CoverNote June 2020 issue

June 2020

Brokers tackle Covid-19 Regulatory changes on the horizon Insurers tackle Covid-19

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visit www.covernote.co.nz and keep up-to-date with live news and articles from IBANZ, it's members and the industry.

You don’t want your customers facing an unexpected insurance problem when they meet an unexpected legal one.

New Zealand businesses have taken a battering in the wake of Covid-19. We’re feeling it too - we’re in it together. There’s strength in being local. And being New Zealand’s only locally based specialist liability insurer brings with it the ability to make decisions quickly, and in the best interests of New Zealand businesses. You can count on us to be ready to help. Because for VL, it’s business as usual.

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New Zealand’s leading liability insurer

Welcome

Advertising/Editorial: Robert Johnson, Benefitz Telephone 09 477 4702, Mobile 027 4970 712, Email: robert@benefitz.co.nz Design/Production: Craig Burkett, Benefitz Imaging: CTP by Benefitz Produced for IBANZ by: Benefitz, 5-11 Parkway Drive, Mairangi Bay, North Shore City. PO Box 33-1630 Takapuna. Telephone 09 477 4700, Fax 09 477 4799 Advertising Deadlines: Bookings 10th of the month prior to publication, material 15th of the month prior to publication.

CoverNote is the official publication of IBANZ and is distributed FREE on a quarterly basis (March, June, September, December) to members throughout New Zealand and associated companies. Additional copies are available at a cost of $7.50 per copy, or 12 month (4 issue) subscriptions at $30.00, inclusive of postage and packaging. The articles or opinions featured within this magazine are not necessarily the opinions of the publishers or IBANZ, and they do not accept responsibility for the content of articles featured within the publication. No part of this publication may be reproduced without the written permission of the publisher. The publishers do not accept responsibility for loss or damage to unsolicited photographs or manuscripts. IBANZ enquiries should be made to: Melanie Gorham, Chief Executive, IBANZ. Email: mel@ibanz.co.nz IBANZ National Office located at: Unit 4D, 2B William Pickering Drive, Rosedale, Auckland 0632 PO Box 302504, North Harbour, Auckland 0751 Telephone 09-306-1732. Website: www.ibanz.co.nz

Melanie Gorham CEO, IBANZ

A new chapter

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elcome to my first Covernote - what a sobering quarter it has been. I joined IBANZ on March 23, the day the Prime Minister announced that we would be moving to alert level 3, quickly followed by level 4. My appreciation goes to Gary Young, who has been incredibly patient with the handover - as well as the team and board for helping me settle in despite the isolation. As we can all no doubt agree, it’s difficult to plan for something as significant and unsettling as the pandemic and lockdown. Members I have talked to have been pleased and perhaps a little relieved with how well their businesses and teams have adapted to working remotely. Many have mentioned the greater client contact they have had as they work with clients on the issues they face from the restrictions. In the short-term, impacts on households and businesses have been cushioned in a variety of ways including the wage subsidy, rent rebates, mortgage holidays and government loan scheme. Notwithstanding the budget, there remains considerable concern that the next few months will bring into focus the true toll on New Zealand and New Zealanders. We have worked closely with ICNZ to openly discuss the current issues faced by clients, brokers and insurers. Positive co-operation has underpinned the mood within the industry, helping deliver targeted solutions to clients’ varied needs. We have worked collectively with FENZ to achieve concessions on documentation, audit and rules in the face of Covid-19. IBANZ submitted a response, on behalf of members, to the Financial Markets (Conduct of Institutions) Amendment Bill. Our chief concern was that more time should be taken to engage with key stakeholders to ensure the bill is fit for purpose and results in good client outcomes. Examples we provided included clearly defining the “fair conduct principle”, the bill being consistent with other applicable legislation and clarity on the meaning of incentive (which was to be restricted to a ban on volume or value-based sales targets). Provided Covid-19 remains under control, we anticipate that “on hold” legislation impacting the industry could swiftly make a return to the Government’s agenda. Thank you to those members who provide their valuable time and insights, working with us on submissions and responses. With the delay to the Financial Services Legislation Amendment Act (FSLAA), we hope disclosure will be finalised prior to the Act coming into effect next year. A huge thank you to all IBANZ and PIQ team members for their extraordinary efforts to deliver a seamless service over the last few months of disruption. At IBANZ our priority continues to be advocating for members’ interests and concerns as we concentrate on the evolving issues facing our clients, our profession and the industry. Melanie Gorham, CEO, IBANZ

