium, i.e., the balance of the policy period after the accident. This is as a result of the other driver’s negligence. Therefore it is recoverable as damages so long as the loss is foreseeable and not too remote. This is the key issue. There is a Scottish case where the court held the loss of a no-claim bonus is foreseeable. On this basis while somewhat novel, the loss of the balance of the premium is foreseeable and recoverable as well.
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.
ASK AN EXPERT
Driveway oil leak issue Fire Service Act exemption QUESTION… I have a situation where our client, ABC, engaged a labour-only contractor via a labour supply company. The labourer has driven in their own car to the site (private house) and parked their vehicle on the brand-new drive. The labourer's vehicle has proceeded to leak oil on to this brand-new drive. The labourer's vehicle is uninsured and the labour supply company has excluded all liability via their contract with ABC. Initial discussions have led me to believe that ABC is vicariously liability for the damage caused by the subcontractor’s vehicle. We lodged a claim on the CMV policy, as the insured vehicle definition includes all vehicles for which ABC is responsible. Insured Vehicle: All vehicles and mobile plant and equipment (including their accessories) listed on the vehicle schedule and all other vehicles of every description (including their accessories), registered and unregistered, owned, used, leased, lent, borrowed, hired or in the care, custody and/or control of the Insured or for which the Insured is responsible, including all vehicles whilst bearing any “X” plate or equivalent whilst anywhere in New Zealand.
QUESTION… The Fire Service Act states that mines and quarries are exempt. This is a very broad comment. Does this mean no levy is payable on all the mining fixed plant, buildings and infrastructure?
REPLY… CAMERON TAYLOR The exemptions within the Act are very specific. As levy is self-assessed, it would be up to the levy payer to ensure that the correct amount of levy is paid. Based on the information above, the plant, buildings and infrastructure would not be exempt, as those items are not a mine.
The insurer has advised that ABC was not responsible for the labourer's vehicle, as they were never given possession of the vehicle. The insurer has cited Darlington Commodities Ltd v Gibbs (1982) 2 ANZ Insurance Cases 60-486 as the case study which supports their stance. My question is does ABC have a legal liability to the property owner for the damage caused by the subcontractor’s vehicle leaking oil? If yes, how can ABC not have been "responsible" for the subcontractor’s vehicle?
REPLY… CROSSLEY GATES, DLA PIPER If the labourer was truly an independent contractor (and not an employee) of ABC, then there is no vicarious liability. ABC is not liable for the contractor's negligence. This means the owner of the driveway, or his/ her subrogated insurer, can only pursue the contractor alone.
QUESTION… A claim has been lodged and accepted for water damage to the ceiling in a two-storey house. The underwriters wished to establish the actual cause; for example, blocked spouting overflowing back down into the ceiling or other reasons. Before proceeding with repairs to the ceiling, the underwriters wished to inspect the roof. Scaffolding was necessary to get up to the roof. The question is who is liable for the costs of the scaffolding? Nowhere in the policy wording is this aspect addressed. Therefore, I would think being silent on the matter, the underwriters are liable.
