CoverNote September 2018 Issue

SMEATON SEES SUNNY SKIES AHEAD

September 2018

CONSUMER ACCEPTANCE OF HEALTH TELEMATICS

Adviser technology you can’t afford to ignore Big data will change world of insurance To disclose or not to disclose

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Gary Young CEO, IBANZ

Welcome to

Time to start planning

A

fter a review lasting four years, the new legislation to regulate financial advisers - including insurance brokers - is close to being passed in Parliament.

The Select Committee recommendations have been received and the bill now goes to Parliament for its second and third readings.

Once it is passed, there are just disclosure regulations and a Code of Conduct to be finalised. The code is probably the most difficult and contentious requirement, it is expected to take until the end of the year to complete.

The Minister will sign off the code and the transition to a full licensing regime begins. The latest estimate we have is that transitional licensing will begin in April next year and run for six months.

Following this is a two-year period in which all entities will have to obtain a full licence. Companies and their employees need to be thinking now about where they fit into the future of financial services.

If you do not want your company to be licenced, then you will need to negotiate to come under another entity’s licence. This needs to be agreed before a full licence application is prepared.

All individuals within your organisation who provide advice must be financial advisers or nominated representatives. You need to decide on your structure and then prepare evidence of how it will operate to go with a full licence application. The regulators will want to see you have appropriate processes in place to ensure compliance.

During transition individuals will most likely have to be financial advisers but may become nominated representatives once a full licence is obtained. New employees in the industry will need to pass competency requirements before they are able to provide advice to clients.

Experienced brokers will need to achieve a qualification or a formal recognition of prior learning. Either way it will not be a quick process, but it must happen before transition ends.

The regulator has indicated that given the number of licences to be processed, a structured approach is essential. They cannot process everyone in the last month or even year. The likelihood is sectors will be given a time during the transition to get licensed; if you don’t do it then there will be no guarantee of being licensed in time.

Don’t assume your call up is two years away.

Initial planning should already be under way. If you are not licenced and/or competent in time you will not be able to work, it’s that simple.

Gary Young, CEO, IBANZ

Features 12. IAG becomes first NZ Insurer to gain

Rainbow Tick 13. Adviser technology you can’t afford to ignore 14. SPOTLIGHT ON: Damian McDonald - CEO of Advisor Promoter 26. New liability solution for manufacturers 30. The rewards of innovation

25. COVER STORY: Consumer acceptance of health telematics

32. Simplification, people and partnerships key to keeping insurance affordable.

34. NZI Advocates for Fire Compliance 36. Keeping your balance An interview with Jane Cook, Senior Commercial

Regulars 1. Welcome to CoverNote 3.

News 42. Ask an Expert

Broker, Rothbury Insurance Brokers, Rotorua

46. Professional Development: Professional IQ College 48. IBANZ Contacts

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37. Insurers: Concerns to address for earthquake claims tribunal

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NEWS

Marsh’s 60 acts of service continues To help celebrate 60 years of doing business in New Zealand, Marsh is conducting 60 acts of community service throughout the year.

To date, Marsh staff across the country have conducted activities such as donating blood, doing street collections for St John and Red Cross, helping sort donations for hospices in Auckland and Taranaki and run Pink Ribbon fundraising morning teas for breast cancer in Auckland, Wellington and Dunedin.

“After 60 years of doing business in New Zealand, we wanted to do something that helped to give back to the communities that have supported Marsh over the years,” said Marcus Pearson, country head for Marsh New Zealand.

“Our 60 acts of service is designed to expand on our annual programme of corporate and social responsibility activities, which is a hugely important part of our company’s ethos.”

Other planned initiatives for the rest of the year include volunteering at the World Press Photo Exhibition in Auckland, helping run a children’s market in Christchurch and tree planting in Wellington.

Incorporated as Price Forbes Ltd on 3 July 1958, the company underwent name changes and takeovers before being formally acquired

by Marsh & McLennan Companies in 1998. The company now has over 250 staff in ten offices around New Zealand.

BE YOUR OWN BOSS PSC Connect gives you the power to succeed.

If you want the freedom and flexibility to run your own general insurance broking business then speak to PSC Connect.

The PSC Connect team provide you with full administrative and compliance support. Plus, you’ll have the support and buying power that comes from one of the largest publicly listed insurance broking groups to help you build your own asset.

For confidential enquiries, call: Dave Penfold 09 358 1186 dpenfold@pscconnect.co.nz Proud members of IBANZ & Steadfast

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3

NEWS

Insurtech 'good news for consumers' The rapid increase in the number of tech companies working in the insurance market and investment by traditional insurance firms into new advanced technologies is expected to lead to better deals for customers in coming years, InsurTechNZ chair Jason Roberts says.

Customer expectations of instant digital transactions delivered seamlessly across digital channels are increasingly the norm and this was a major factor driving the growth of the New Zealand insurtech market, he said.

“The insurance sector is also testing new technologies to better assess or manage their risks. Even some of the simplest processes, once digitalised, provide huge upside for both customers and insurers.

“For example, New Zealand insurtech startup, Fireform, has created a platform for managing fire alarm shutdown periods helping large corporations better manage their fire safety and helping insurance firms to better calculate and reduce risk.

“The early testing of drones by insurance companies for damage assessment is expected to soon lead to faster claim processing after mass damage events like earthquakes and floods.”

He said many people were not aware they were already engaging with AI via a chatbot on insurers’ websites.

“One of the fastest growing global insurance firms, Lemonade, has replaced brokers and bureaucracy with bots and machine learning, enabling a zero paperwork and instant everything experience.

“This rapid change is bringing both opportunity and challenge as the industry and government grapple with the implications of robo-advice and an almost unlimited array of insurance possibilities.

“As a leading member of the global insurtech alliance and our ability as a country to adapt regulations relatively quickly, we expect New Zealand consumers to gain the benefits if we can adapt our systems fast enough.”

InsurTechNZ has formed with the support of the New Zealand FinTech group to bring focus to opportunities.

What’s keeping directors up at night?

People risks, such as the loss of a key person and talent attraction and retention, are top of mind for directors in the fourth Directors’ Risk Survey Report conducted by Marsh and the Institute of Directors.

Directors were overwhelmingly concerned about their ability to replace a key person, with 83% of respondents rating this as the biggest internal risk to their organisation.

Concerns over talent attraction and retention also ranked highly, with respondents ranking this as the fifth-largest internal risk and the second largest emerging risk.

Despite this concern, nearly a third (32%) of directors said they did not have plans in place to manage their talent attraction and retention risks.

The survey, produced by Marsh and the Institute of Directors, is a barometer of the mood of the boardroom, focusing in on the risks that directors feel that their organisation is facing.

“With a tight labour market and more competition amongst workplaces to attract and retain talent it is unsurprising that people risks are so prominent,” said Marcus Pearson, country head for Marsh New Zealand.

“What is surprising is that so many entities don’t have plans in place to deal with it. Directors and boards need to ensure that organisations are focused on meeting the needs of the workforce of tomorrow. This 4

September 2018

means embracing diversity and inclusion, having flexible working conditions and ensuring that employee benefit programmes are fit for purpose.”

The prominence of people risks in the Directors’ Risk Survey Report is also reflected in the results of the Institute of Directors’ 2017 Director Sentiment Survey, where directors cited labour quality and capability as the biggest risk (28%) facing their organisation.

IoD chief executive Kirsten Patterson said: “Directors today are operating in a complex environment, where digital disruption is changing the playing field for established businesses.

“Many organisations are finding themselves in the midst of what McKinsey called a ‘war on talent’, where the gig economy coupled with shifts in how often workers change jobs is creating pressure to attract and retain workers.”

The Directors’ Risk Survey also revealed succession planning is an area organisations need to pay attention to in their risk management.

“SMEs are particularly vulnerable in the loss of a key person”, Pearson said. “Sadly a number of SMEs fold each year because of the death or injury of an owner or key staff member. Having succession planning in place is vital to ensure that these instances, which often happen unexpectedly, are well managed.”

People risks were not the only key issues given prominence in the survey, with cyber the number one external and emerging risk. Other issues highlighted were brand and reputational risk, IT disruption and the loss of data. Given the array of different risks and the complexity of the current business environment it is little wonder that 53% of directors said that their board’s involvement in insurance and managing risk had increased over the last 12 months.

“It is important that New Zealand directors continue to place risk management as an ongoing priority,” Patterson said. “Negotiating this environment will require directors to have a long view and anticipate how rapid social changes will impact on their business, as well as remaining flexible and responsive to changes within their industry.”

The Directors’ Risk Survey, which is designed to gauge directors’ views on a wide range of risk issues, was completed by 570 members of the Institute of Directors across New Zealand.

NEWS

Insurers promote diversity Marsh, AIG and NZBrokers are hosting events in New Zealand as part of the international Dive In Festival, which promotes diversity and inclusion in the insurance industry.

The festival is in its fourth year and involves events in 26 countries, returning to locations such as London, Perth, Zurich, and Bermuda, as well as new cities including Amman, Tokyo, San Antonio, and Wellington.

This year marks the start of a two-year campaign, Awareness into Action. After three years of raising awareness of the business case for diversity and inclusion, the global movement now looks to harness the energy of previous years to encourage action across the sector.

The annual theme is #time4inclusion. Last year, chief executives from across the industry singled out time as the biggest barrier to achieving inclusive cultures in their organisations.

Dive In is helping insurance get fit for the future, highlighting the business case for diverse and inclusive workplaces and providing practical ideas and inspiration for how to bring about positive change. Its unprecedented growth bolsters its strength as the first unique collaboration of sector organisations for D&I in the world.

Dominic Christian, chair of Inclusion@Lloyd’s and global chairman of Aon Benfield International, said: “The Dive In Festival is a catalyst for the global insurance industry that inspires collaboration around the key issues of talent and innovation. Our fourth year is a good time to focus our combined efforts on translating the growing awareness into action – supporting our industry’s ability to thrive and stay globally competitive and relevant.”

Pauline Miller, head of talent development and inclusion at Lloyd’s, added: “This year’s festival builds on the accelerated progress on diversity and inclusion across the sector in the last three years. We’ve reported on a higher number of companies taking action in our annual research Holding up the Mirror, at the senior exec level, throughout organisations, and through cross-industry collaboration.

“To grow this momentum, Dive In 2018 will see more subject matter experts leading valuable and engaging discussions, equipping professionals across the sector with the tools to take action both individually and within their organisations.”

Marsh will hold an event with AIG in Wellington on September 25 on the theme “creating an environment for inclusion” while NZBrokers will hold an event in Auckland on September 27 on unconscious bias.

www.covernote.co.nz

5

NEWS

Windscreen benefits under threat The increasing cost of replacing the modern technology embedded in new car windscreens will mean many consumers will no longer receive free vehicle glass cover under their insurance policy, the head of one broker group says.

Jo Mason, chief executive of NZbrokers, said the change meant owners of older vehicles would lose their free glass cover - even though the impact on insurers is due to the cost of repairing technology that is only found in the newest models.

“Some new vehicle windscreens can contain a wide range of sophisticated technology including cameras, radar, rain sensors, heating elements, light sensors, UV protective cover and even acoustic lamination - which can be expensive to replace.

“We have seen one example of an insurance claim for a new car replacement windscreen costing upwards of $15,000.

“While we have seen extreme cases where windscreen repair claims can reach this level, it is rare as they are typically in the very latest models and vehicles retailing at more than $100,000.

“Putting this in perspective, the average age of the four million vehicles in New Zealand’s fleet is over 14 years - and you can pick up a standard windscreen for an older model for under $200,” she said.

Mason said insurers were seeing the likelihood of higher cost across their portfolio and were moving to change their policy conditions.

Free glass cover has been a standard feature of most vehicle insurance policies in New Zealand for decades.

“Although some of this technology is just coming on to the market now, we’ve already had one insurer say they will no longer provide free glass cover as a result of the higher cost of replacing windscreens,” Mason said.

“Our concern with this change is that for the vast majority of vehicles on the road, the cost to replace their windscreen is just a few hundred dollars, but the policy change should not penalise the owners of older vehicles who do not have the latest technology.

“Unfortunately the change by one insurer will mean that for all motorists regardless of the age of their vehicle, they are likely to lose the benefit of a replacement windscreen with no excess at some stage in the future, if not already.

“Left unchecked, we believe this trend could become commonplace among all insurers which would be inherently unfair to most Kiwis and could be better managed by premium or excess increases for just those cars with modern technology,” she said.

She urged brokers to help their clients understand their policy fine print.

But IAG, the country’s largest insurer, said it had no plans to change its excess-free windscreen cover.

Judith Harvey, national portfolio manager - private motor, for IAG New Zealand, said customers had made it clear the windscreen protection was one of the most valuable insurance services.

“We’re proud to continue to provide this service for our customers,” she said. “We insure more than 500,000 Kiwis, so with our size and scale, as well as operational efficiencies, we’re able to keep this service and keep it affordable for our customers.

“Keeping our customers and their families safe on the roads is a key reason we’re keeping this service going. Being able to quickly remove and replace a broken windscreen means those who need to be on the road can be safe while doing so.”

Kiwi firms at risk of becoming zombies Despite an overall increase in business confidence, companies are not prepared for the impact of disruption, a new survey suggests.

The Suncorp New Zealand Business Success Index found that while 78% of businesses reported being confident about handling future disruption, 57% said they had no plans to change their products and services to address market disruption in the next five years.

Suncorp New Zealand chief executive Paul Smeaton said the findings showed that despite a growing understanding that taking calculated risks was essential to business success, there was a corresponding reluctance to actually take those risks, which meant many businesses might not be resilient to disruption.

“We know you’ve got to take risks when growing a successful business, but today’s environment is changing rapidly, and businesses need to be thinking about how they will adapt to stay relevant,” Smeaton said.

Economist Cameron Bagrie said the attitudes to disruption showed some businesses were at risk of becoming “zombie firms”.

“Even when prompted, only 59% see disruption coming to their businesses from digital platforms, 57% from new technology and machinery and 51% from customer behaviour,” he said.

“And astonishingly, only around 2.5% think advances in technology present a risk to their own firm.

“Businesses need to embrace the threats and opportunities of digitisation, artificial intelligence, robotics, and changing consumer habits to address the impact on their business models.”

Overall, the 2018 Suncorp New Zealand Business Success Index proved largely unchanged (down two points from 66 in 2017 to 64), with staff, leadership and management processes again considered to be the most important factors to a company’s success. A largely neutral to positive business community appears to be adopting a ‘wait and see’ approach following the change of government.

Smeaton said he hoped the insights from the Suncorp New Zealand Business Success Index helped provoke a conversation about whether businesses were focusing on the right things and doing enough to stay competitive.

“We are clearly faced with a climate of growing disruption but I also like to think of it as a climate of risk and reward. These findings show that only 46% of businesses feel confident in their ability to make good risk decisions.We want to help grow that number because there is a strong possibility that for many New Zealand businesses, doing nothing could be their greatest risk to future success.”

6

September 2018

NEWS

e-Bikes may be uninsured Thousands of Kiwi drone and e-bike owners are being warned to check their insurance policies as experts caution the industry has not kept pace with the development of new technologies.

Simon Moss, partner services manager of NZbrokers, says his group’s analysis of the home and contents policies on the market found significant complexity and variation in the policy wording - leaving many e-bike and drone owners unexpectedly without cover for loss, damage or third-party liability.

“When consumers purchase this type of technology they tend to think of it as they would for a model aircraft or push bike - as they are seen to perform the same function.

“The insurance company is looking at it very differently however while they may cover your $5000 push bike, many will not cover your e-bike of the same value because of terms in the policy or the legal status of your e-bike.

“Similarly, a drone may be treated by insurers as a type of aircraft if it is capable of lifting more than its own weight - a criteria which is impossible for most consumers to measure.