Features 3. 4.

Customers get $20 million from their insurers for first flood of 2020 Apex strengthens construction and engineering specialist skills

5. Suncorp makes $100,000 donation to Shine

12. COVER STORY: Brokers tackle Covid-19 10. Managing risks in an ever-changing world 32. GST payable on insurance proceeds received by third-party claimants

Opinions

Regulars 1. Welcome to CoverNote 38. Ask an Expert

24. Avoidance for material non-disclosure Recent English case provides lessons for NZ

41. Professional Development: Professional IQ College 44. IBANZ Contacts

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30. Insurance has a critical role in the crisis ahead

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CUSTOMERS GET $20 MILLION FROM THEIR INSURERS FOR FIRST FLOOD OF 2020

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nsurance customers received $19.7 million to meet losses from the February 2020 floods that led to a state of emergency being declared in Southland, Fiordland and Clutha. The preliminary figures show the severity of the event which affected the area from February 3 to February 18, and led to New Zealanders claiming $7.3m for damage to their house and contents and almost $900,000 for damage to vehicles. A further $11.4m was claimed for damage to commercial property and interruption to businesses due to the event. "These figures reinforce the scale of damage that a flood can cause," said Tim Grafton, chief executive of the Insurance Council of New Zealand. "It also highlights the importance of having insurance to help you get back on your feet when the unexpected happens - which it has done several times in recent years. “Extreme weather events over the last five years have seen insurers support people and their communities to the tune of $737.6m in insurance pay-outs. "Sadly, these events are becoming ever more frequent and severe for our communities, and we know that with climate change this will only increase. Grafton said New Zealand needed to adapt to the changes seen and

take steps to reduce risks where possible to minimise the social impact and cost. "Flood-prone areas of New Zealand are well known. We need to be mindful of this as we develop new and existing areas of New Zealand to reduce risks for Kiwis."

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APEX STRENGTHENS CONSTRUCTION AND ENGINEERING SPECIALIST SKILLS

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pex has hired a construction and engineer specialist to provide guidance to clients in that industry. Managing director James McGhie said he had seen the business’s construction and engineering portfolio grow significantly over the past 10 years. It includes a lot of medium-sized construction companies looking for a specialist to provide advice on this niche market. McGhie said that made newly appointed Daryl Robinson a perfect fit for the company, with skills as a civil engineer with international construction experience and 10 years' insurance experience as a construction and engineering underwriter working in the London and New Zealand insurance markets. Robinson will look after all aspects of construction and engineering as Apex’s practice leader. His practice will look at everything from annual and single site contract work policies to insuring contractors’ plant and equipment as well as placing liability policies and other covers a construction firm would typically require. Contract works policies contain many unique clauses due to the nature of the developing asset during construction. These were sometimes overlooked or not fully understood by clients, McGhie said, so to to bring attention to these clauses and ensure they were understood and managed was something that brought real value. Having a close relationship

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with New Zealand and overseas underwriters facilitated developing an insurance solution which was clear for all parties. Robinson’s dual experience as an engineer and an insurance professional equipped him to provide expert advice on contract interpretation and ensure that risk allocation was clearly understood by the contracting parties. As well as assisting during tendering and before the construction contract was awarded, Robinson was also at home on a construction site and enjoyed meeting clients and visiting sites where he could ask the right questions and also pass on advice gained from a lifetime of getting his boots dirty. McGhie said the construction industry was at a “tipping point” due to the Covid-19 lockdown. “We have been recently ensuring that clients’ sites are fully covered for the duration of the lockdown and looking at portfolios to optimise expenditure. “To rebuild the economy post-lockdown there is every chance a competent Government will look to construction as a way of reinvigorating the economy and this will be great news - not only for construction contractors that make it through the current crisis but the people of New Zealand who will make use of these much-needed assets when they are finished.