REPLY… CROSSLEY GATES, DLA PIPER If they want to establish the cause before proceeding with repairs, I wonder if they are reconsidering the claim. The law does not say that because a policy is silent on a matter, the underwriter is liable. Rather, the law says that if an underwriter wants to rely on an exclusion, the onus is on the underwriter to prove it (at the underwriter's cost). I don't see why the insured should have to pay for the scaffolding unless it is part of the repair cost that the underwriter has already agreed to reimburse the insured for. www.covernote.co.nz
IFSO CASE STUDY
FALSE OR INCORRECT STATEMENTS A
n insurer can only decline a claim on the basis of either false or incorrect statement if the policy contains an exclusion or condition to that effect. These IFSO Scheme case studies look at claims declined on the basis of false or incorrect statements and explain the differences between these two types of statements. FALSE STATEMENT The falsity of the statement must be wilful, in that the insured or person making the statement knows it is false. The insurer must show the statement was deliberately incorrect. THE IFSO SCHEME TEST 1. Was it a representation that would give a misleading impression to the reasonable reader/listener? 2. Was it made deliberately, in the sense that he/she knew it was incorrect or was deliberately reckless as to its truth or falsity? 3. Can it be dismissed as de minimus? CASE STUDY – 135619 (2016) Dan* made a claim because his house had been burgled. The insurer’s investigator said that Dan still had a number of the items he had claimed were taken in the burglary, including: a television, liquor, a laptop and a massager. The policy contained a provision that stated that the insured “must not make a claim that is false or fraudulent in any way or make any false or incorrect statement in connection with any claim… Otherwise [the insurer] can decline [the] claim and/or recover any payment already made”. The policy also contained a provision that permitted the insurer to avoid the policy or cancel it immediately if a claim was “false or fraudulent in any way or [the insured] ma[d]e any false statement”. The insurer declined the claim and cancelled the policy. It suspected the claim was fraudulent, but it relied on false statement to decline the claim. The insurer said Dan had claimed for items that he still had in his possession, he had made false statements about items he said he had purchased and had inflated the value of some items. The investigator focused his enquiries on Dan’s TV: • Dan said an X brand 50”TV had been stolen. He said he had purchased it from the Warehouse two months before the burglary for $699. He provided a receipt for a Y brand TV for $699. • Dan told the investigator he had made a mistake on the claim form; it should have been a Y brand TV [X brand was more expensive]. • The card number on the receipt was not Dan’s credit card. Dan said the card could have belonged three or four people and he was not sure. He said he might have given someone money to buy the TV. • The investigator noted Dan currently had a Y brand TV in his house. After that, Dan said it was a mistake and asked to remove TV from the claim. • Dan later told the IFSO Scheme that the investigator had made a mistake and seen a smaller Y brand TV at his house. IFSO SCHEME • Misrepresentation? Dan said he had purchased the TV but could not confirm who had purchased the TV, despite the purchase being only two months before the loss. Dan acknowledged the receipt he had provided was for a TV he still had at his house. Dan gave a misleading impression about how he came to own a 50” Y brand TV. • Incorrect or deliberately reckless as to truth? Yes • De minimis? The false statement was not de minimis i.e. of no legal significance. It was significant to the extent of the investigation and the claim.
INCORRECT STATEMENT The courts have made a clear distinction between incorrect and false statements. A statement can be incorrect without the moral element required to be a false or untruthful statement. This means an insurer could decline a claim for an innocent misstatement. An insurer must show that a clear, unambiguous statement has been made in support of the claim that is substantially incorrect and material (same as misstatements in ss4 to 6 of the Insurance Law Reform Act 1977). CASE STUDY – 135654 (2016) Company R held insurance for its business assets and liability. David*, as Company R’s owner, was also covered by the policy. In October 2015, David was driving a covered vehicle when he pressed the brakes suddenly.This resulted in the vehicle behind him, driven by Jared*, hitting the rear of the vehicle. The accident was witnessed by Garry*. David made a claim for the accident. David said he had to stop because of traffic ahead and a car behind crashed into him. However, Jared’s insurer talked to David’s insurer. Jared said that he knew David, and David was trying to get Jared to pull over when the accident happened. Garry said when Jared did not stop, David slammed on his brakes. David admitted he was trying to get Jared to stop due to a personal dispute with him, but said that traffic still caused him to stop. Jared’s insurer declined the claim, on the basis Jared had provided incorrect information about the circumstances of the accident. IFSO SCHEME • Incorrect statement? David said he stopped because of traffic ahead. The case manager asked Garry if there was traffic ahead of David. Garry said no. • Substantially incorrect and material? Courts have found substantially incorrect to mean “if the difference between what is stated and what is actually correct would have been considered material by a prudent insurer”. • Test “… a statement is material if it would have influenced the judgement of a prudent insurer in determining whether to investigate the claim further or whether to accept it either without investigation or after such investigation as it has thought proper to undertake” i.e. the difference between what was stated and the correct position. The reason David braked suddenly was not due to traffic. However, it appeared that David did this in order to avoid divulging the nature of the personal dispute. Therefore, the statement was incorrect and material, as the insurer was going to accept the claim but for the contact from Jared’s insurer.