“What this means is your drone may be covered for loss if you drop it while getting it out of the car, but if it falls from the sky while in use, you are on your own.

“From the insurer’s perspective, drones and e-bikes are an unknown risk and until they have an accurate picture of that risk they will tend to act conservatively,” he said.

According to Statistics NZ there are now an estimated 40,000 e-bike owners in NZ, with some 500-watt models costing almost $10,000.

Moss said the growth in recreational drones had seen a wide range of products enter the market and they could retail at more than $5000.

About 700 complaints have been made to the Civil Aviation Authority about users of drones in the past five years.

Moss said the rapid evolution of the technology was contributing to a lack of consistency across insurance policies and created more uncertainty for consumers.

He said, once insurers started to see a claims trend, it was likely that more exclusions and conditions would be applied to both e-bikes and drones.

“Historically we have seen a precedent for this type of model, in the 1960s and 1970s insurers began to exclude sporting goods ‘while in use’ after they found themselves paying out for bent golf clubs and damaged windsurfering boards.

“Later, we saw a similar trend with laptops, after insurers realised they were replacing damaged technology with better equipment because you couldn't buy the same product with old software anymore. So

anything over two or three years of age would then be replaced at its second-hand value,” he said.

Moss said some home contents policies would cover an e-bike if its output was under 300 watts, which was the maximum power output before the bike was classified as a motorcycle by NZTA regulations.

“This is one source of potential confusion as some e-bike motor manufacturers print on the motor their maximum ‘input power’ because that number is larger (typically motors run at about 80% efficiency) thus giving the impression the buyer is getting a more powerful motor.

“Conversely a consumer may see ‘300 watts’ written on the motor but the bike may generate more power than this when in use.”

Moss said some policies would not cover e-bikes and drones while others would set maximum standard limits but would include third party damage.

“The risk of a road accident on an e-bike, which can travel in excess of 40 km/h, is at least as high as any other road user travelling at that speed and most home content policies we looked at don't cover owners for third party damage to other vehicles.

“And if a drone happens to cause an accident while it is in use near a road, the owner will be left to foot the bill in most circumstances,” he said.

Moss said, while there were no e-bike specific policies on the market at the moment, some insurers were starting to offer better cover for drones.

“Drones have a number of commercial applications and so we are seeing what amounts to mini aviation policies coming on the market now, but there are limited options for private or hobby drone users.”

No more sales targets for IAG staff IAG New Zealand has stopped incentivising employees based on sales targets.

Chief executive Craig Olsen said it was the culmination of an ongoing process of review and change over recent years.

“IAG New Zealand has had a long-standing commitment to a balanced scorecard with regard to rewarding staff which has seen an incremental reduction over the past few years in the value of sales incentives in our performance framework.”

He said the insurer had decided to completely remove sales target incentives from staff objectives from July 1.

That would help support customer requirements from a service and needs basis, he said.

“To demonstrate we are truly purpose-led and to create world-leading

customer experiences, we are continually assessing our current business practices and future approach.

“We know that customer and community sentiment is evolving, people expect to receive a great experience. Removing sales targets will further enable IAG to build a culture that has our people and customers at the core of everything we do.

“Over the last three years we have continually reduced individual objectives around sales. In the current financial year, we introduced an objective to place less emphasis on the outcome and more emphasis on the customer experience. The latest move means will we have zero incentivised sales targets.”

Stephen Parry, national organiser for finance at the First Union, welcomed the move, saying it was a huge first step. www.covernote.co.nz

7 7

NEWS

Insurers pick up tab for storms Insurers have provided $203.9 million of support to Kiwi communities this year across more than 27,000 claims for severe weather events.

The figures, released by the Insurance Council, show that insurer support for communities is as essential now as it has ever been.

“Insurers provide a lot of support into local communities in the wake of natural disasters and severe weather events,” said ICNZ chief executive Tim Grafton.

“Not only do insurers pay claims, they go into affected communities to help them recover from these events in a concrete, measurable way.

They get in there, boots on the ground, and assess damage and risk, liaise with local councils, and speak to community members about their policies and claims processes to help them get back on their feet sooner.”

“It is vital that insurance remains accessible to New Zealanders.

Cyclone Fehi (final figures) Claims House and contents

That’s why we work closely with local government both during and between these weather events to help them understand the risks their communities face and both adapt to and mitigate those risks,” Grafton said.

“These events are frequent reminders of the impacts climate change is having on our country. By addressing these risks and doing something about them now, we can help keep insurance accessible for the everyday New Zealanders it benefits the most.”

The final figures from Cyclone Fehi, which hit in early-February, show the storm cost a total of $45.9 million across 3750 claims. Cyclone Gita, in late February, cost $35.6m across 4694 claims. And the April 27 to 29 storms, which saw severe flooding and a state of emergency declared in Rotorua, have cost $16.1m across 1475 claims so far.

27-29 April nationwide storm, including Rotorua flooding (provisional)

Cyclone Gita (final figures) Cost $

Claims

Cost $

Claims

Cost $

1,128

11,365,093

209

3,668,072

4

29,952

2,509

25,392,228

House and contents

714

15,832,060

Commercial

Marine

14

942,674

Motor

441

2,944,221

Motor

257

1,161,088

Motor

115

756,992

Other

72

814,455

Other

55

935,232

Other

19

267,676

3,750

45,925,638

4,694

35,570,496

1,475

16,087,785

Commercial

TOTAL

Marine

TOTAL

How to spot 'bad' tenants

2,595

14,557,343

House and contents

1,780

18,858,203

Commercial

7

58,630

Marine

TOTAL

by Tenancy Information NZ

Brokers with landlord clients can show them other ways to minimise their exposure to risk.

The majority of private landlords are not using available resources to determine the risk profile of prospective tenants. This presents a major risk to the insurers of these landlords.

Getting the tenant application process right is a pivotal moment for private landlords. We all know that it’s much easier to reject a troublesome tenant upon application than remove one once they’re in a property. During this brief window of time we can take a good look at an individual’s character and economic situation prior to entering into a binding financial relationship.

The past few years have seen an explosion in the amount of signal intelligence available for risk assessment, yet private landlords continue to use decades-old processes of verbal and written references to screen prospective tenants. Anyone with a stake in making accurate, timely and predictive risk judgements should be employing all available tools to gain an edge in the current data rich environment.

Private landlords are missing a trick by failing to conduct what many property industry experts consider minimal due diligence before taking on a new tenant. TINZ, operator of New Zealand’s largest tenancy database, offers a comprehensive suite of tenancy checking products spanning everything from court judgements and outstanding debts to social media and global databases. The benefits of swift, comprehensive and up-to-date tenancy checks are clear, with one in five TINZ tenancy applications returning ‘bad’ character assessments. Failing to conduct adequate checks is a luxury most landlords can ill afford.

Brokers can play a key role in promoting the benefits of 8

September 2018

TINZ to private landlords, while mutually adding value to their own core offering and reducing risk. We encourage you to have a conversation with clients and ask them if they can answer “yes” to the following: Do they use all available data sources to ensure they know the risk profile of a prospective tenant?

Do current checks include the following: • Tenancy debt collection data from debt collectors • Current Home Ownership records • Credit check • Tenancy Risk Score • Driver's licence verification • Passport verification • Personal Property and Securities Register • Social media • International as well as local databases • Court judgements • Debt collection databases • Criminal record and parole board checks • Print and online media outlets • Companies office for director, shareholder and disqualified or banned directors • Obituaries If they answer “no” to any of the above they are exposing themselves, and by extension your business, to unnecessary risk and should consider using TINZ.

NEWS

Significant reform needed for EQC: Report An independent report has called for wide-ranging reforms to speed up the resolution of outstanding EQC claims.

The report was prepared by Christine Stevenson, acting chief executive of New Zealand Customs, who was appointed independent ministerial adviser to identify ways to break through roadblocks in the settling of claims.

“The findings of this report confirm our reasons for commissioning the advice. It’s clear there’s a big job to do to get these claims moving faster, but the report contains some very good recommendations in here to improve the way EQC operates, get claims sorted and to help people move on with their lives,” said EQC Minister Megan Woods.

“The report reveals sizeable issues with staffing levels, data quality, record-keeping and organisational culture and structure that are holding back resolution of claims."

Woods said the recommendations fell into several broad categories: those EQC will have the responsibility for implementing, those Treasury and the Ministry of Business, Innovation and Employment need to work with EQC on, and those that will require a wider approach.

“I have asked Dame Annette King, the interim board chair, to consider these recommendations right away and to swiftly implement appropriate measures,” Woods said.

The recommendations include hiring more staff to reduce the caseloads for case managers so claimants could get more personal attention, establishing a claimant reference group, comprised of claimants and community representative advocates who are paid for their time and expertise to advise EQC on how to improve the treatment of their

customer, making any claimant’s EQC file available to them on request and introducing a standard for better communication with claimants.

Stevenson also recommended having a team of experienced EQC staff to pull out all the physical claims files relating to the remaining claims, and have the team sort, review, confirm and capture the key data to ensure it is correct, as well as increasing government monitoring to improve accountability.

“There are also broader recommendations which we will begin work on including looking to allow EQC more flexibility to make cash settlements above the EQC cap, which would then be recovered from the private insurers,” Woods said.

“Another recommendation we are beginning work to implement will be to significantly scale up the Residential Advisory Service which provides independent help to claimants. This service has helped resolve over 4000 outstanding claims and we want to make it even better.”

Woods said she had asked for a group of executives of other government agencies to come together to implement the recommendations.

Insurers welcomed the report.

Tower chief executive Richard Harding said his company has long maintained that the current EQC system was broken.

After Kaikoura, the insurers formed the first point of contact for all aspects of the claim, acting as an agent for EQC. This streamlined the process.

He said it was fairer to implement a six-year limitation period from the day the claim was settled, not the date of the original event.

Expansion good news for the construction industry Surety guarantee provider Bonded Global Australia Pty Limited expands its business offering to New Zealand with the exclusive backing of Tokio Marine & Nichido Fire Insurance Co. Ltd. Tokio Marine & Nichido Fire Insurance Co. Ltd. is rated A+ by Standard and Poor’s rating agency.

The business opportunity will assist the small to medium sized

construction industry businesses with access to non-bank Surety guarantees without the need for cash collateral.

The effect of this launch will create huge opportunities for the New Zealand construction industry to use their capital more wisely and not have cash tied up in performance or retention guarantees.

QBE and North Harbour Rugby announce renewed partnership to 2021 QBE New Zealand (QBE) have announced an agreement with North Harbour Rugby to continue as its principal partner until at least 2021, a move that will see the sponsorship prevail as one of the longest in New Zealand Provincial Rugby.

The renewal of the sponsorship agreement between the global insurer and North Harbour Rugby, established in 2003, will see the partnership reach an astonishing 18-years.

General manager of QBE’s New Zealand operations, Bill Donovan, said QBE is delighted to continue as principal sponsor and credited shared values and excellent service delivery for the enduring partnership.

“We are proud to be part of one of the longest-standing sponsorship in New Zealand Provincial Rugby and its longevity is testament to its strength.

"Shared core values of teamwork, commitment, tenacity, leadership, and diversity are what drives our partnership and have seen us share so much success over the last fifteen years.

“Our partnership has seen us support Harbour at the elite level – but also, importantly, at the grassroots level.

“North Harbour Rugby not only includes the men’s and women’s elite teams but also encompasses a geographical area that includes

twelve rugby clubs from the region as well as 18 secondary schools, with close to 100 teams taking part in school rugby competitions,” Donovan said.

“This involvement at a grass roots level is one of the reasons QBE is so proud of our long association with Harbour and we look forward to helping more rugby players – from under six’s to the national representatives – pursue their dreams on the field.”

North Harbour Rugby general manager, David Gibson, said the Union is thrilled the partnership will continue and thanked QBE for its continued energy and support.

“With QBE’s support, we continue to work hard with our clubs and schools to improve the lives of people through rugby.

“The province now has 9900 registered players, including over 2000 female players, supported by 660 community coaches – we could not have achieved all this without our long-standing partnership with QBE.” “On behalf or all of us at Harbour, thank you QBE for your continued loyalty and support, we look forward to achieving even more success together as our partnership continues.”

www.covernote.co.nz

9

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Introducing an easy way for insurance businesses to find Lloyd’s underwriters online, instantly.

Grow your business as a Lloyd’s coverholder by simply entering the details of your opportunity, then get connected with specialist underwriters who have the appetite to match.

If you’re ready to bring your business idea to life, we have the expertise to make it happen.

Start the conversation at lloyds.com/bridge

10

From our roots as a London coffee house recognised as the place to go for marine and shipping insurance, to becoming the world’s largest specialist insurance and re-insurance marketplace, Lloyd’s has always been in the business of connecting people. All over the world, Lloyd’s has the enviable position of being the leading insurance marketplace and the most soughtafter destination for insurance solutions.

The world has become smaller, faster, more accessible and more connected than ever with the advent of technology. Because of the changing technological landscape, geographies have narrowed, borders have become more transparent and barriers to business have been removed. Digital disruption has brought about new demands for innovative ways to access markets and products.

The business of insurance is no exception to this and insurers need to remain at the cusp of innovation to engage with and retain business in their markets. This is especially important for Lloyd’s coverholders, which are third-party businesses authorised to accept insurance risks directly on behalf of Lloyd’s syndicates. Coverholders offer a wide range of different insurance products, this might include insurance for consumer electronics or personal accident cover for sports. They are a vital distribution channel and offer local routes to the global Lloyd’s market in many territories around the world. There are approximately 4,000 Lloyd’s coverholder offices writing business globally.

Lloyd’s has recently launched a new digital distribution platform, aptly named Lloyd’s Bridge, which is designed to quickly, easily and efficiently connect insurance businesses with underwriters from the Lloyd’s market, enabling these businesses to underwrite certain policies on behalf of Lloyd’s and its syndicates under binding authority agreements. Lloyd’s is committed to continued growth through the broker distribution channel, with brokers having access to the platform if acting as a coverholder or are acting on behalf of a coverholder.

Coverholder business as a whole is one of the fastest growing parts of Lloyd’s business and accounts for roughly one third of Lloyd’s gross written premiums. Lloyd’s Bridge is the latest in a series of moves to use technology to create opportunities for Lloyd’s to provide even better customer service, enhance underwriting decisions and streamline operations. Earlier this year, we mandated the use of greater digital placement, with about 80% of our underwriting business to be placed electronically by the end of 2019.

Australia and New Zealand were the markets-of-choice for the pilot and launch of Lloyd’s Bridge. This was mainly due to their thriving coverholder network, where Lloyd’s has over 130 established coverholder partners in Australia, and over 30 in New Zealand, and also because these markets show most potential for immediate growth.

Since the launch of the Lloyd’s Bridge’s pilot in July, interest has been steadily growing and there are a number of Lloyd’s underwriters adding their risk appetites. Coverholders, MGAs and brokers have also started registering on to Lloyd’s Bridge, business opportunities are being added (and matched with underwriters with a similar risk appetite) and conversations between parties have begun.

This article is contributed by Chris Mackinnon, Country Manager, Lloyd’s Australia and New Zealand.

11

FEATURE

IAG BECOMES FIRST NZ INSURER TO GAIN RAINBOW TICK

I

AG New Zealand is the first general insurer in Aotearoa to be certified with the Rainbow Tick.

The accreditation indicates the organisation understands, values and welcomes sexual and gender diversity.

The certification was presented to IAG by Rainbow Tick programme director, Michael Stevens who said, IAG has shown, “genuine goodwill and a desire to be welcoming.”

As part of IAG’s family of brands in New Zealand, NZI is proud to be supporting diversity in the workplace.

Garry Taylor, NZI’s Executive General Manager, says it’s important that everyone feels they can be authentic and know they will be supported and respected when they come to work each day.

“The Rainbow Tick is a fantastic endorsement of our work in support of diversity, inclusion and belonging, and that work will continue in the wake of this certification.”