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SUNCORP MAKES $100,000 DONATION TO SHINE

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uncorp New Zealand is helping children affected by domestic violence stay connected with their schools and online learning through a oneoff $100,000 donation to the domestic violence charity, Shine. Suncorp New Zealand has supported Shine as a community partner for the past two years and recognised that during the Covid-19 level 4 lockdown there was increased need for education support for children impacted by domestic violence, particularly those in emergency accommodation. “With New Zealand children now reliant on virtual learning we knew it was important for students who’d experienced family harm to stay connected to the outside world and their learning,” said chief executive Paul Smeaton. “Domestic violence incidents have unfortunately increased during the lockdown. Everybody deserves to be safe and feel safe in their own home. We hope our contribution helps lessen the burden for children in these situations.” The $100,000 donation is in addition to more than $100,000 of support Suncorp and its people has already provided to Shine over the past two years and will give families access to digital devices and one-on-one support through the KIDshine programme.

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Profile

NEW CHIEF EXECUTIVE STEERING IBANZ TOWARDS INSURANCE FUTURE Melanie Gorham took the role two days before New Zealand shifted to level 4 lockdown. But that may actually have helped her hit the ground running. If you were choosing a time to start a new job, two days before New Zealand went into unprecedented lockdown in response to a global pandemic might not be it. But new IBANZ chief executive Melanie Gorham is upbeat and positive about the challenges she’s been thrown into the middle of as she replaces retiring chief executive Gary Young. She said the experience of starting a new job on March 23 was not as bad as you might expect, and even provided some benefits. “It’s been a challenge but an opportunity to focus. I can’t go and visit people – ordinarily I’d be out meeting people so there’s more of an ability to focus and come to grips with the role, immerse myself in that - it’s easier than trying to do that while also being out meeting and greeting.” While there have been long days from the home office, Gorham said she had been able to get a deeper understanding of the new organisation and what would be required in the coming months. Faced with the sort of economic challenge that New Zealand had not encountered before, Gorham said there would be an inevitable impact on the insurance industry as a result of Covid-19. But as long as the industry navigated it well and continued to cement its relationships with clients and customers, it should come out of it in good shape, she said. “Many have been through things like the GFC but didn't have the far-reaching impacts this is likely to have.” If the effect was short and sharp the focus could return on rebuilding and getting back to the new business as usual, she said. Balancing the social, economic and health impacts of the outbreak was a challenge, she said, but something that needed more attention paid to it as the country moved further through its response. While it would be tough, Gorham said she could see there would be the chance for businesses to flourish in the rebuilding phase. “There’s always opportunities. but for many it will mean changing in some way. As we have sadly already seen some businesses will fail whilst others will evolve because of what they have been through and learned.” Prior to being approached about replacing Young, Gorham was QBE’s head of claims NZPAC. It was a varied role which included leadership of the NZ claims operations and oversight of those in Fiji, Papua New Guinea, French Polynesia, New Caledonia, Vanuatu and Solomon Islands, QBE having recently integrated these countries into the NZPAC region. Gorham said she had reached a point at QBE where it was time for a new challenge and a fresh perspective. Former general manager Bill Donovan heard she was moving on and asked whether she would be interested. 6