WHAT THESE CASES TELL US 1. 2. 3.
The policy must contain a provision that allows the insurer to decline the claim for false or incorrect statement. It is important to identify what statement (false or incorrect) the insurer is relying on to decline the claim, as false statement and incorrect statement are different and have different tests to satisfy. Clients must be aware of the dangers of not telling the truth WHEN MAKING A CLAIM.
FSCL CASE STUDY
THE IMPORTANCE OF GOOD FILE NOTES As we have reported previously, poor communication or miscommunication between a broker and a client are common causes of complaints that escalate to FSCL. We strongly encourage all scheme participants, including brokers, to keep detailed contemporaneous files notes of meetings and discussions with clients. Good file notes are invaluable evidence if a complaint arises some years later, particularly where there is a “he said/she said” situation. In the two case notes that follow, where we had conflicting accounts from the clients and the brokers, we found the brokers were not at fault. However, it would have helped our investigations, and the complaints may never have escalated as far as a FSCL investigation, had the brokers in questions kept proper file notes.
In the first case, “Employee theft leaves clothing store bare”, there was a dispute between the client and the broker about whether the client had asked the broker to arrange cover for employee theft. In the second case, “Paul’s indemnity period pickle”, a small business owner thought he had 24 months of business interruption insurance cover in place. Following a flood, Paul’s business was unable to trade and the business premises needed repair. Paul then discovered he only had 12 months of business interruption cover in place and was going to suffer a loss because the building repairs were going to take longer than 12 months. As with all our case notes, the parties’ names are not their real names.
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FSCL CASE STUDY
EMPLOYEE THEFT LEAVES CLOTHING STORE BARE D
ylan owned a clothing shop. Having decided to open a new store in another city, he asked his broker to review his insurance. As Dylan would not be physically present in the new store, he had identified staff theft as a business risk. Dylan reviewed the insurance package the broker recommended and saw that he was covered for $50,000 for theft. Four years later Dylan discovered an employee in the new store had stolen approximately $60,000 from the business. Dylan immediately contacted the broker who said the claim was unlikely to be accepted because Dylan was not insured for staff theft. Dylan submitted an insurance claim, and an insurance assessor came to discuss the loss. The assessor left Dylan with the impression that the claim was unlikely to be accepted and suggested Dylan pursue the employee. The employee, who was still working for Dylan, wrote a letter of apology, agreed he had stolen $20,000 and offered to pay Dylan back. Dylan received $900, but when the employee disappeared, Dylan contacted the broker again. A more senior broker within the firm resubmitted the claim. The insurer declined the claim and Dylan complained to us about the broker’s service. DYLAN’S VIEW Dylan said: • he told the broker he needed insurance to cover employee theft at his new store and believed the policy would cover him for this • the broker did not provide sufficient support during the claims process and actively discouraged him from making a claim. THE BROKER’S RESPONSE The broker said that Dylan had not mentioned that employee theft cover was important to him. The broker referred to the renewal documentation sent every year which noted that employee theft cover was available but not selected by Dylan. In any event, the broker considered it was unlikely the insurer would have covered Dylan’s claim because the insurer had the following concerns when it assessed Dylan’s claim: • the employee continued to work for Dylan after the theft was discovered • Dylan had not reported the theft to the police • Dylan had declined a full interview with the insurance assessor • the date of the theft was uncertain. The broker considered he and his firm had provided reasonable support to Dylan during the claims process. The broker was being realistic when he advised Dylan that it would be a waste of time submitting a claim. Dylan had not selected employee theft cover, so the insurer was unlikely to accept the claim. After the employee disappeared, a more senior broker became involved, doing all he could to have the claim assessed quickly. FSCL’S REVIEW Regrettably, there were no notes of Dylan’s instructions to the broker when arranging the cover. We encourage brokers to keep notes made at the time of any interaction with clients. It is extremely difficult, years after an event, to determine what might or might not have been said without a reliable written record. When there is no record, our only option is to look at the surrounding