Rainbow Tick is a programme which evaluates a company’s LGBT inclusion in five core areas and provides evidence-based recommendations for change, along with resources and support for implementation.

According to Rainbow Tick, diversity and inclusion training is not about

12

September 2018

political correctness – it’s about allowing employees to bring the whole of themselves to work, an approach which has been proven to increase productivity, talent retention and loyalty, and is directly linked to enhanced performance and strengthened brand reputation.

It’s a value that resonates with Taylor.

“Our company first and foremost puts its people first, which is why it’s important we have a culture that respects difference.”

He says NZI and the wider IAG NZ business has learnt a lot from the partnership.

“We see our certification as the start of a journey to develop our strengths in this space even further, and to ensure that there is no part of our business that could create exclusion. There is a lot of evidence about the business consequences of not being an inclusive employer, but more than that, there’s a moral responsibility in 2018 to do the right thing.”

“We’re working in our offices and stores across New Zealand to ensure everyone at IAG understands what we are working to achieve in this area.”

The Rainbow Tick follow’s IAG’s first entry in Auckland’s Pride Parade earlier this year under the banner, Together We’re Safer.

ADVISER TECHNOLOGY YOU CAN’T AFFORD TO IGNORE T

he foundations of building an adviser’s customer base have been well proven over the years. At the end of the day, it is about getting in front of customers, solving customer needs, building and maintaining relationships and getting referrals from happy customers.

Technologies have played a big part in adding to the tools available in helping advisers reach out to more customers from telemarketing, emails, text messaging through to social engagement and any numbers of other initiatives. There is no doubt, used correctly, modern marketing tools such as marketing automation (the ability to automate tasks and processes for the purpose of marketing a product or service) can play a big part in growing and maintaining a customer base.

If you google “business marketing tools” you will find thousands of tools available online that can be used to help you market your business.

In fact, as of 2018, there are more than 6000 registered technologies that could be used.

The problem is that the technology is only part of the solution. The excitement of thinking that a technology is going to change your business dissipates when you realise that you need to sit down and learn how to use each piece of technology. In addition to this, you then need to start preparing data lists and marketing content, such as email copy, images, videos and text, not to mention the principles of modern marketing automation. In many cases, advisers want the outcome, but are not necessarily interested in

the process involved in getting there. In much the same way that we do not need to know how a car works, but rather focus on the basic skills to drive the car from point A to point B. This problem has been uniquely identified by a New Zealand company with significant international experience that has developed a marketing solution uniquely for insurance brokers.They recognised that to be successful, the technology needed to be able to run on modern devices such as smartphones, leverage the latest marketing technology, have content developed and maintained by leading market experts, but more importantly, be no more complicated to use than making a phone call.

Advisor Promoter is such a technology and is making waves in the industry in helping advisers grow their business. It is well worth a look for advisers wanting to take their marketing to the next level.

ADVISOR PROMOTER LAUNCHES MARKETING AUTOMATION TECHNOLOGY FOR INSURANCE AND FINANCIAL ADVISERS Built with a talented team of marketers and technologists with experience in developing enterprise level market automation solutions for international markets, Advisor Promoter sets a new standard in simplicity and usability without compromising on power.

Designed in New Zealand for insurance and financial advisers, we have focused on developing a comprehensive system that leverages the latest

technology to help advisers nurture existing relationships, automate tasks and generate new leads through a range of very powerful predesigned campaigns. In working with advisers, we have married technology with processes that directly drive business and strengthen customer relationships, all within a system that is simple to use and understand. Not only have we developed comprehensive systems that delivers leads to you in real-time, we continually add to, monitor and improve these campaigns so you can rest assured that you are always getting optimum marketing results.

Advisor Promoter is a highly advanced, yet simple to use, smartphone based marketing automation system.

Designed primarily as a fully maintained, done-for-you service, Advisor Promoter uses the power of the smartphone providing nontechnical users the ability to promote their product or service without having the need to understand the complexities of marketing automation. Utilizing both online and offline media, Advisor Promoter allows users to market with both traditional marketing tools in addition to best in class marketing automation technology, all from your smartphone or any modern device.

This technology uses a range of simple to use, trackable marketing channels including Mobile Landing Pages, Email, SMS, Social, Print, TV, Radio and Presentation tools etc all designed to help you better understand where to spend your time and investment to generate results. www.covernote.co.nz

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SPOTLIGHT ON

DAMIAN MCDONALD CEO OF ADVISOR PROMOTER HOW LONG HAVE YOU BEEN INVOLVED IN TECHNOLOGY? I actually started my first full time job at Commodore Computers in New Zealand when I was 18 and was running the technical side of the business and managing 52 service centres by the time I was 21. It was a steep learning curve, but it really set a solution foundation for me to build from. After leaving Commodore I decided to move into sales and marketing and set up my own company Visual Newmedia, which specialised in developing brand strategies and marketing technologies for medium enterprise and corporates. The passion for technology and how it could be applied to business continued with developing a range of technology tools for business, ranging from presentation tools through to marketing automation technology using mobile phones for international markets.

WHY DID YOU DEVELOP ADVISOR PROMOTER? It came about through a personal experience. I had taken out family insurance on a range of cover options five years prior to this point. On a random phone call, another adviser called to offer a free assessment on my current policy cover to make sure it was still relevant. It dawned on me during the conversation that, in fact quite a lot might have changed since I had taken out the policy and that my adviser hadn’t communicated with me since signing the contract. On this basis, I went ahead with the assessment. To cut a long story short, the new adviser pointed out some areas that I may not be eligible to claim so I sent an email through to my existing adviser to comment. Within two days, the old adviser was on the door step with the insurer representative, trying to retain the business.

I took the opportunity to present some marketing automation technology I had been developing for some time and communicated how it could apply to the sector. The feedback was extremely positive, so that was the point I started researching the requirements of advisers in the Insurance and Financial sector.What I had learnt from other sectors of the market was that the end user experience was just as important as the technical capability of the product. If it was too 14

September 2018

SPOTLIGHT ON

We are in an age of continual change, so business needs to be able to learn and adapt based on incremental changes in process improvement

hard to use, or too hard to learn, people will not use it. In my experience most people only use 10% to 20% of the functionality of Microsoft Office tools such as Word or Excel so we took the view of focusing on the 80/20 rule and developed critical marketing automation functionality from the ground up, targeting the smartphone with a strong focus on compelling content and more importantly, usability. User feedback tells us that Advisor Promoter is the most advanced, yet simple to use marketing tool for Insurance and Financial advisers.

WHAT ARE THE MAIN AREAS ADVISOR PROMOTER HELPS ADVISERS? Advisor Promoter is all about generating leads for advisers. This is done through a process called nurturing and lead generation. The nurturing side uses marketing automation technologies combined with well-crafted communications that keep and nurture the customer relationships. It may involve timely updates on products on offer, birthday wishes and renewal reminders etc. This is all done by a range of communication channels ranging from email to SMS messaging depending on the customer's preferred choice. The system keeps the customer informed and provides ways in which they can easily source further information. As clients interact with various communications, those interactions appear in realtime on the adviser’s smartphone dashboard, allowing them to easily gauge customer interest, to then take action on. From the Dashboard they have access to single click actions such as sending emails, SMSs through to booking appointments directly from the phone. Lead generation is also where Advisor Promoter stands out. With custom tools like Leverager and Social Shares, advisers can quickly leverage media articles and information to promote lead generation through social sharing across their social channels. In addition to automated social sharing any marketing initiative can be uniquely tracked so advisers and adviser groups can easily see what is working and what is not. These are some of the main areas that Advisor Promoter helps advisers, but the system is packed with additional tools and campaigns to help advisers simplify business processes and generate leads.

WHAT ARE MARKETING AUTOMATION SYSTEMS AND WHAT MAKES ADVISOR PROMOTER DIFFERENT? Marketing automation refers to software and technologies designed to help business more effectively market their product or service on multiple channels both online and offline, this can include email, social media, SMS, websites, print, radio and tv etc. In a market that is continually changing in the way that people choose to receive information, it is important that systems continuously measure the effectiveness of each channel and adapt accordingly to their customers' communication preferences. Whilst a

fundamental requirement of any automation system is to automate repetitive tasks, our belief is that for effective adoption of these systems, they need to be focused on simplicity and usability for the end user. In most cases, people are not interested in learning and managing the processes involved in marketing automation, but are far more interested in the outcome.

In the context of Advisor Promoter, we provide a done-for-you marketing service through a range of managed marketing campaigns designed for the industry. By utilising the Moberate Technology which has been specifically designed for the sector, combined with partnering with industry specialists, we are able to provide a world class real-time marketing solution for advisers through a simple to use Smartphone Application.

As part of the done-for-you service, you don't really need to worry about the technical stuff that happens in the background as our job is to continually work behind the scenes to manage the systems that deliver leads and marketing tools to you in real time, so you can focus on working with your new prospects and existing clients.

WHAT IS THE KEY THING YOU HAVE LEARNT OVER THE YEARS WITH TECHNOLOGY? The biggest thing I have learnt is that technology needs to be easy to use. The best technology in the world is no good if a person doesn’t know or can’t remember how to use it. Companies like Apple took years to learn from early MP3 players following the Walkman and wanted to rethink what a music device could deliver. The first Apple iPod revolutionised the industry in usability and paved the way for the iPhone. One of Steve Jobs’ founding principles was “You've got to start with the customer experience and work backwards to the technology.” We recognised that most advisers are not necessarily technology-savvy, so it was even more reason to focus on simplicity. Whilst some of the more advanced aspects of the application require more skills to learn, we take pride in knowing that 95% of the functionality is available via the Simple Dashboard of the application.

IS TECHNOLOGY BECOMING A CRITICAL PART OF BUSINESS? In this day and age any modern business needs to embrace technology and the benefits that technology solutions can bring. My recommendation for business is to focus on the 80/20 rule. Look for areas that you can get the most benefit from and make sure the systems are in place to drive the process to a conclusion. We are in an age of continual change, so business needs to be able to learn and adapt based on incremental changes in process improvement. The fact that we are delivering a fully managed service means that businesses can be up and running in days, if not hours, and immediately start to see how the technology can benefit business. www.covernote.co.nz

15

FEATURE

COVER STORY

www.covernote.co.nz

17

COVER STORY

BIG DATA

WILL CHANGE WORLD OF INSURANCE

By Angela Cuming

18

September 2018

COVER STORY

T

he big data revolution isn’t coming it’s already started, and it will change insurance in at least two key ways.

The first big change will see insurers being able to build a much deeper and more accurate profiles of their customers.

The second is more challenging. Insurance will have to embrace a big shift in culture to become much more positive and proactive in its relationship with customers. ‘’Big data will be transformational for the industry,” said Insurance Council chief executive Tim Grafton.

BUYING AND SELLING INSURANCE As insurance companies begin to mine big data it will help them get a clearer picture of what their customers want, experts say.

Michael Naylor, a senior lecturer in finance and insurance at Massey University, said there was a whole new range of data resources and techniques available for insurance companies to use, including information collected from a person’s social media right down to their seemingly mundane gym membership and grocery shopping purchases.

“To combine all that data together would not be easy, technically speaking, for an insurance company to do, but once it’s done it will be a lot easier for the company to know about each individual customer and then the company will be able to do ‘customer underwriting’,” he said.

“What it means, essentially, is that you won’t have to ask the clients a lot of questions to gather data. It will simply already be there in front of the companies, collected from each clients’ digital footprint. The companies will know more about you than you know about yourself.

They will know, for instance, if you are googling wedding dresses and then will be able to offer you, for instance, life insurance, or if you have started taking yoga classes at your local gym and offer you a specific health insurance policy that covers you for injuries sustained during a yoga class.”

The data could be collected by a “digital agent” – a piece of software that monitors and collects a person’s digital footprint, Naylor said.

“Currently people give themselves away to Google and Facebook for free, so why wouldn’t people want to charge a digital agent for learning their online surfing patterns?

“The software would build a profile of an individual and then these digital agents would get the profile, control the profile and filter the profile to the people who want to get it – namely insurance companies.”

The result?

“No forms,” Naylor said. “Insurance companies will be able to tailor-make a policy for an individual without that individual having to do anything. The person’s profile and the insurance company’s software would come to an

agreement and give the customer the best deal available.”

Insurance companies are already starting to build profiles of clients and provide bespoke insurance packages based on a client’s specific needs and wants, Grafton said.

“This will occur and has occurred,” he says.

“For example, a start-up and relatively new entrant to the UK market, Bought by Many, has specialised through extensive research in a niche market, pet owners; they’ve aggregated key needs and developed products with underwriters. This shows the emergence of more sophisticated and responsive broker models.”

Big data will also mean more interesting and accurate predictors of risk being discovered and developed.

“Insurance is a sector that has always been heavily dependent on information to inform its decisions about risks, so a quantum shift in the ability to source, amass and analyse data almost instantaneously provides a platform to significantly enhance the insurance experience for customers.

“Smart analytics will drive more risk prevention and better customisation to meet individual consumer needs which will also reduce claims costs.”

One big change – and benefit for insurance companies – would be better and more efficient risk assessment for underwriting, Grafton said.

“Underwriting based on historical data may become less relevant in some lines. There will be faster and more insightful processing of claims and automated processes, will make operations more efficient.”

Property insurance premiums would be influenced by the higher volume of data available to insurance companies, Grafton said.

“Big data will provide risk information at a granular level – for instance, for individual houses based on publicly available data that can be aggregated and modelled to deliver a house’s risk profile,” he said.

“Alternatively, real-time telematics can riskprofile drivers, which can provide consumer benefits by encouraging lower risk driving rewards.”

Customers will benefit because insurers would need to ask fewer questions of their customers to be informed about a risk they are insuring.

“Insurers would have the ability to proactively deliver new product offerings for consumers based on better understanding and knowledge of their needs, leveraging the technology to act as a virtual e-broker.”

The increased use of blockchain technology would enable claims settlements to be virtually instantaneous in some situations, Grafton said.

“Take the example of someone with travel insurance heading to the airport who receives a credit payment from their insurers triggered by

confirmation from the airline to the insurers that their flight has been cancelled.

“Technology has the potential to build high levels of trust and confidence in the delivery of the insurance promise. And, of course, the use of multiple platforms will enable consumers to purchase their insurance on their device of choice, which will almost certainly be a mobile device, and to have their claims settled rapidly via the same platform.”

ON THE ROAD It’s not all a question of buying more insurance, however, and in some areas customers may find they need less. Car insurance is one of them.

“Car insurance has probably another decade and then it will be utterly unprofitable,” Naylor said.

And the cause of that death? Driverless cars.

“Once we move to driverless cars the crash rates will drop markedly. The car insurance industry as a profitable field is doomed.”

The reason car insurance on its own would stop being profitable is simple, he says.

“If you don’t already have to drive your car and it crashes it’s not your fault because you were not driving, it’s the fault of the software or something similar. If there is no one in the car you can’t blame the driver and you can’t blame a person.”

And while it may take a decade or more for driverless cars to become common on New Zealand roads, Naylor said there would be a “tipping point” for the car insurance sector.

“What we are arguing about is not a matter of when self-driving comes in, it’s when the (car insurance) cash flow starts to decline,” he says.

That reduction in cash flow will be because of fewer crashes, and therefore fewer claims and ultimately less need and want from customers to take out big car insurance policies. Insurance companies will have to fight for the business of ‘’bad’’ drivers – the ones that are involved in crashes with other drivers – and things will start to become more competitive, Naylor said.

“Already all the high-value cars have a range of in-built crash avoidance technology,” he said.

“So as an insurer’s good customers that own very expensive cars don’t crash, they will be competing for the customers that still do all the crashing.”

And there is also what he refers to as the "tipping point", the moment when vehicle crashes fall to such a low rate that it effectively renders car insurance unprofitable for companies to sell.