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“I like the idea of more focus back on the broking side.” Working at IBANZ would mean connecting back into the advice world, but removed from the client relationship, she said. “When you’re broking there’s a duty you owe to clients and I always took that very seriously. It’s great to keep my hand in with broking but with more distance between you and the client.” Gorham has worked in insurance for almost all of her career, including as a broker for Marsh. She said her career success had been driven by being able to build strong, collaborative relationships with colleagues, clients and suppliers and deploying sound analysis and negotiation skills. Insurance offered a wide variety of experiences as a career, Gorham said. It often provided the opportunity to think about things from a different perspective, she said. Working on infrastructure projects such as roading allowed her to develop a good understanding of a sector she might not otherwise have been exposed to, for example. “I’ve got to meet a remarkable array of people… it’s just incredibly interesting. Everyone buys insurance for all different reasons.” While she had managed a New Zealand based team of 47 at QBE, the IBANZ team is a much smaller one. Gorham said she liked the make-up of the board and knew many of the broker members well. “It’s a diverse board, with good representation from local brokers and bigger corporates. A lot of them I have worked with or know of from previous roles.” While the industry is going through a significant period of legislative change, Gorham said the idea of getting into the “nitty gritty” of making submissions and fighting for better outcomes for the broking world and its clients was appealing. “As odd as that sounds. I find it interesting, albeit a bit challenging and frustrating.” Gorham said there were positives out of the new regime for financial advisers and insurance brokers, but there was a need for the Government to have a fuller understanding of the industry, particularly how the fire and general insurance side worked and how it was different to life insurance. “They’ve taken what they’ve seen on the life side and applied the same logic but it’s so different. There are improvements that can be made for everyone. We would all be best served if the Government took on board what everyone had to say.” The Conduct of Financial Institutions bill, which is progressing through Parliament was somewhat at odds with the Financial Services Legislation Amendment Act rules, which come into effect next year. “There’s a lot to work through there, a lot yet to be discussed, including disclosure requirements.” There was increasing focus on the social responsibilities of

Profile

IT’S BEEN A CHALLENGE BUT AN OPPORTUNITY TO FOCUS. I CAN’T GO AND VISIT PEOPLE – ORDINARILY I’D BE OUT MEETING PEOPLE SO THERE’S MORE OF AN ABILITY TO FOCUS AND COME TO GRIPS WITH THE ROLE, IMMERSE MYSELF IN THAT - IT’S EASIER THAN TRYING TO DO THAT WHILE ALSO BEING OUT MEETING AND GREETING. the insurance industry, Gorham said. “If I think back to five or ten years ago, businesses needed to look after clients but that balance of social responsibility was not at the forefront like it is now. “I feel like [the industry] has come a heck of a long way in 30 years but it needed to improve.” Young's last few years were inevitably focussed on keeping up with the significant amount of legislative and regulatory changes and this would remain so Gorham said. She also said she is keen to continue discussions with a cross section of IBANZ members to understand what else they thought was important for the association to concentrate on, balancing both would be a challenge for the future.

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Profile

INSURERS STEP UP IN TIME OF CRISIS Suncorp New Zealand’s chief executive Paul Smeaton has been elected caught president of the Insurance Council of New Zealand. up with him to ask what might lie ahead for the industry. What do you think the big challenges are for insurers right now? Supporting vulnerable customers is front and centre for all of us right now. The economic and health challenges that have unfolded as a result of Covid-19 are unprecedented. I’m proud of the way the insurance sector has supported New Zealanders. From the outset, the Insurance Council has worked closely with insurers, Government and the public to help raise awareness of the help available, and how insurance can contribute to financial resilience. How do you feel about FSLAA? What will it change for the general insurance world? Ultimately, the legislation will help deliver better outcomes for New Zealanders. The changes will raise standards, increase transparency and support customers to make informed decisions. I’m confident insurers will respond positively to the change. The general insurance sector already has a strong focus on self-regulation. The Fair Insurance Code is followed by all Insurance Council member companies and has recently been revised to improve accessibility and understanding of insurance. Where are the opportunities for insurers right now? Economic crises have a habit of putting financial resilience in the spotlight. Significant effort’s going into helping New Zealanders under financial pressure maintain their insurance. If we continue doing this well, insurers will come out the other side of Covid-19 with stronger reputations and greater understanding of the part we play in maintaining the economic wellbeing of our customers and their businesses. Being there in person has been central to how many insurers work with their customers, but the lockdown has meant working differently for our assessors, brokers and advisers. We’ve tried some new things, such as using drones to remotely assess claims, and the challenge now is to take the things we’ve learned during this time and integrate them into our new ways of working.