evidence to try to determine what might have been said. We noted that at renewal time Dylan was alerted to the fact that employee theft cover was available, but he had not selected it. We also asked for information about the cost of employee theft cover. Dylan was paying premiums of $450 a year and employee theft cover would have cost between $800 and $1,000 more for $50,000 worth of cover. In our opinion, Dylan may well have decided the additional cost was an expense his business was unable to afford. We considered the broker could have given Dylan more information about the claims process but did not consider his actions had caused Dylan any direct loss and the inconvenience was minor. OUTCOME We suggested to Dylan that he discontinue his complaint. OUR INSIGHT We encourage all advisers to keep records of their interactions with their clients. If the broker had kept records and was able to jog Dylan’s memory about his instructions and the broker’s advice, Dylan’s complaint may well have been more satisfactorily resolved.
FSCL CASE STUDY
PAUL’S INDEMNITY PERIOD PICKLE I
n June 2015, a building Paul owned suffered flood damage following a bad weather event. Paul ran a small business out of the building and he made a business interruption (BI) claim under his business’s insurance policy and a material damage claim for the building repair costs. INDEMNITY PERIOD FOR 12 MONTHS, NOT 24 MONTHS In early 2016, Paul was in contact with his broker because he discovered that the indemnity period for BI cover was only for 12 months following the event causing interruption. Paul had thought the BI cover was placed with a 24-month indemnity period. Paul was concerned the repairs would not be completed within the 12 months following June 2015. In March 2016, Paul contacted FSCL and complained about his broker. Paul said he had made it clear to his broker that he wanted business interruption cover placed for 24 months, not 12 months. Paul wanted his broker to compensate him for losses he was likely to incur after the expiry of the 12-month indemnity period, in June 2016. With repairs likely to be completed by October 2016, Paul sought four months of lost BI cover from the broker (approximately $55,000). THE BROKER’S VIEW The broker said she had not erred in the placement of Paul’s insurance and that Paul was responsible for his loss. After speaking with Paul about his insurance needs at the time cover was arranged, the broker emailed Paul the schedule for the business policy which noted a 12-month indemnity period. The broker asked Paul to review the documentation to ensure it accurately reflected the cover he sought. The business policy application form Paul completed and signed also showed he had ticked the box indicating he wanted 12 months of BI cover. The broker said that: a) Paul had the opportunity to raise an issue about the indemnity period with her several months before the flood. b) A 12-month indemnity period was suitable for Paul’s business. A business of his type would usually be back up and running within 12 months. c) There was cover for Paul to move his business to another premises, which he did not do. In other words, the broker said Paul did not mitigate his loss. Although the building and business policies were separate, the broker said she could appreciate that because Paul ran his business out of the building he owned, it was likely that if the property was damaged and remained damaged for longer than 12 months, this was going to affect the business. However, this would not have altered her advice to Paul at the time of policy placement, because it was suitable to place BI cover for 12 months for a business of the type Paul owned. PAUL’S VIEW Paul said he spoke with his broker at length over the telephone about the placement of insurance. Specifically, Paul said he spoke with the broker in 2012 about his building policy requiring an indemnity period of 24 months.