"If we say 15% of the cars are self-driving they won’t crash, they will ‘talk’ to other self-driving cars on the road and they will all avoid each other and therefore avoid crashes.”

Once autonomous vehicles were 35% to 40% of cars, people-driven cars would find it very www.covernote.co.nz

19

COVER STORY

difficult to find another car on the road to crash into, he said.

Jeremy Holmes, principal of actuarial firm Melville Jessup Weaver, says another way big data will influence car insurance is via telematics, which are devices that monitor insured driving behaviour and incorporate this into their premium.

“This sort of thing hasn’t really taken off in New Zealand yet but is very big in the United Kingdom and United States,” Holmes said.

“When you’re recording second-by-second driving information covering numerous metrics (speed, location, direction, G force) for hundreds of thousands of insureds, then it doesn’t take long for the data sets to become so voluminous as to present big challenges to data users.This probably falls well into the territory of what people like to call big data.”

their customers. They really must change their entire culture to become customer-engaged and friendly. They have to become aware that everything they do needs to be based on what the customer will respond to, and that’s a real hard trick.”

But insurers had to change, he warns.

“If insurers do nothing they will gradually shrink, and they will end up being just a piece of software in a box. What they must do is turn around and say ‘well, we have all this data, we have, for example, a real-time link with drivers, what can we use it for? What can we leverage?’.”

The obvious step would be for insurers to offer customers a range of things to buy that the companies could make a profit from, like the health insurance company in Singapore that provided day care, Dr Naylor said.

“When Amazon made the Kindle they lost

WHAT IT MEANS, ESSENTIALLY, IS THAT YOU WON’T HAVE TO ASK THE CLIENTS A LOT OF QUESTIONS TO GATHER DATA. IT WILL SIMPLY ALREADY BE THERE IN FRONT OF THE COMPANIES, COLLECTED FROM EACH CLIENTS’ DIGITAL FOOTPRINT. CULTURE CLUB In order to survive the brave new world of big data, insurance companies will have to undergo a radical culture change, Naylor said. In short, they have to start being “more positive”.

“Currently insurance companies are fairly negative, you deal with them when something bad happens. You deal with them when you are trying to claim, you deal with them when they demand renewal money and that’s why people don’t like insurance companies.”

But the good news is insurers could use big data to create positive experiences and a higher level of service for clients.

One example would be using pre-set software in a car to know the moment a client’s car engine started to get problems and thus book a repair or a service on the driver’s behalf - or sending a customer a rental car because they knew the moment the car had broken down.

“And the companies have to give clients information they like receiving,” Naylor said.

“They have to have ongoing contacts with clients through social engagement.”

That may sound hard, but a company like Amazon proves it can be done.

“I mean Amazon was a book warehouse at the start and they moved into being a company that basically shows you things that are nice.

“Insurance companies have been focused on cost control and on risk, they have not been focused on 20

September 2018

money on every Kindle sold,” he says.

“But what they did was they then used that product that was in everyone’s hands to sell books and music and things like that.

“Amazon then dominated the market and sold a range of value-added things around that. Think about Facebook, it makes all its money from advertising. So why would you make your money from insurance when you can make your money in a range of other ways?”

ACTUARIES, ACTUALLY The role of actuaries would change as more insurance companies started to “mine” big data, Holmes said, and actuaries would no longer be sitting in the back office, crunching data.

“I think the role of actuaries is definitely changing,” he said.

“If you look at the pricing teams for large insurers (in NZ and abroad) then they’re generally made up of some actuaries as well as other technical experts. Insurers understand that your pricing team doesn’t need to be all actuaries.

“Actuaries are not simply data scientists or insurance statisticians, although we share some of the same skill sets. The value that an actuary adds is to take the technical results and overlay with commercial acumen, market knowledge, judgment and common sense.

“Actuaries now and going forward will act as a conduit between the data technicians and the decision makers to help them understand what

the numbers actually mean in terms of achieving their goals.”

Dr Naylor said the traditional role of actuaries would be replaced by artificial intelligence algorithms and that going forward “most things will be done by software”.

“It will be the software that will be doing the underwriting,” Naylor said.

“And therefore the actuaries will actually have to supervise the software systems. Computers are very stupid and will make mistakes that are obvious to people.”

SET TO PRIVATE? But, will the growth of big data, should customers be worried about privacy? Maybe, Holmes said.

“It’s reasonably easy to find out what information an entity holds on you (you just ask them) and you can correct it if it’s wrong,” he said. “It’s no surprise that entities are collecting more and more data on people these days – internet browsing behaviour is an obvious example. Fortunately, individuals have some control over this by you choose how you use the internet.”

And while data collected from your internet browsing and social media habits is not really incorporated into insurance pricing in New Zealand yet, says Holmes, this may change in future.

“But for an insurer to go to the effort of analysing all this data, they need to have some belief that it might actually make a worthwhile difference in the insured’s assessed risk profile.”

On the issue of privacy Grafton said high levels of protection needed to be built into any insurer’s data storage systems.

“Insurers need to operate with high standards of transparency in dealings with customers about data collection and the use of the data (including what it will not be used for),” he said.

“Full compliance with appropriate privacy legislations will be essential, and should any breaches of privacy occur, then customers need to be advised immediately.”

Dr Naylor is blunter. “There are massive concerns about privacy,” he says, “but young people are not that bothered. Older people don’t understand that everything we do online is public.”

Expect to see insurance companies offering discounts to people who are “prepared to expose their lives” to show they are a lower risk, Dr Naylor said.

“The people who don’t will be higher risk and therefore there will be a massive increase in their premiums.

“And I think soon enough customers will start to see the benefits that flow from insurance companies knowing a lot more about them via their online presence. It’s really going to do some amazing things.”

KEEP YOUR BUSINESS AT THE TOP OF ITS GAME. |

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Talk to AIG today.

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The All Blacks and Black Ferns success on the field comes from their focus and preparation off it. At AIG, we take the same philosophy when developing insurance solutions, making sure we’re there to help businesses tackle their future with confidence.

COVER STORY

TO DISCLOSE OR NOT TO DISCLOSE Do insureds need to disclose their insurance policy when matters turn litigious?

by Andrew Horne, partner, and Olivia Brown, solicitor, at Minter Ellison Rudd Watts

P

laintiffs want to know a defendant’s financial position so they may determine the enforceability of a judgment. Often the mere knowledge of an insurance policy will steel a plaintiff ’s resolve to bring or to continue litigation.

The two most common situations in which plaintiffs seek disclosure of a defendant’s insurance policy are where: (a) they are concerned that there is a risk that the defendant will soon be insolvent or bankrupt which may require joinder of the insurer; and/or (b) they seek disclosure to assist in settlement negotiations.

On its face, the former is more legitimate than the latter.

The general rule is that parties to litigation are not required to disclose documents which are not relevant to the issues between the parties as determined by the pleadings.

This means that, in most disputes where an insurer is not a party, the defendant’s insurance policy would not be in issue. Recent decisions both here and in the United Kingdom have tested this proposition.

WALKER V FORBES The liquidators of several companies sought 22

September 2018

copies of any insurance policies held by those companies’ former directors. The liquidators sought to employ High Court rules 8.19 and 8.20, which concern particular discovery and pre-commencement discovery.

Rule 8.19 provides for discovery of particular documents or categories of documents where a party has not disclosed documents that ought to have been discovered. The liquidators argued that the directors were obliged to discover the relevant insurance policies pursuant to their general discovery obligations.

The liquidators mounted a number of arguments to confront the general rule that a party is only required to discover documents that are relevant to the pleaded issues.

In particular, the liquidators argued that, because they were required to disclose details of their litigation funder’s financial position, there would be a “significant imbalance between the degree of information” if the defendant was not required to disclose their insurance policy.

Justice Lang did not accept the liquidators’ arguments and found, among other things, there is no general requirement of balance between the

level of information parties provide in relation to their respective financial positions, and the information disclosed by the litigation funder was a “direct consequence of the involvement of the litigation funder as a whole” – certain details are required to be disclosed in any event; and the role of the courts is to determine cases that come before them.

It is not for the courts to consider the likely ability of a defendant to satisfy judgment and indeed many judgments are entered against defendants who have no prospect of satisfying them.

The court then dealt with the liquidators’ application under rule 8.20, which provides a discretion to the court to order particular discovery before a proceeding is commenced.

This was on the basis that the liquidators claimed they were contemplating an action directly against the defendant’s insurer under section 9 of the Law Reform Act, which allows a third party to claim directly against another party’s insurer in certain circumstances.

Consequently, the liquidators argued that they could not formulate that claim without knowing who the insurer was and what the

COVER STORY terms of the policy were. Lang J declined to exercise the court’s discretion because: • it was clear that the liquidators had learnt of the existence of the defendant’s insurance in without prejudice settlement negotiations and therefore it would be wrong and very close to an abuse of process if the liquidators could benefit from information obtained in

such a manner; • there was no suggestion that the defendant would fail to make a claim on the policy or that the insurer intended to decline cover; and • the liquidators were not genuinely interested in a proceeding against the insurer – they wanted a copy of the insurance policy only to assist them in negotiating a settlement and in deciding whether to pursue a claim against the former director.

So the New Zealand position is that insurance policy documentation is not generally discoverable unless it falls within the usual discovery rules.

PEEL PORT SHAREHOLDER FINANCE COMPANY LIMITED V DORNOCH LIMITED Peel Port’s warehouse suffered fire damage which it alleged was caused by European Active Projects Limited (EAPL).

EAPL’s insurer, Dornoch, declined cover on the basis that EAPL had failed to observe certain precautions required by the policy.

Peel Port was concerned that EAPL would be unable to meet a judgment without insurance coverage even though it was solvent at the time proceedings were commenced.

Peel Port sought a copy of EAPL’s policy to test whether Dornoch’s decision to decline coverage might be challenged.

Peel Port applied under Rule 31.16 of the UK Civil Procedure Rules, which is similar to rule 8.20 of the High Court rules in that it provides a mechanism for disclosure before proceedings have started, if in the judge’s discretion it is “desirable” to do so.

Justice Jefford declined to require disclosure of EAPL’s insurance policy as Peel Port’s application involved too many hypotheticals – EAPL might become insolvent and Peel Port might have a claim against its insurer, Dornoch.

This finding was supported by: • the separate regime for the provision of information about insurance policies under the Third Parties (Rights against Insurers) Act 2010. Parliament did not intend that Rule 31.16 would be used to obtain insurance policies from insurers; • there has never been an express statutory

provision entitling a litigant to obtain the insurance policy of a solvent insured (because a litigant takes a defendant as they find them); • the insurance policy did not meet the test for standard disclosure; and • attempts to deploy other provisions of the Civil Procedure Rules to obtain the insurance policy of a solvent insured have failed in other cases.

KEY TAKEAWAY There is scope for a plaintiff to apply for an order requiring disclosure of an insurance policy under Rule 8.20 in a case where there is reason to believe: (a) the defendant’s insurer will decline cover; (b) the defendant is likely to become insolvent; and (c) there is no dishonesty involved in how the plaintiff came to acquire the knowledge of the policy.

However, the fact that neither plaintiff succeeded in obtaining the insurance policies in the above cases shows that there is a high bar in seeking to persuade a court to order disclosure. Although disclosure may facilitate more efficient outcomes, or even avoid unnecessary litigation (especially in cases like Peel Port), plaintiffs cannot request disclosure of documents that are not relevant to the proceedings, or anticipated proceedings, before a court.

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23

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COVER STORY

CONSUMER ACCEPTANCE OF HEALTH TELEMATICS

By Mike Naylor, Massey University

O

ne of the forecasted future changes in health insurance is the use of wearable health telematic devices, like Fitbits, to help set clients’ premiums.

It is unclear, however, whether consumers will accept these devices as they imply a higher level of sharing of personal information than is currently the case.

One solution to the initial consumer reluctance is the use of premium discounts to overcome this initial reluctance.

Research conducted by Massey indicates that 83% of current health insurance consumers are willing to share personal health telematic data with insurers if sufficient premium discounts are offered.

This is higher than many industry commentators have guessed and indicates that health telematics could have a substantial role in the future of health insurance.

This willingness to share health data is, of course, dependent on the attractiveness of the offer insurers make.

On average, the respondents saw a 20% discount as sufficient incentive to willingly share personal health data, with a substantial group who would accept less.

Most respondents were willing to share daily activity data, with a lower willingness to share blood pressure data, cardiac data, blood oxygenation, or blood insulin data. Surprisingly, however, more than half of all respondents would share all kinds of data if offered the right deal.

While respondent had a high level of knowledge of telematic health devices, comments indicate unease about how their use would link to insurers.

This means that was a premium built into the discount demanded, and implies that over time increased familiarity could lead to consumers accepting lower discounts.

In general, males were more willing to share data than females, and those with a higher level of perceived health were more willing. Income level and ethnicity had little impact on willingness.

There was an indication that insurer inducements would help respondents stick to exercise plans on a longer term basis than occurs at present. This will help overcome the tendency for Fitbit use and exercise regimes to be temporary.

One of the major issues of concern to respondents was the level of their trust in their insurer to safeguard the confidentially of their health data and act to ethically, so that they do not abuse their increased knowledge about their clients.

Unsurprisingly, there was a strong relationship between the respondents’ level of trust in their insurer and their willingness to share data, the level of discount required, and the kind of data they were willing to share.

Surprisingly however, even those respondents who mistrusted insurers were willing to consider sharing data if sufficient inducement was offered.

This result highlights that a major element of insurer competitive advantage in the future will be their perceived trustability. This is an issue as life and health insurance companies are finding it increasingly difficult to actively engage in positive ways with clients, whose expectations of engagement have been raised by the customized approach used in the tech sector.

Feedback from health telematics would enable health insurers to offer similar customized service if used correctly, if presented to clients positively, and if used to increase trust. A majority of respondents were in favour of increased customisation of insurance.

The research surveyed nearly 100 financial adviser clients, with a mix of quantitative questions and discussion feedback. Most respondents were aged between 35 and 54 years, and of middle to high income, which reflected the segment of the NZ population which buy health insurance.

The study was done by Upmeet Sodhi (RFA) of Mutual Solutions as part of his Massey University MBA under the guidance of Dr Mike Naylor.

www.covernote.co.nz

25

FEATURE

NEW LIABILITY SOLUTION FOR MANUFACTURERS

T

he New Zealand manufacturing sector is experiencing strong growth and is currently a standout on the international stage.

According to Statistics New Zealand, export earnings are approaching $50 billion with manufacturing for the construction and agricultural sectors growing over 9% and 8% respectively in the last year. With innovation and efficiency driving this growth however, manufacturers are confronted with new challenges and evolving risks – risks that need to be continually assessed and minimised.

NEW AND EVOLVING RISKS Dinesh Murali, casualty manager and senior underwriter at Delta, explains: “In order to benefit from an efficient global supply chain, our manufacturing sector is increasingly more reliant on outsourcing many of their components and processes from offshore suppliers. However, this also makes them vulnerable to potential quality issues that are outside of their control.

26

September 2018

“Additionally, there is a major trend for widescale use of programmable logic controller software and Industry 4.0 technologies in the manufacture of today’s products. By embedding this technology into their equipment and machinery, our manufacturers’ products also become connected to the internet of things, giving rise to risks such as cyber security which were not previously a concern.”

The same issues hold true for food manufacturers, with a 62% increase in recall rates for food products last year.These product recalls cover a range of issues, including accidental contamination from pathogens, undeclared allergens and other foreign matter, malicious product tampering and incorrect labelling.

The increase in recall numbers last year and the recall numbers so far in 2018 suggests this is a trend that looks set to continue.

“Generally this is the biggest risk that our manufacturing companies face today. Events such as product defects or pollution incidents can be prohibitively expensive. Product recalls can have a substantial impact on the bottom line and can seriously damage a company’s reputation.

Manufacturers need to make sure they are covered for such an event,” Murali said.

FEATURE

YOU CAN MAKE HUNDREDS OF GOOD DECISIONS EVERY DAY AND THEN COME UNSTUCK WITH ONE EVENT THAT CAN SERIOUSLY IMPACT THE BOTTOM LINE.

COMPREHENSIVE COVER Traditionally, the insurance industry has dealt with these situations with limited extensions to their GL policy and by issuing multiple policies, and this approach has remained static for the last decade.

“It can be a tedious and expensive exercise for typical SME businesses when they need to purchase several insurance products independently,” Murali said. “Multiple insurance covers usually make the cost prohibitive.”

Because of this, Delta have developed what it believes to be a New Zealand-first – liability coverage specific to the needs of manufacturing companies, giving them comprehensive cover for such potential outcomes.

“We are a SME, middle-market country – we don’t have many billiondollar companies. To suit the needs of these small companies, we’re making it as comprehensive as possible by covering those individual sections under one umbrella. We have put everything under one competitively-priced package at a more affordable premium.”

The manufacturer’s liability package is built on a general liability policy and takes a modular approach, carrying some unique coverage sections that are usually not addressed in other policies.

This cover under one umbrella targets both food and non-food manufacturers and insures a range of manufacturingspecific risks. The manufacturing package includes: • Standard general liability cover for damages and injury to third party.

• Product defect and recall section, which covers the cost of removing

and replacing the defective products.

• Errors and omissions section, which covers financial losses to

third parties.

• Gradual pollution • Consequential Loss section to cover business interruption from a

covered liability event.

The food specific package covers all of the above, except the defects and recall section is triggered by product or packaging defects which pose a health risk.

Beyond the direct financial impact, manufacturers can also suffer significant reputational damage if they do not have the resources and expertise to proactively manage the complexity of a product recall. “The

policy covers the costs of crisis management incurred to help mitigate negative publicity. We can help to provide manufacturers with all the legal, PR and other expertise they need in a crisis,” said Murali, “and there is also the flexibility to package it with other coverages too, such as Cyber liability.”

Murali said:“While it’s important for manufacturers to achieve innovation and growth for their companies, it’s also important that they have the risk mitigation strategies in place to deal with the one-off nightmare scenario when things go pear-shaped. You can make hundreds of good decisions every day and then come unstuck with one event that can seriously impact the bottom line.

“We would be more than happy to assist any brokers that would like us to work with them and their manufacturing clients to put this risk mitigation strategy in place.”

CATERING TO NICHE MARKETS As the only locally owned and operated specialist liability underwriting agency in New Zealand, Delta’s strategy of tailoring their offer to niche markets has been a successful one for them. They are currently the largest insurance provider to the thriving Kiwi technology sector and have introduced the first local liability products in New Zealand for the environmental and UAV (or drone) industries.

General manager Craig Kirk said: “We don’t see Delta as being all things to all people. We are in continual dialogue with our broker partners and we see a growing business demand for cover of specific industry risks.

For example, we are seeing more requests coming through for areas like intellectual property and reputational cover, or even personal cyber cover.

We want to make sure that we can accommodate this demand and add value by providing tailored, high quality products for the market.”

This article was supplied by Delta Insurance, a New Zealand-based insurance provider, a Lloyd’s of London Coverholder and are backed by multinational insurer Allied World. It provides a range of specialty commercial insurance products and have an office in Singapore. www.covernote.co.nz

27

SPOTLIGHT ON

SMEATON SEES SUNNY SKIES AHEAD Suncorp’s New Zealand chief executive is buoyant about the New Zealand insurance market and his firm’s place in it.

By Michael Botur

A

ugust 9 was a good day to catch up with Paul Smeaton.

The chief executive of Suncorp NZ, the country’s second-largest insurer, had just helped present strong results to trans-Tasman shareholders for the 2017-2018 year.

Profit after tax for Suncorp’s general insurance in NZ this year was $109 million, largely through Vero, and life insurance net profit after tax was $39m.

Ninety-six per cent of Suncorp’s claims from the Kaikoura quake had been settled and a programme aimed at reducing Suncorp’s risk exposure in earthquake-prone areas – particularly around corporate property underwriting – was launched. Suncorp had also been helping customers affected by the Edgecumbe flood. Meanwhile the company’s Australian parent has been going through some upbeat rebranding, asking in adverts ‘Are you ready to money with Sunny?’

One downbeat in Suncorp’s August announcement was net life insurance profit from Asteron Life and AA Life slipped 2.5% due to more claims than planned and a higherthan-expected lapse rate. Overall though, Smeaton said things had been especially good for Suncorp compared to last year.

“If you look at 2017 the natural hazards incurred were double what we allowed for in our pricing but we still managed working our claims and expenses very well,” Smeaton said. Cyclone Debbie made things challenging. As he puts it: “April 2017 in Auckland was a shocker.”

TOWER INSURANCE: BURNING ISSUE EXTINGUISHED One recent bump in the road was the Commerce Commission declining Suncorp’s application to merge Vero Liability with Tower Insurance in July 2017 (Suncorp’s appeal was relinquished in November.) It was March 2018 that Vero announced it had sold its 19.99% stake in what was NZ’s third-largest general insurer by premium income. A $8.5m gain was realised by Suncorp NZ shortly after.

“Our time is over with Tower,” Smeaton said. “With the Commerce Commission decision to not allow us … we’ve moved on. We’ve lowered our stakes this financial year and wish them luck moving forward. It was an interesting time… we accept the judges’ decision.”

Considering Smeaton’s New Zealand operation is owned by Australia’s $99 billion Suncorp Group Ltd, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has also been topical. The commission structure in life insurance is one of many aspects the commission has looked at.

“We are definitely seeing the contagion effect [of the commission],” Smeaton said. “A lesson that we’re all learning is about conduct with customers and good customer outcomes.”

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September 2018

SPOTLIGHT ON

Elevating the customer is one of Vero’s mottos.

“You can’t underestimate doing the right thing by the customer. When you decline a claim for whatever reason […] take a little bit extra time to think, ‘Is this the right customer outcome?’”

30 YEARS IN THE INDUSTRY Smeaton hails from Brisbane. Not long after finishing school, he began work at Citibank then worked in the UK for seven years before joining Suncorp in 1994, when the company was owned

by Queensland’s government (Suncorp-Metway went private in 1996). His first Suncorp role was heading information technology.

He then moved on to senior leadership positions in corporate projects, human resources and general insurance teams. His career in Australia includes roles as director of GIO Workers Compensation (NSW) and GIO

leadership style. When I went to NZ in 2015 I went for only CEO of Vero but it made sense to bring Asteron and Vero together as one business.

“It comes down to execution, taking people on a journey, and then delivering results.

“I do hold people to account. Accountability and ownership is a core value.”

He said he tried to operate a style of “fervent leadership”.

“I’m there to serve my people, they don’t serve me. I hand work over to future leaders. I serve my team develop them… I’m not the sort of guy that just holds the reins.”

Part of that sustainability is allowing staff to work flexibly and outside of the office, which has reduced the company’s NZ real estate footprint by 40 per cent; travel and printing have been reduced too.

YOU CAN’T UNDERESTIMATE DOING THE RIGHT THING BY THE CUSTOMER. WHEN YOU DECLINE A CLAIM FOR WHATEVER REASON […] TAKE A LITTLE BIT EXTRA TIME TO THINK, ‘IS THIS THE RIGHT CUSTOMER OUTCOME?

Workers Compensation (Victoria), and he was a board member of the Personal Injury Education Foundation Limited and RACT Insurance. Smeaoncalls the history of Suncorp “flavoursome” and estimates he has seen five CEOs serving. “I’ve worked many different roles. If you said to me back in ’94 ‘you will be CEO some day’ I would’ve thought you were on drugs!”

Memorable milestones include the Canterbury earthquakes in 2010 and 11, the Brisbane Floods in 2011 and, again, the Kaikoura quakes. “Our vision is to be there for those moments that matter. When I think back to the floods, our customer response – it goes to the heart of why I love working for Suncorp.”

Watching mergers as far back as 1993 with Queensland’s State Government Insurance Office have convinced Smeaton of the need to drive transformation through the business. “That goes to my

WINNING OVER BROKERS AND SMES The Insurance Council of New Zealand, of which Smeaton is vice-president, will look at two key themes at its annual conference in Auckland on November 20: climate change, and consumer trust. Gaining consumer trust, for Vero, has required putting in a lot of effort to listen closely to brokers and small businesses.

The Vero SME Insurance Index report, published five months ago, was built around survey feedback from 900 small to medium enterprises.The report “Helps brokers to provide better advice […] and helps us think about product design,” Smeaton said. The report also aimed to gain insight into businesses who don’t have insurance.

There have been significant recent declines in broker usage in Australia, the Index report points out. In NZ, the decline is far slower, though behaviour is shifting. Rising GST, EQC levies and fire service levy don’t help, Smeaton notes.

Vero’s report found in 2013, 44% of SMEs surveyed said they purchased their last insurance policy through a broker.This fell to 37% in 2017.

There was decline in broker usage particularly among medium sized business (those with

between 19 and 200 employees), who would traditionally have been the brokers’ core target audience, the report found. Meanwhile SMEs buying directly from insurers rose from 56% in 2013 to 63% in 2017.

Half the NZ respondents said they could easily organise their own insurance online, leading to brokers being cut out, or no insurance being sold at all.This is a worry for Vero, whose payouts following NZ’s largest-ever biggest business interruption– the Canterbury earthquakes – were 75% for commercial clients, most of whom relied on insurance to continue trade.

The survey also found • 47% said the reason for not having

insurance was the cost was too high • 33% were unsure about the benefits

of insurance • 1 in 4 SMEs said they had no business

insurance at all.

“For me, this confusion about the benefits of insurance, we need to work with brokers on that,” Smeaton said. “We have a role to play in affordability – we have a role to make sure that 47% [finds insurance] affordable.”

IS VERO PLANNING TO FOLLOW IAG’S LEAD AND REMOVE INCENTIVISED SALES TARGETS? “We’ve got the same philosophy [as IAG],” Smeaton said. “It’s all about frontline staff being rewarded for providing better outcomes.”

However, “We’ll roll [removing sales targets] out, it’s totally imminent this year. KPIs for 2018/19 being rolled out so now is the time.”

ON VERO’S DECISION TO TAKE AWAY FREE EXCESS ON WINDSCREEN AND WINDOW REPLACEMENTS. “In terms of repairing a glass windscreen, that’s still free. You only pay excess when you want it to be replaced,” Smeaton said. “We’ve found in the last 12-18 months the number of windscreen claims became unsustainable.” Vero has said only 7% of customers were claiming the benefit anyway, so the changes only affect a small number of customers. “We’ve tried to limit the impact on a small percentage who want to replace, rather than applying it across the board.

Nothing’s for free. NZ brokers were quite vocal about [the benefit]… Nothing’s for free. It’s embedded in the price. Let’s acknowledge that.”

ICNZ figures show the amount paid out for private and commercial motor vehicle claims as a proportion of premiums has spiked from 60% in 2013 to 77% in 2017, essentially meaning for every dollar insurers received in premiums last year, 77 cents was paid out in claims. www.covernote.co.nz

29

FEATURE

THE REWARDS OF INNOVATION

I

nstead of thinking outside the box, Rothbury Insurance Brokers has got rid of the box and is using a virtual underwriter.

Steadfast New Zealand’s Virtual Underwriter (VU) turned one last month and has paved the way for Rothbury to better manage its Small Medium Enterprises (SME) business.

VU is a full life cycle broker to underwriter placement system which gives Rothbury’s brokers the ability to transact SME business coverage in a fast, efficient and more structured way. It includes full quoting and binding and is set to change the way the brokerage carries out its daily SME business.

Client data is placed in VU and quotes are returned from the underwriter’s quoting platform, usually in under a minute.

The package information is fed back into Rothbury’s Swift Broking system to enable a smooth, easy and accurate process.

Two Rothbury branches are now past the first anniversary with VU and into the renewal cycle which is even quicker!

Over the last year, more than 2,500 packages and over $4 million of business has been closed through VU. Now the platform is set to evolve even further as VU continues into its second year and more underwriters come on board.

VU was initially part of a tri-partite project between Steadfast, Rothbury and NZI. Not only does it address a business issue around the cost and time incurred by both broker and underwriter dealing with multiple micro SME businesses, it allows brokers to spend more time interacting with their clients.

Rothbury’s goal is to be able to receive quotes from multiple insurers

within 30 seconds – and that’s set to become a reality in 2019.

As the insurance broker continues to grow organically and through business acquisition new brokers coming on board get to enjoy the benefits of using VU as well.

Talk to Rothbury’s EGM - Broking Services and Business Operations, Chris Hughes if you’d like to find out more.

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30

September 2018

FEATURE

www.covernote.co.nz

31

FEATURE

SIMPLIFICATION, PEOPLE AND PARTNERSHIPS - KEY TO KEEPING INSURANCE AFFORDABLE

I

n an evolving market, removing complexity and maintaining a focus on people and partnerships will be crucial for ensuring insurance affordability in the future.

NZI’s executive general manager, Garry Taylor says NZI is committed to being an organisation brokers and customers can trust and have confidence in to be there when needed most.

“The three things that will enable us to deliver this strategy are underpinned by; our people, our partnerships and the simplification of our business,” he says.

“These three things are the key to ensuring the sustainability of NZI, one of New Zealand’s oldest and most reliable brands. They are also what will ensure we are successful as we face into a continuing challenging market; changing customer needs; and new and complex risks that simply mean traditional insurance models need to evolve and adapt.”

In recent years, insurers have seen increasing claims costs due to emerging and changing risks. NZI will be allocating reinsurance costs based on risks more so in the future.

Taylor says NZI has invested in new and sophisticated pricing technology to manage this.

“We now have access to improved data and analytics, so we have a better understanding of different risks. This means we are becoming more and more granular in how we price insurance.”

Taylor admits that maintaining insurance at an affordable level during the transition to risk-based pricing will be a big challenge, but says it’s a challenge NZI is determined to conquer.

“I work with some extremely talented people who are committed to developing new ways of doing things to continue to provide affordable and reliable insurance solutions.”

He identifies simplification of the business to remove duplication and inefficiencies as a crucial element to help with this.

“NZI will be leveraging offshore partners for parts of the business to ensure to keep the cost of insurance affordable while gaining access to world-class technology and insurance expertise.”

He says NZI’s partnerships with brokers are vital during this process and says he’s determined to strengthen these further to ensure his team are adding value through effective local relationship management.

Taylor believes the role of the insurance industry in sustaining the local and national economy is often underestimated.

“A robust insurance model is vital to New Zealand’s economy - that’s why NZI is continually seeking to develop new ways of doing things.”

“We’ve been here for 159 years and we will continue to be here for New Zealanders for at least another 159 more.”

32

September 2018

FEATURE

NZI ADVOCATES FOR FIRE COMPLIANCE I

n London, a charred husk of a building still stands as a grim reminder of the deadly fire that ripped through Grenfell Tower last June. The tragedy resulted in 72 deaths and left dozens of families homeless.

Three years earlier, fatalities were narrowly avoided when the Lacrosse apartment building in Melbourne’s Docklands — also lined with flammable cladding — caught alight.

The tragedies ignited worldwide debate about the safety of combustible aluminium composite panels (ACP) and expanded polystyrene (EPS) cladding that adorns many high-rise buildings, including here in New Zealand.

Effective passive fire compliance is a key element for property owners and business to ensure fires are contained into a single fire compartment and to avoid catastrophic damage to a building including its early collapse.

Ongoing vigilance is required when a building is constructed and throughout its life time to ensure integrity is maintained.