Paul said he told his broker in early 2015 that he wanted the cover for the business to be the same as that for the building. Paul said it was understood between him and the broker that he wanted 24 months of BI cover because he told her he knew people who had moved outside BI indemnity periods as a result of building repair delays. Paul accepted his broker sent him information about the insurance placed and that he should have picked up the error about the indemnity period. However, in Paul’s view the greater responsibility was on the broker to make sure he had the cover he wanted. Although the broker said that 12 months of BI cover was adequate, Paul said his case proved this to be incorrect. Lastly, moving his business to another premises was not possible because there were no suitable premises nearby. However, Paul’s broker should have pointed out to him that he had that available cover for the costs of moving the business premises. FSCL’S REVIEW There were no telephone call recordings or file notes made of the discussions between Paul and the broker about the indemnity periods required. In a ‘he said, she said’ situation such as this, we place more weight on the documentary evidence available. We said that regardless of what was discussed over the telephone between Paul and the broker, the biggest hurdle for Paul was that he signed the application form where he ticked the box for a 12-month indemnity period. Paul also received a schedule noting the 12-month indemnity period and had the opportunity to correct the error. We said Paul was responsible for reading the schedule and ensuring the cover placed met his needs. Accepting Paul’s evidence that he discussed the indemnity period at length with his broker, we would have expected him to have carefully checked the indemnity period noted on the schedule. In addition, we did not consider it reasonable for Paul to have assumed his broker would determine, based on the discussion about indemnity periods in 2012, that his expectation in 2015 was that the BI policy should have an indemnity period of 24 months. Without a clear instruction from Paul in 2015 about the BI indemnity period required, it was reasonable for the broker to send Paul the application form to complete and for him to choose which indemnity period option he chose. COVER FIT FOR PURPOSE AND MITIGATION OF LOSS It was a moot point whether the cover placed was fit for purpose. However, we noted that it appeared to be reasonable to have placed the business policy with a 12-month BI indemnity period.There was no way to anticipate there would be circumstances where the material damage repairs would take longer than 12 months. Based on what the parties knew at the time of policy placement, a 12-month indemnity period was reasonable. FINAL DECISION We did not uphold Paul’s complaint. Paul then decided to pursue a complaint about the insurer on the basis he considered it was the insurer’s delay in completing the repairs that moved Paul outside the BI indemnity period of 12 months. www.covernotemag.co.nz
Professional Development: Professional IQ College
Scholarship entries open
rofessional IQ College is offering IBANZ member company employees the opportunity to apply for the KWT Scholarship for 2017/2018. Applications must be received at Professional IQ College by October 13, 2017. Ashley Lowther, last year’s winner, said: “I would encourage anyone who is interested in gaining more industry based knowledge to apply, and anyone who has been in a role within the financial services industry for a while and wants to fill any knowledge gaps. The KWT scholarship has been a great opportunity for me to advance my understanding of the financial industry and completing the assessments gives not only confidence in my capability but a great feeling of accomplishment.” Lowther was encouraged to apply for the KWT scholarship by one of the brokers where she worked. Lowther had received the reminder emails from Professional IQ College that the scholarship was open to enter and had thought about it, but the encouragement of a colleague to apply pushed her to go for it. Lowther’s advice to all insurance brokers or anyone in the financial industry was to think about those they worked with whom they felt would benefit from further study and encourage them to apply. If you have at least one year minimum of experience in a risk adviser (insurance broker) job role, are able to take up the scholarship within 12 months of announcement of the winner and are a citizen or permanent resident of New Zealand, consider applying. The scholarship covers the enrolment fee to undertake the Financial Services Industry Programme leading to the New Zealand Certificate in Financial Services Level 5. The award will take into account commitment to the study plan, likely ability of the applicant to complete the programme. The successful applicant will be announced in November 2017. For an application form and the terms and conditions please visit the Professional IQ College website - www.professionaliq.co.nz or for further information contact Professional IQ College on +64 9 306 1731