Bryan Tedford, NZI’s National Business Continuity and Asset Protection Portfolio Manager says as a nation we’ve struggled to achieve compliant

34

September 2018

passive fire protection in many of our new build projects and then maintain it in existing buildings with the life cycle refurbishments that occur over time.

Leaders from the construction industry, insurance sector, fire safety officers and building owners came together to discuss what could be done to change this at a one-day seminar on Passive Fire Compliance.

“There’s been some discussion about whether a specific qualified trade or stricter construction monitoring should be required but we also need to weigh up how much time and money this will cost the construction industry when prices are already running away on some projects.”

But, he says, “the cost to New Zealand in diminishing life safety and loss of our properties is far greater.”

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He says NZI felt it was important to be part of this discussion as noncompliance threatens the safety of customers, employees and the broader community.

On top of this, it’s placing upward pressure on insurance premium costs.

“Non-compliance of building design and construction is a hidden risk – if we cannot accurately assess the risk, the uncertainly results in more fires and higher insurance premiums for our customers,” Tedford says.

“Correctly designed, coordinated and installed and inspected passive fire systems are paramount for our populations wellbeing as well as providing trust and confidence in the construction industry.”

Tedford says the seminar was a great first step in looking at a long-term solution to the problem, but now action needs to be taken.

“There’s force in numbers and if all of the industries involved can work together on this, I believe we can improve Passive Fire Protection.”

“If we get this right, we will not only reduce economic loss, but more importantly, we will save lives.”

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35

FEATURE

KEEPING YOUR BALANCE An interview with Jane Cook, senior commercial broker, Rothbury Insurance Brokers, Rotorua

T

echnology may have blurred the lines between work and home but it’s also made it possible to work remotely and create more work/life balance.

CoverNote talks to Jane Cook about what prompted her to sell her broking business and do just that.

WHAT WERE THE TRIGGERS THAT MADE YOU DECIDE TO SELL YOUR BROKING BUSINESS? I went out on my own in 2001. I hired two staff and the second one didn’t work out so I had to manage her out – that was difficult. I knew I had to hire more people if I wanted to grow my business but I just kept putting it off because I didn’t want to hire the wrong person again.

I spoke to a few different brokers about joining forces and merging but nothing really seemed to be the right fit, or if it did they weren’t ready so nothing came of it.

Then in 2016 I moved to Ohope to be closer to my father as he was ill. It changed my entire focus.

When my father died I lost some of my passion. I knew something had to change, but didn’t know how to change it. Then I got a phone call from a friend I’d known for years calling to say he was moving to Rothbury Insurance Brokers. I told him I wanted a change and was thinking of selling my business but wasn’t sure what to do.

We said goodbye and then a few months later he called again to say he remembered our conversation and would I like to talk to Paul Munton from Rothbury Insurance Brokers about an acquisition. I said yes and we set up a meeting.

HOW DID YOU FIND THE PROCESS? In the back of my mind I wanted an easy option. I met with Paul and compared to other meetings I’d had about selling my business this sounded really easy and just felt right. I remember thinking to myself - if I can get the terms I want, I’ll do this.

In the end the process was seamless. At the time I remember thinking, this is a welloiled machine. Everything just fell into place!

HOW DID YOU HANDLE THE CHANGE? I had got to the point where I didn’t want the stress of running my own business anymore but I still wanted to manage my own clients and have autonomy.

Sure I had some doubts. Was this going to go as well as I hoped? Was I doing the right thing? But the doubts I had were soon dispelled at further meetings with the Rothbury team. The transition was smooth.

WHAT HAVE BEEN THE PROS AND CONS? I have more time to spend with my family and I can still take time off whenever I want. Moving to the beach has been great and I’m still able to service my Auckland clients. The difference is I no longer feel tied to my business and too afraid to take a holiday. Now I can go away and relax knowing my clients are being taken care of and if they call the phone will be answered!

Having a dedicated claims person is one of the best things about joining Rothbury.

I never realised before how much time I spent on my clients’ claims. It’s so important and it’s really how people judge your business. Having a dedicated person to look after my clients claims is a major benefit.

The only con I can think of is not earning quite as much money as I did before.

But really my work/life balance outweighs all of that in the end. The other day I took a Wellness day (we get three Wellness days a year) to take my son to the orthodontist.

HOW IS LIFE FOR YOU NOW? If I didn’t have the option of joining Rothbury, I may still have been plodding along – not happily. So that has been the best thing of all – that I’ve actually done it.

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September 2018

FEATURE

INSURERS: CONCERNS TO ADDRESS FOR EARTHQUAKE CLAIMS TRIBUNAL

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nsurers are cautiously welcoming a proposed tribunal to deal with Canterbury earthquake settlements.

Justice Minister Andrew Little introduced a bill designed to help Cantabrians resolve outstanding residential insurance claims from the 2010 and 2011 earthquakes.

“The bill delivers on pre-election promises and establishes a tribunal which will enable homeowners to resolve long-standing residential insurance claims including with Southern Response or the Earthquake Commission,” Little said.

“The tribunal will have the ability to award costs or general damages, and to appoint independent expert advisers to help the tribunal to understand the technical aspects of a claim.”

Greater Christchurch Regeneration Minister Megan Woods said it would make a real difference.

“People have waited too long to have their claims resolved. This tribunal will be another way to provide closure and help people move on with their lives.The delay to resolve residential insurance claims has had significant impact and we need more options to make progress and help them reach an outcome.

“The tribunal will have flexibility to tailor its approach to the needs of each case, and has various options available for resolving claims without a formal hearing, including referral to an independent, funded mediation service.The tribunal will be proactive, managing cases through the process and setting timeframes that must be followed so claims progress.”

The Insurance Council welcomed the idea.

“The people of Canterbury have been waiting too long to get their lives back on track after the 2010-2011 earthquakes. This tribunal will hopefully be a meaningful step in getting them there,” chief executive Tim Grafton said.

But he said the proposal was not without flaws.

“First, that the tribunal won’t be up and running until 2019, the best part of 18 months since the Government was elected,” said Grafton.

“It will have been nearly nine years since the first quakes, far too long by anyone’s measure to be finally trying to sort this out. Insurers want to settle their customers’ claims as quickly as possible but we’re still receiving, on average, two claims a day from EQC. “Second, we have concerns with the way the tribunal is proposed to be run. It will not allow insurers to bring cases, only policy-holders. This is unfair as it only deals with one half of the problem and the Ministry of Justice agrees, saying it creates inequity of access to justice. Some Cantabrians appear stuck, unable to make decisions and move their claims forward due to the enormity of the changes the earthquakes have wrought on their lives. A tribunal that allowed both sides to bring claims would be fair and balanced and truly working towards the goal of helping everyone find resolutions and move forward from the quakes.”

He said the minister and ministry had failed to engage with stakeholders on the issues.

“While the Government’s own agencies, EQC and Southern Response, account for the majority of outstanding claims, neither they nor private insurers were consulted on this bill before its introduction. We were given an undertaking that would happen and that has not been followed through on. We have sought repeatedly to engage with the minister on this process but according to his own advice he and the ministry have spoken only to Treasury.”

Grafton said it would be important that the tribunal respected the rule so natural justice and fair procedure, the need to apply rules of evidence, to be bound by precedent and to have the ability to appeal significant points of law.

“The people of Canterbury deserve better than a tardy process that fails the test for best practice policy development.”

www.covernote.co.nz

37

IFSO CASE STUDY

MOTOR VEHICLE INSURANCE: WHAT WE CAN LEARN FROM IFSO SCHEME COMPLAINTS

About 44% of complaint enquiries about fire and general insurance to the Insurance & Financial Services Ombudsman (IFSO) Scheme relate to motor vehicle insurance. Now is a good time to remind your clients of their motor vehicle policy, and when it won’t pay out.

The following complaint case studies illustrate what happens when clients drive under the influence of alcohol or other substances, or in breach of their licence.

CASE STUDY – 136378 (2017) Mary’s* employee, Jared*, was driving Mary’s vehicle when he fell asleep and drifted into parked vehicles. Mary made a claim to her insurer for the damage to the vehicles. The policy excluded loss that occurred while the vehicle was being driven by someone whose faculties were impaired by alcohol. The insurer declined the claim, relying on a policy exclusion relating to alcohol.

Mary argued that Jared had been under the legal alcohol limit and there was no proof that his alcohol consumption caused the accident. When tested, Jared’s breath alcohol level was less than the legal limit of 250mcg per litre of breath. Despite this, the insurer believed Jared’s faculties had been impaired by alcohol.

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September 2018

Jared said the accident occurred at 3am, but his lawyer said it occurred at 4.30am. The traffic crash report recorded 4.30am, and the police were not called until 4.30am and arrived at 4.50am.

The timing of the accident was important, as fatigue was also a factor in the accident. Jared said that he woke at 7am and worked from 7.30am through until 1.30am-2am. He said he then played mah-jong for an hour and consumed two beers, before he left to drive home.

The insurer referred to the interaction between alcohol and fatigue. It provided evidence to indicate that any alcohol, in the presence of fatigue, will affect a driver’s alertness.

IFSO SCHEME If the accident had occurred at 3am, Jared consumed the alcohol over a shorter period of time, so his breath alcohol level could have been higher at the time of the accident than when it was tested at 4.50am, almost two hours after the accident. If the accident had occurred at 4.30am, Jared would have been awake for 21.5 hours when the accident occurred.

On the basis of evidence regarding the interaction of alcohol and fatigue, the case manager believed that, on the balance of probabilities, it was more likely than not at the time of the accident that the alcohol and Jared’s fatigue had impaired his faculties.

YOU CAN REMIND YOUR CLIENTS: • Many policies have exclusions for being under the influence of

alcohol or drugs, not just being over the legal limit.

• If you have vehicles which others drive (either employees, friends, or

family), you need to remind the other drivers that the insurance will

not cover them if they drive under the influence of alcohol or drugs.

• If an exclusion applies to the claim, then your insurance will not

only not cover any damage to their car, it will also not cover any

damage to another car or any damaged property.

*Names have been changed to preserve anonymity

IFSO CASE STUDY

More case studies can be found at www.ifso.nz CASE STUDY – 136101 (2017) Jenny* and Cameron* had vehicle insurance for their car. In October 2015, Cameron*, who held a learner driver’s licence, was driving on his own. He attempted to join a lane on the motorway, when an oncoming vehicle collided with him, causing damage.

Cameron made a claim for the damage.The insurer relied on an exclusion to decline the claim, on the basis that Cameron was in breach of conditions of his learner driver’s licence. A condition of the learner driver’s licence is that learner driver must be accompanied at all times by a suitably qualified person under the Land Transport (Driver Licensing) Rule 1999.

Cameron complained, stating he had been driving on a learner driver’s licence for 21 months at the time, and was eligible to obtain a restricted driver’s licence. Because he had obtained his restricted licence since that time, he argued that the insurer should not have applied the exclusion.

IFSO SCHEME The case manager pointed out that, in order to rely on section 11, Cameron would need to prove on the balance of probabilities that the absence of a suitably qualified supervisor did not cause or contribute to Cameron’s accident.

Cameron was at fault for the accident. He had not seen the oncoming vehicle while attempting to enter a lane on the motorway from a stationery position. A supervisor would, at the very least, have been a second pair of eyes able to see the oncoming vehicle.

The case manager did not believe Cameron was able to show that the absence of a supervisor would not have contributed to the accident and, therefore, concluded that section 11 did not apply.

In the absence of an argument under section 11, the insurer was entitled to rely on the exclusion, and decline the claim.

Refresher: Section 11 Insurance Law Reform Act 1977 (ILRA) To use section 11 ILRA to prevent the insurer from declining the claim, the customer must prove, on the balance of probabilities, that breaching the terms of his/her driver’s licence or being under the influence of alcohol or drugs, or exceeding the legal limit for alcohol, did not cause or contribute to the accident.

YOU CAN REMIND YOUR CLIENTS • If any drivers of the vehicle do not have a full driver’s licence, if they

breach the terms of their licence, insurance will not pay for any

damage to their vehicle or any 3rd party vehicle or property.

• If you disagree with an insurer’s decision to decline a claim on the

basis the driver was in breach of his/her licence, you will need to

provide evidence to show that the breach of licence (i.e. the absence

of a supervisor) did not “cause or contribute” to the accident. www.covernote.co.nz

39

OPINION

PROFESSIONAL INDEMNITY POLICIES

– HAS THE WORD “PROFESSIONAL” HAD ITS DAY?

By Crossley Gates

A

s its name implies, the insurance industry originally designed professional indemnity policies (PI policy) for insuring the traditional professions against legal liability, principally, for providing negligent advice. The world has moved on in terms of who is a professional, but the PI policy has not. Kelly and Ball in their text Principles of Insurance Law sum the position up nicely in the opening paragraph of their section on the PI policy as follows: Despite its name, this cover is available not only to people practising in what have traditionally been regarded “the professions”, but also to persons (for example moneylenders, financial advisers) who do not work in any of those areas. It might be more accurately described as “occupational” or “business” liability insurance.

The way the courts are interpreting the word “professional” in a PI policy varies depending on whether it appears in the insuring clause or in an exclusion. While in both cases, the courts’ interpretation leads to wider cover for the insured, in some wordings this different interpretation is also starting to undo the demarcation between a PI policy and a public liability policy (PL policy). This is undesirable. It will lead to disputes about coverage and arguments about double insurance.

WHAT AMOUNTS TO ADVICE? The word “professional” usually appears in a policy wording as an adjective before “advice”. Before we look at the word professional, let’s 40

September 2018

clarify what amounts to advice in the first place.

The Court of Appeal considered this in the context of a liability policy in TimTech Chemicals Limited v QBE. TimTech manufactured and sold a timber treatment plant. TimTech developed leading edge computer technology to operate the plant. The successful operation of it relied on three critical computer set points. TimTech did not set them correctly, leading to the owner of the plant incorrectly treating its timber and suffering a loss as a result.

Even though it sold equipment, TimTech did not arrange public liability insurance. It only held a PI policy insuring “technical advice”. The Court of Appeal had to decide whether TimTech’s error amounted to advice. If it didn’t, there was no cover at all.

The Court of Appeal held that advice requires the communication of information to someone else. Until it is communicated to someone else, advice is merely an internalised opinion held by the person who forms it.

Here TimTech didn’t communicate the settings to the owner of the plant, rather it set them itself. The Court of Appeal held this did not amount to advice and so the PI policy did not respond.

PROFESSIONAL ADVICE – INSURING CLAUSE The PI policy insuring clause usually names the insured’s type of discipline or business and limits the cover to liability in connection with that discipline or business. In so doing, many insuring clauses also limit cover to professional advice in the course of that discipline or business.

Does this add an extra qualification to the cover and, if so, what is that qualification? In other words, is all advice given in connection with the

OPINION discipline or business potentially covered, or is only a subset of that advice called “professional advice”, and how do you determine that subset?

In the Victorian Court of Appeal decision Suncorp Metway Insurance Limited v Landridge Pty Limited, the insurer ran the argument that its policy only covered the subset. It lost.

The insured business was a real estate agency. Like many real estate agencies, it managed the tenancy of properties on behalf of their owners. A tenant in one of the properties complained to the insured about a hole in the garage floor of the property. The insured failed to take any steps to remedy it. Subsequently, the tenant injured himself when he stepped into the hole and sued the insured for negligently failing to take steps to fix it.

The insured’s PI Policy described the business insured as a real estate agency. The insuring clause also referred to insuring breaches of “professional duty”. The insurer argued that the insured’s omission to fix the hole was not a breach of professional duty even though it was in the course of running a real estate agency. The Court of Appeal rejected this argument and said all that matters is whether the omission was in connection with the nature of the business stated. The requirement that the omission be professional adds little.

Other Australian decisions have taken a similar approach finding that in an insuring clause the word “professional” just means advice of a skilful nature according to an established discipline, and nothing more. It is not limited to the traditional professions. In addition, this definition is applied at an organisational level, rather than focusing on the position of the individual employee who carried out the act or omission. In other words, as long as the nature of the business involves the giving of advice of a skilful nature in an established discipline, it doesn’t matter that the individual who gave it did not possess those attributes.

The New Zealand Court of Appeal in Aon New Zealand Limited v Attorney-General has adopted the same approach. In that case, the insuring clause of the PI policy changed on renewal and the insurer argued the changed words altered the cover. In year one of the cover the PI policy’s insuring clause covered any claim: … arising out of any act, error or omission on the part of the insured in the conduct of the insured’s business.

In year two, this was changed to cover any claim: … by reason of any act, error or omission or conduct constituting a breach of professional … duty committed or omitted … by the insured in the conduct of their business.

The insurer argued that the second formulation was narrower than the first because of the reference to professional duty. The Court of Appeal rejected this and said there was no difference between the two insuring clauses. So long as the claim fell within the business description named, cover applied.

In summary, a reference to professional advice or professional duty in an insuring clause adds little if anything. All that matters is whether the act or omission in question is in connection with the business description named.

Getting that business description accurate and sufficiently broad is critical.

On this basis, any continued reference to professional advice or duty in an insuring clause is undesirable. The law is clear; it has no effect on the level of cover. Its continued use runs the risk of leading well-meaning claims handlers into error. This tarnishes the reputation of the insurance industry.

PROFESSIONAL ADVICE – EXCLUSIONS Interestingly, when the same words appear in a policy exclusion, the courts are giving them a narrower interpretation more consistent with limiting them to the traditional professions. This seems unusual but is perhaps consistent with the law requiring exclusions to be interpreted narrowly.

For example, in Chubb Insurance Co of Australia Ltd v Robinson, Robinson was a senior executive of a project management company. In

accordance with the terms of the construction contract, he was required to sign a statutory declaration about the state of progress of construction before the principal made progress payments. He signed a statutory declaration that was misleading. He lodged a claim under his D & O Policy, which excluded liability to third parties for professional services. The Federal Court held that the exclusion didn’t apply to Robinson’s actions. All he was doing was completing a prerequisite for the sub-contractors to be paid; he was not carrying out a professional service.

In order to demonstrate the different approach taken by the courts between the same words in the insuring clause and in an exclusion, let’s assume the project management company itself held a PI policy covering its project management business and the insuring clause also referred to professional services in the insuring clause.

An argument that there is no cover for the company under that policy because the signing of the statutory declaration by the senior executive was not a professional service is unlikely to succeed. Project management companies often control progress payments and the executive’s negligent action easily comes within the description of the business.

DEMARCATION PROBLEM You might say this is all fine; however, where is the problem here?

The problem arises when trying to dovetail different liability policies together in order to achieve seamless cover. For example, ideally there should be no overlap between a PL policy and a PI policy. Overlaps are wasteful to the insured as they potentially create unintentional double insurance (and in theory partial double-ups in premium). This may lead to disputes, particularly if each policy is with a different insurer.

The key difference between those two types of policy centres on advice.

A PL policy covers liability in connection with goods supplied or repaired, but does not cover liability arising from advice given, whereas the position is the other way around for a PI policy (mostly).

Now let’s add the word “professional” to the word “advice” in both polices. In the PL policy, the word “advice” appears in an exclusion. When the word “professional” is added, this means it will be interpreted narrowly and only apply to the traditional professions. This leaves advice by the nontraditional professions covered under a PL policy. Turning to the PI policy, the word “advice” appears in the insuring clause. As noted above, adding “professional” adds little, if anything, and all advice within the ambit of the business description is covered. This means that even when the word “professional” is added, both traditional and non-traditional professions are covered under a PI policy.

The net result is that by using the word professional, a PI policy covers advice by both traditional and non-traditional professions and a PL policy covers advice by non-traditional professions. Subject to their double insurance clauses, this means there is potentially double insurance for the non-traditional professions.

I suspect this outcome may come as a surprise to some liability insurers.

CONCLUSION The insurance industry must make sure its products are fit for purpose. I suggest policy drafting that overlooks legal precedents, leading to unintended overlaps (and therefore disputes) is sloppy and not fit for purpose.

If the intention is for products to work together seamlessly then it is incumbent on the industry to ensure they do so – not pass the cost of a mismatch on to the insured by way of a dispute. That is not delivering peace of mind.

Crossley Gates is a partner at Keegan Alexander.

Email: cgates@keegan.co.nz Direct Dial: (09) 308 1809

www.covernote.co.nz

41

ASK AN EXPERT

Water bills QUESTION… Our client had a burst pipe at his holiday home. The insurers have accepted the claim, however, they have declined to pay the extra cost of the water bill. Their normal water usage is around $36 a month and the bill came up to $650-plus. The insurers have declined this portion of the claim on stating that it falls under consequential loss and that is an exclusion under the policy.

My understanding of consequential loss is indirect loss which accompanies an insured loss, such as loss of earnings resulting from a total loss of a building. This should fall under the business interruption section - however, this property is not used for financial gain and therefore the water bill should fall within the claim.

When the pipe burst, the insured suffered physical loss of the water it had paid for, and physical damage to the house and contents the water saturated.

Assuming this scenario is correct, the physical loss of the water was not consequential on the damage to the house and contents.

I suggest the consequential loss exclusion addresses loss consequential on the physical loss and physical damage covered by the insuring clause. A good example would be if the insured regularly rented the property and lost rent because of the damage.

This consequential financial loss is excluded.

In a situation where a client incurs costs to remediate damage to third party property; either because it was prudent and practical to do so, or in order to preserve a commercial relationship, to what extent can an insurer then decline a claim because they feel that their situation has been prejudiced? Is it a cause to decline outright or must they weigh the degree of prejudice against the value of the claim?

REPLY… CROSSLEY GATES Two issues arise from this scenario: 1. Is the insured legally liable in the circumstances? Assuming we are referring to a liability policy, it only responds to legal liability not moral liability. For example, there will be no cover if the remediation was solely to preserve a commercial relationship where there was no legal liability.

2. Assuming there is legal liability, was the settlement with the third party reasonable? To the extent it wasn't, the insurer is prejudiced by the failure to notify it first. It will only have to meet what a reasonable settlement would have been. Otherwise, there is no prejudice and the insurer cannot dispute the settlement.

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.

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September 2018

When was the damage?

QUESTION… Our builder client installed a shower during renovations of a house in 2014.

In 2018 their client advised them of water damage to wall and flooring, and investigation showed this to be due to either the failure of a plumbing fitting behind the wall or failure to tighten the fitting properly – with cost to remediate about $6000.

The builder has made a claim under their general/public liability policy as the sub-contracted plumber who had actually done that part of the job had liquidated their company.

The GL policy included a “defective workmanship” extension, and the claim has been accepted by the insurer under the policy current in 2014, but with an excess of $2500 which applied at that time.

Is the fact that the work was done in 2014 the driver for the determination of the occurrence, or is it when the damage is first noticed, in 2018? Or somewhere in between?

It appears there are several points in time to consider – i. When installed ii. When leak started iii. When the damage started iv. When ‘de minimis’ threshold reached ( – perhaps only applicable when decay has occurred?) v. When the damage became manifest - when the client noticed it vi. When the builder was notified Indeed, as the wording states “however, the insurer will indemnify the insured for resultant property damage arising from defective materials, design or workmanship”, would the damage to the walls and floor not in fact be deemed to be resultant upon the failure of the fitting, and only the actual replacement/repair of the plumbing fitting itself fall under the coverage provided by the defective workmanship clause?

REPLY… CROSSLEY GATES You refer to a general/public liability policy. These policies are usually occurrence-based policies and are triggered by property damage occurring during the period of insurance.

Therefore, it is when the damage occurred for which the insured is being held liable that triggers cover. Assuming the leak started soon after installation, it will be back in 2014. Therefore, the $2500 excess will apply.

ASK AN EXPERT

One incident or two?

Switching brokers

QUESTION…

QUESTION…

I have a tour coach operator based in Queenstown. On the day of the Queenstown marathon their coach was directed by the police to go down a street that due to its steepness my client would never use. Although they informed the police that this would result in the coach bottoming out they were forced to drive down the street and when they got to the bottom of the street the coach bottomed out and sustained damage and needed to be towed. In the course of the towing more damage was sustained to the coach. The insurer of the coach has applied two excesses (which is significant due to the value of the coach) as they consider it to be two events. We have been arguing that had the first event not occurred, then the second would have never eventuated and effectively one event and therefore only one excess should apply.

A client changes broker at the renewal of their policies. The new broker arranges new covers for the next 12 months with a different set of insurers.

After the new policies have commenced the previous motor insurer contacts the new broker wanting them to charge the client a washup premium for additions made over the previous 12 months.

Whose responsibility is it to charge the client for these additions (old broker or new broker) and is the client legally obliged to pay them?

The wording reads: "The premium for all additions and deletions will be calculated and paid at the end of the period of insurance based on 50% of the difference in value between all additions and deletions at the premium rate agreed at the beginning of the period of insurance."

REPLY… CROSSLEY GATES, I would have thought that unless your appointment is a limited one, you have been appointed for all purposes in relation to your client's insurance affairs. By implication this will include dealing with the management of any hangover issues arising from expiring covers before your appointment that need to be dealt with after your appointment.

REPLY… CROSSLEY GATES The starting point is the words used in the policy that aggregate several excesses into one for the purpose of calculating the excess. Often the policy refers to the excess applying to an event or series of events arising from the same source or cause.

If so, the cause of these events isn't the same. While it is true that the need to tow the vehicle was in consequence of the coach bottoming out, the cause of the damage to the coach from the towing may be unrelated. For example, if the tow truck driver failed to fasten the coach correctly to the tow truck or trailer, this has nothing to do with why the coach bottomed out. Without knowing all the background, it sounds to me that the causes are likely to be different, not the same.

If so, two excesses apply.

43 www.covernote.co.nz

43

FSCL CASE STUDY

BREAKING THE RULES DOESN’T ALWAYS RUIN COVER

U

nder New Zealand law (Insurance Law Reform Act 1977, s 11), insurers cannot rely on a policy exclusion unless the excluded event or circumstances caused or contributed to the insured’s loss. The wording of s 11 can be summarised as follows: • Where a policy has an exclusion because the event or circumstances

was likely to increase the risk of loss, then • The insured does not lose indemnity if, on the balance of probabilities,

the actual loss was not caused or contributed to be the excluded

event or circumstances.

The case below is an example where s 11 was applied and the insured retained his cover for a motor vehicle insurance claim.

WHAT IF I’M BREAKING THE RULES WHEN I CRASH, BUT BREAKING THOSE RULES DOESN’T CAUSE THE CRASH? In June 2016, Hameed purchased motor vehicle insurance for a sum insured of $8500. Hameed had recently arrived in New Zealand from India and had an Indian driver’s licence.

In December 2016, Hameed was driving near Taumarunui when he crashed in heavy rain.The crash took Hameed into a roadside fence and he completely totalled his car. Fortunately, Hameed was fine, and subsequent passers-by drove him 40 minutes to the Taumarunui police station in order to report the crash.

The police did not attend the scene of the crash. Because Hameed was the only occupant of his car, on a country road at 9pm, there were no witnesses.

Based on Hameed’s version of events, as well as the weather conditions at the time, and the police officer’s local knowledge of the stretch of road, the police officer noted that the crash was caused by “adverse weather conditions/ environmental factors.”

Hameed submitted an insurance claim. The insurer declined the claim because Hameed had breached the terms of his conditional licence by not travelling with a ‘supervisory’ occupant.

Hameed complained to FSCL. INSURER’S VIEW The insurer’s report noted that the suspected speed at the time of the crash report was 90km/h and the car aquaplaned in excessive surface water.

It was also noted that no police attended the scene.

One of Hameed’s licence conditions was that he must be accompanied by a supervisor. The insurer believed that a supervisor would have assisted in guiding Hameed to drive at safe speeds on wet New Zealand roads.

The insurer declined Hameed’s claim relying upon the clause in his policy which stated Hameed is not insured for any loss or damage while any vehicle in connection with which the insurance is granted is being driven by any person who… is not complying with the conditions of his licence

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September 2018

HAMEED’S VIEW Hameed believed his claim should have been accepted because the vehicle skidded through surface water covering the roadway and the police thought that the crash had been caused by environmental factors rather than by Hameed’s driving. Hameed reasoned that he would have been charged with a driving offence if he had been at fault.

Hameed commented that he had an unblemished driving history in more than 10 years of driving in India and the only reason he was required to have a supervisor in his car was because the one-year allowance for international drivers had expired and he was yet to book to sit the test for his NZ licence.

Hameed believed that the insurer had unreasonably denied his claim.

REVIEW OF S11 INSURANCE LAW REFORM ACT Hameed argued that section 11 of the Insurance Law Reform Act (ILRA) should apply given the cause of the accident was not the absence of a supervisor, rather extremely poor road conditions.

S11 states The insured shall not be disentitled to be indemnified by the insurer by reason only of such provisions of the contract of insurance if the insured proves on the balance of probability that the loss was not caused or contributed to by the happening of such events.

REVIEW To rely on s11 ILRA Hameed had to prove, on the balance of probabilities, that he did not cause or contribute to the accident by not having a supervisor present. If he was able to prove this then it followed that the insurer could not rely on the exclusion clause.

Upon a review of the information presented to us, we found that Hameed’s lack of a supervisor had not, on the balance of probabilities, contributed to the crash.

There was no indication of drugs and alcohol, or excessive speed being involved in the crash. Moreover, the police decided not to give Hameed an infringement notice. In addition to this, Hameed had been driving in NZ unsupervised for more than a year. It was only after this one-year allowance expired that Hameed was required to be accompanied by a supervisor.

Hameed’s previous driving experience (in India) had also been on the lefthand side of the road.

Given all this information, it was inconclusive whether a supervisor would have been likely to have prevented the accident.

OUTCOME After considering our findings, the insurer agreed to pay the claim to the value of the written off vehicle’s worth.

FSCL CASE STUDY

CLIENTS MUST HONOUR OBLIGATIONS

P

arvati owned a fish and chip shop and arranged insurance cover for material damage through her broker. The fat in the shop’s deep fat fryer overheated and caught fire, destroying the shop. Parvati made an insurance claim.

The insurance assessor determined the fire was caused because an integral part of the deep fat fryer cut-out switch had been removed, meaning that the heating element in the deep fat fryer overheated the fat to the point where it ignited.The insurer declined Parvati’s claim because she was unable to show that she had complied with her obligations under the commercial cooking warranty in the policy to have the deep fat fryer serviced annually. If the deep fat fryer had been properly maintained the cut-out switch would have stopped the fat from overheating, avoiding the fire.

PARVATI’S VIEW Parvati said she was unaware the policy contained a commercial cooking warranty, which was her undertaking to the insurer that she will maintain and service the deep fat fryer annually, to minimise the fire risk posed by deep fat frying. Parvati complained that the broker did not tell her she needed to have the deep fat fryer serviced annually to maintain insurance cover.

After the fire, Parvati read the annual renewal letter, the policy schedule, and the policy document. Although the annual renewal letter advised Parvati that warranties applied, and that she should read the policy as the warranties would affect her cover, the policy schedule stated that no warranties applied.

The policy itself stated that warranties only become part of the policy if they are listed on the policy schedule.

In Parvati’s view, the commercial cooking warranty was not listed in the schedule, therefore it was not part of the policy, she was not obliged to have the deep fat fryer serviced annually and the insurer should not have declined her claim.

Parvati wanted the insurance broker to cover her loss.

THE INSURANCE BROKER’S VIEW The insurance broker agreed it had made a mistake by not listing the commercial cooking warranty on the policy schedule. The commercial cooking warranty had been listed on the schedule when the policy was first placed a few years earlier, and at every annual renewal except the most recent one. The insurance broker also said it would have told Parvati about the commercial cooking warranty when the policy was placed four years earlier.