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istance learning is sometimes referred to as self-directed study. Either way it allows you the convenience of study without physically attending a course. As a learner at Professional IQ College you will have access to learning material through a personal online dashboard on the college website and support will be available to you from the student liaison team by phone, online chat or email. Professional IQ College is New Zealand Qualification Authority (NZQA) certificated and can provide you with the New Zealand Certificate in Financial Services Level 5 while you stay in control of work and family commitments. You plan your time to study within a set time frame, just like you plan your workload or be with family. The college has a set of planning tools to help you achieve your goals. To find out more, contact Sylvia on 09 306 1737 or email Sylvia@professionaliq.co.nz All of our learning materials have been written by industry experts and are delivered using online study guides and assessment material. The college also offers a range of topical workshops and webinars. It is possible to complete a qualification without visiting us from anywhere in the country. 46
I WOULD ENCOURAGE ANYONE WHO IS INTERESTED IN GAINING MORE INDUSTRY BASED KNOWLEDGE TO APPLY, AND ANYONE WHO HAS BEEN IN A ROLE WITHIN THE FINANCIAL SERVICES INDUSTRY FOR A WHILE AND WANTS TO FILL ANY KNOWLEDGE GAPS. THE KWT SCHOLARSHIP HAS BEEN A GREAT OPPORTUNITY FOR ME TO ADVANCE MY UNDERSTANDING OF THE FINANCIAL INDUSTRY AND COMPLETING THE ASSESSMENTS GIVES NOT ONLY CONFIDENCE IN MY CAPABILITY BUT A GREAT FEELING OF ACCOMPLISHMENT.
Effective Communication: Powerfully Persuasive People, Proposals, Presentations
Auckland & webinar
Whether talking to a client; a staff member; interviewing a potential employee; or just entertaining around the dinner table – you could benefit greatly by knowing these essential secrets for’ persuasive discussions’ and selling.
Undertaking the Negotiation
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The final session in the negotiation course introduces participants to Trevor Slater’s Negotiation Preparation Guide and how to practically use the process. Participants are taken through an example and then set a task to undertake a negotiation and report back on the process and outcomes.
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Pollution events and resultant Environmental issues are becoming an increasingly topical issue for the NZ public with increased regulator activity and enforcement. The cost to businesses through fines, clean-up costs, civil claims and reputational damage can be significant. Traditional liability insurances do not adequately address these exposures and in this webinar Delta Insurance will discuss the risks, the gaps in traditional insurance policies and available solutions in the marketplace.
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This course covers both the theory and practice of Contract Works Insurance and provides a broad but detailed overview of the industry and its component parts, players and products.
Expert Evidence in vehicle claims
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Often expert evidence is required when assessing vehicle claims. Sometimes clients disagree with this evidence and other times expert evidence can assist your clients.
Conquering Your Email Overload: Ease Your Pain. Enhance Your Gain.
Auckland & webinar
Delightful tricks that will have you saying ‘wow’ every few moments. In essence, conquer your pain of email and become a master of communication, customer service and response.
When the words count – interpreting policy wording
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Sometimes claim decisions are made on the basis of the specific meaning of policy provisions or even single words.
Business Interruption – Insurance of Wages
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Different ways to insure wages (including Dual Wages) – and what is best for your clients?
Complaint Handling Webinar
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This webinar looks at how a compliant and efficient internal complaint process looks like and introduces participants to the skills to increase the chances of an early resolution.
Onus of proof – prima facie claim and beyond
Auckland & webinar
Clients are often confused about why they have to provide more information when they make a claim and to challenge an insurer’s decision to decline a claim. This webinar looks at who has the onus of proof at the various stages of a claim, from the initial claim to the application of an exclusion to decline a claim.
Business interruption natural disaster claims and issues
Auckland & webinar
In one hour we share some of the actual issues we experience and how we resolve differences to get to a fair claim settlement.
Effective Database Marketing - Earn More from Your Clients
Auckland & webinar
Debbie was one of the first to conduct email marketing in NZ, wrote several books on it and is still going strong 16 years later. Learn how to do a successful email campaign and/or newsletter to help grow your business results, improve branding and add value to your client service.
The FSCL conciliation process – the why and how to conciliate a case & the benefits of conciliation
Auckland & webinar
More details to come.
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