The broker advised, and the insurer confirmed, that the insurer would have been highly unlikely to insure a fish and chip shop without a commercial cooking warranty. Because deep fat fryers pose a high fire risk if they are not properly cleaned and maintained, it is standard practice to include commercial cooking warranties when insuring fish and chip shops.

In the broker’s view, even if it had included the commercial cooking warranty on the schedule, Parvati would not have acted any differently. She would not have had the deep fat fryer serviced, the deep fat fryer would have caught fire and the insurer declined the claim.

The broker declined to pay compensation and Parvati complained to FSCL. REVIEW We considered Parvati’s submission that the commercial cooking warranty did not form part of the policy and therefore she did not have to comply with the warranty’s terms. However, this approach seemed inherently unfair.

In our view, the broker’s error did not cause Parvati’s loss. By her own admission Parvati said that she had not read the policy schedule or the policy

itself. The loss was not caused by the broker’s error, but by Parvati’s failure to: • read the policy as directed by the broker every year at renewal time • service the deep fat fryer at least once a year • notice the safety mechanism had been tampered with.

We also considered Parvati’s submission that the broker had failed to tell her to have the deep fat fryer serviced every year to comply with the policy warranty.We checked with another broker and were advised that this level of advice is unwise. The independent broker advised that best practice would be to: • alert the client to the warranty • direct the client to the policy wording and • leave it to the client to decide what steps to take to satisfy their

obligations under the policy.

OUTCOME We recommended that Parvati’s complaint should not be upheld. We considered Parvati knew, or should have known, that the warranty was intended to apply.The loss was not caused by the broker’s error, but

by Parvati’s failure to read the policy to understand her warranty obligations and take steps to satisfy those obligations. www.covernote.co.nz

45

Professional

College

Professional Development: Professional IQ College

Code of conduct coming for advisers

D

o you know what the new Code of Professional Conduct will mean for you?

If not, call Sylvia on 09 306 1737 or email sylvia@professionaliq. co.nz Professional IQ College is NZQA-accredited to deliver the New Zealand Certificate in Financial Services Level 5. The certificate is delivered by distance learning and was specifically designed for individuals working in the financial services industry working towards code of conduct minimum requirement levels of competence, knowledge and skill.

Distance learning is sometimes referred to as self-directed study. Either way it allows you the convenience of study without attending a course in a location out of your area. As a learner at the college you will have access to learning material through a personal dashboard on the college website and

46

September 2018

support will be available to you from the student liaison team at the college by phone, online chat or email.

All of our NZQA certificate programmes have been written by industry experts and are delivered using online study guides and assessment material. All our assessors are industry experts who will mark your work and give you feedback on your assessment answers.

By Sylvia Heywood

DATE

TITLE

PRESENTER

WHERE

TIME

COURSE DESCRIPTION

September 4

Rural Insurance

Iain Grant

Auckland & webinar

10.3011.30

Rural Insurance can be a daunting product to sell, even to those well versed in the sector. However this doesn’t need to be the cause. Aimed at experts and beginners alike, this review is intended to be a toolkit to succeed in the Rural Market.

5

You, Your Business and Your Most Important Asset

Darren Pratley

Auckland & webinar

10.3011.30

When wanting to create more success for your business, it is critically important now to understand how your client needs are changing.

13

Is the NZ Standard for Internal Complaints Handling Practical in Todays Financial Sector?

Trevor Slater

Auckland & webinar

10.3011.30

‘AS/NZ 10002:2014 Guidelines for Complaint Handling in Organisations’ is the accepted process for internal complaint processes. However, how practical is applying the principles of the Standard in today’s financial services industry? Are the requirements reasonable and achievable?

Debbie Mayo-Smith

Auckland & webinar

10.3011.30

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.

Mark Anderson

Auckland & webinar

10.3011.30

We will discuss a Business Interruption calculation of loss as a worked example.

9 Things Top Professionals Do To Sell Themselves to Prospective Clients

Clifton Warren

Auckland & webinar

10.3011.30

Learn the 9 Things Top Professionals Do To Sell Themselves to Prospective Clients

2

Conquering Your Email Overload: Ease Your Pain.

Enhance Your Gain.

Debbie Mayo-Smith

Auckland & webinar

10.3011.30

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

4

Developing Trust

Darren Pratley

Auckland & webinar

10.3011.30

The concept of developing trust has now become professional services number one focus. Having realised the key to customer loyalty and long term success, opportunity comes from the mutual trust and how it develops

9

Underinsurance and sum insured issues

Virginia Douglas

Auckland & webinar

10.3011.30

Another session by IFSO. More details to come.

10

Are you ready to negotiate?

Trevor Slater

Auckland & webinar

10.3011.30

Just about every waking moment we are negotiating but often those negotiations fail. In this session Trevor Slater will show you how to prepare to negotiate including looking at interests, generating options, identifying positions, considering the relationship and what baggage do you bring to the negotiation tables.

23

Risks facing commercial UAV operators in New Zealand

Akshay Subramanian

Auckland & webinar

10.3011.30

Presentation by Delta. More details to come.

24

Turning your email into your CRM program

Debbie Mayo-Smith

Auckland & webinar

10.3011.30

Learn how to use the two most under utilised features of your email program with a few email tricks to turn you into a master of client service, retention and business development. You’ll never view your Contact and Tasks the same again!

25

26

27

Effective Communication: Powerfully Persuasive People, Proposals, Presentations Business Interruption – Claim example – and how well would your client’s cover have performed?

October

November 6

Case Wrap Up

Karl Robinson

Auckland & webinar

10.3011.30

Karl works alongside Andrew Hooker and will give us an update on recents cases from the Courts in 2018.

7

Your Proposition - It's not about price

Darren Pratley

Auckland & webinar

10.3011.30

In professional services the concept of price verses value is often debated. The customer has changed considerably from the type of customer we dealt with previously which now requires us to critically look how we engage with our customers and how our product fits into their needs.

12

How Top Performers Position, Package and Sell Their Expertise

Clifton Warren

Auckland & webinar

10.3011.30

Learn how to develop your core marking message, identify your target market and create compelling marketing information.

13

The meaning of “damage” and other interesting issues in insurance claim cases

Carl Schreiber

Auckland & webinar

11.3011.30

FSCL will discuss a recent case where it had to consider the meaning of “damage” relating to a material damage claim. FSCL will also discuss other interesting insurance cases it has recently considered, including the application of s 11 of the Insurance Law Reform Act, and cases where the insurer has unnecessarily delayed the claims process

15

Oh No! I’ve got a complaint!

Trevor Slater

Auckland & webinar

10.3011.30

Many of us react poorly when a complaint is made against us which can result is all sorts of problems. In this session you will learn how to stop a complaint escalating and more importantly how to use a complaint to improve your business.

21

Professional Indemnity and Liability claims help clients avoid nasty surprises

Virginia Douglas

Auckland & webinar

10.3011.30

Another session by IFSO. More details to come.

22

Business Interruption – Insurance of Wages

Mark Anderson

Auckland & webinar

10.3011.30

Different ways to insure wages (including Dual Wages) – and what is best for your clients?

27

Five Proven Methods To Promote Your Business and Drive Growth

Clifton Warren

Auckland & webinar

10.3011.30

Learn how to to use networking to get known in your market, how to use e-newsletters to keep your brand in the market and how to generate referrals using LinkedIn.

29

Non-disclosure: when clients don't have to disclose

Karen Stevens

Auckland & webinar

10.3011.30

Another session by IFSO. More details to come.

www.covernote.co.nz

47

CONTACTS: IBANZ CORPORATE COMPANY LIST IBANZ BOARD Roger Abel Rothbury Group Limited PO Box 1596 Shortland St, Auckland 1140 Mob: 021 952 230 roger.abel@rothbury.co.nz Tony Bridgman (Vice President) Executive Director Marsh Ltd PO Box 2221 Auckland 1140 Tel: 09 928 3015 Mob: 021 873 399 tony.j.bridgman@marsh.com Craig Buckle National Manager, Corporate Risk Solutions Willis New Zealand Ltd PO Box 369 Auckland 1140 Tel: 09 356 9347 Fax: 03 358 3343 craig.buckle@ willistowerswatson.com David Crawford Director, New Zealand PO Box is 37670, Parnell, Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz

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

Jason Smith Managing Director Property & Commercial Insurance Brokers PO Box 4 Feilding 4740 Tel: 06 323 8820 Mob: 027 293 8724 jase@pcinsurance.co.nz

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

Ruth Steele (Vice President) Trevor Strong Ins (2013) Ltd PO Box 302635 North Harbour Auckland 0751 Tel: 09 4142563 Mob: ruth@tsibrokers.co.nz

Stuart Speirs Director Abbott Group PO Box 3086 Christchurch 8011 Tel: 03 366 7536 Mob: 021 358341 stuart@abbott.co.nz

Jo Mason Chief Executive Officer NZ Brokers Management Ltd PO Box 334 012 Sunnynook North Shore City Auckland 0743 Tel: 09 869 2785 Mob: 021 893 668 jom@nzbrokers.co.nz

Gary Young Chief Executive, IBANZ

Auckland DDI: 09 306 1734 gary@ibanz.co.nz

Rod Severn CEO, PAA

Auckland Ph: 09 600 5171 rod.severn@paa.co.nz

Jason Smith

STAFF

Managing Director, Property & Commercial Insurance Brokers

PO Box 4, Feilding 4740 Tel: 06 323 8820 Mob: 027 293 8724 jase@pcinsurance.co.nz

WANT YOUR VERY OWN COPY OF

Gary Young Chief Executive DDI: 09 306 1734 Mob: 027 543 0650 gary@ibanz.co.nz Robyn Gosden Finance & Office Manager DDI: 09 306 1733 Mob: 027 275 2477 robyn@ibanz.co.nz Karen Scard Administration Manager DDI: 09 306 1738 karen@ibanz.co.nz Sylvia Heywood Academic Manager Professional IQ College DDI: 09 306 1737 sylvia@professionaliq.co.nz 48

David Crawford Director, New Zealand PO Box is 37670, Parnell, Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz

September 2018

Zeeshan Ahmad Student Support Professional IQ College DDI: 09 306 1739 zeeshan@professionaliq.co.nz

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

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

TO ADVERTISE...

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

by IBANZ, the Insurance Brokers Association of New Zealand.

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

Next issue is due out: DECEMBER 2018

S SUNNY SKIE

S AHEAD

September 2018

CONSUMER AC CEPTANCE OF HEALTH TELE Adviser technolo MATICS gy

you can’t afford Big data will cha to ignore nge world of insu rance To disclose or not to disclose

www.ibanz.co.nz

CONTACTS: IBANZ CORPORATE COMPANY LIST IBANZ CORPORATE COMPANY LIST

Abbott Group Adams Trimmer Insurance 1992 Ltd Advance Insurance Services Ltd Advice First Limited Affiliated Insurance Brokers Ltd AIB Group Insurance Ltd AIM Associates Ltd Albany Insurance Services Ltd Amicus Brokers Ltd Andrew Scragg & Associates Apex General Ltd API Insurance Ascot Insurance Brokers Ltd Atlas Insurance Brokers Ltd Austinsure Ltd Avon Insurance Brokers Baileys Insurance Brokers Ltd Bay Insurance Brokers Ltd Benson Insurance Brokers Ltd Boston Marks Group Ltd Brave Day General Ltd Bridges Insurance Services Limited Broker Direct Services Ltd BrokerWeb Risk Services Limited Cambridge Insurance Brokers Ltd Capital Risk Solutions Limited Card Marketing International Ltd Cartwright General Insurance Limited CBA Insurances Limited Certus Insurance Brokers NZ Ltd Coast Insurance Coastal Insurance Brokers Ltd Commercial & Rural Insurance Brokers Ltd Crombie Lockwood (NZ) Ltd Dawson Ins. Brokers (Whakatane) Ltd Dawson Insurance Brokers (Rotorua) Ltd Edward Ruys & Co Ltd Emerre & Hathaway Insurances Limited Frank Risk Management FundAGroup Insurance Brokers Limited Future Insurance Mortgage Glenn Stone Insurance Limited Grayson & Associates Ltd Gregan & Company Ltd GYB Insurance Brokers Ltd Harden & Hart Insurances Ltd Hazlett Insurance Brokers Ltd Honan Insurance Group (NZ) Ltd Hood Insurance Brokers NZ Ltd Hurford Parker Insurance Brokers Ltd Hutchison Rodway Ltd ICIB Limited ILG Insurance Brokers Ingerson Insurances Ltd

Christchurch Whangarei Paeroa Wellington Wellington Lower Hutt Auckland Albany Village Christchurch Manukau Auckland Manukau Whangarei Christchurch North Shore City Christchurch Auckland Tauranga Christchurch Auckland Auckland Hamilton Christchurch Auckland Cambridge Wellington Wellington Ashburton Tauranga Auckland Whangaparaoa Papamoa Alexandra Auckland Whakatane Rotorua Hamilton Gisborne Cambridge Auckland Auckland Waitakere Auckland Papakura Lower Hutt Auckland Christchurch Auckland Auckland Hastings Auckland Auckland North Shore City Wellington

Insurance Advisernet NZ Ltd Insurance Brokers Alliance Ltd Insurance People (Fire & General) Limited JLT Holdings (NZ) Limited JRI Limited Luxor Insurance Brokers Ltd Malcolm Flowers Insurances Ltd Marsh Ltd Matt Jensen Insurance Brokers Ltd McDonald Everest Insurance Brokers Ltd MIG Fire and General Ltd Mike Henry Insurance Brokers Montage General Insurance Ltd Multisure Ltd Nelson Marlborough Insurance Brokers Ltd (NIB) Neville Newcomb Insurance Brokers Ltd North Harbour Ins Services (1985) Ltd incl Northsure Group Limited Northco Insurance Brokers Ltd Northcrest Insurance Brokers Ltd O'Connor Warren Insurance Brokers OFS Insurance Brokers Ltd Omni Fire & General Ltd Paramount Insurance Agencies Ltd Paterson & Co NZ Ltd Penberthy Insurance Ltd Peter C Cranshaw Insurance Broker Ltd PIC Insurance Brokers Ltd Primesure Brokers Ltd Property and Commercial Insurance Brokers Protekt Insurance Brokers 2008 Ltd Provincial Insurance Brokers Limited PSC Connect NZ Limited River City Insurance Brokers 2000 Ltd RMA General Ltd Rothbury Group Ltd Runacres & Asssociates Limited Seneca Insurance Brokers Ltd Sit & Blake Limited South Pacific Insurance Brokers Ltd Sweeney Townsend & Associates Ltd Thames Valley Insurance Ltd The Advisers 1 Limited Thorner General Insurances Ltd Towes Insurance Brokers Ltd Trevor Strong Ins Ltd Vercoe Insurance Brokers Ltd Vision Insurance (S.I.) Ltd Waikato Insurance Brokers Limited Wallace McLean Ltd Wanganui Insurance Brokers Ltd Willis Towers Watson Yesberg Insurance Services Ltd

Auckland Invercargill Auckland Auckland New Plymouth Auckland Taupo Auckland Taupo New Plymouth Hamilton Auckland Auckland Auckland Nelson Auckland Orewa Masterton Auckland Tauranga Dunedin Auckland Auckland Auckland Auckland Levin Manukau Auckland Feilding Auckland Masterton Auckland Wanganui Warkworth Auckland Christchurch Auckland Auckland Auckland Rotorua Thames New Plymouth Upper Hutt Te Aroha Auckland Morrinsville Ashburton Hamilton Auckland Wanganui Auckland Christchurch

www.covernote.co.nz

49

New Zealand’s leading liability insurer Level 32, ANZ Centre Albert Street, Auckland veroliability.co.nz