What are the biggest challenges? There’s no playbook for life in a post-Covid-19 world. Every insurer is dealing with uncertainty around the direction of the economy, where unemployment might head and what that means for New Zealand’s GDP. At Suncorp, we’re putting our effort into ensuring we’ve got an agile and sustainable business that can pivot and respond to new opportunities as they emerge. Is the Insurance Council as effective as it should be in its role in the industry? Is there anything it could be doing better? Events like Covid-19 have shown how important the council is in helping New Zealanders understand their insurance, and the support available for those experiencing hardship. The council also plays a key role in helping members understand what regulatory change means for operational practice. Looking ahead, I think there’s opportunity for insurers to build on consumer awareness about insurance through the support they offer customers. Why do you value your involvement with ICNZ? I’ve been on the council’s Board for five years now. I’m there because I value the diversity of thought around the table. Every major general insurer is there, from the likes of AIG, Tower, IAG and Suncorp, through to FMG, the Medical Assurance Society, reinsurer Swiss Re and specialist providers like Chubb, Hollard and AA Insurance. The council provides a very effective industry voice into government and regulatory discussions, and it does some outstanding financial education work with both young and vulnerable New Zealanders. What are your goals for ICNZ over the next couple of years? I want to help the ICNZ in supporting New Zealanders through the recovery period following lockdown. Helping customers maintain appropriate levels of cover will be important in getting the economy back on its feet. I’m also very interested in helping the ICNZ develop a robust future claims model in partnership with the EQC for earthquake and flood damage. This is vital to ensure customers are appropriately supported in what can be a time of extreme stress.

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MANAGING RISKS IN AN EVER-CHANGING WORLD By Nick Frith, Andrew Horne, Minter Ellison Rudd Watts

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he need to manage risks in an ever-changing world is not new. The insurance market has seen sea changes in approach over the last few decades, driven by the emergence of new risks and lessons from significant events. Significant underwriting changes are occurring, as insurers and insureds become more sophisticated in presenting and assessing risks. The Wellington property market and the D&O market are two recent instances of insurers’ attitudes shifting rapidly, followed by brokers and insureds responding with more focused and detailed underwriting submissions directed at more granular risk assessment.

NEW YEAR – NEW ISSUES Two issues have assumed prominence this year. First, we have seen countries across the world gripped by Covid-19, the coronavirus disease. Secondly, parts of Australia have suffered some of the earliest and fiercest bushfires in history, likely linked to climate change.

COVID-19 – CORONAVIRUS: TRADE, TRAVEL AND INSURANCE The impact of the coronavirus has been devastating. The threat to life and wellbeing is the most pressing concern. However, global economic disruption has also become a key concern given the increasingly integrated nature of global supply chains and the frequency of global travel. BUSINESS INTERRUPTION INSURANCE COVER? Many supply chain-dependent companies will have contractual protections in place to reduce or avoid liability to pay for goods and 10

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components that are not able to be delivered due to transit restrictions and geographic lockdowns. They may also be relieved from liability arising from a failure to meet their own supply obligations. However, even if a company can escape a contractual obligation by relying on a force majeure clause, in many cases this will not fully restore the company to the position it would have been in absent Covid-19. For example, a New Zealand manufacturer which relies upon imported components might avoid liability to pay for those parts and be prevented from pursuing the supplier for non-performance. But its inability to manufacture an end product may cause loss far beyond the cost of the relevant inputs, including lost profits, due to an interruption in the supplier’s business. In such cases, businesses should look closely at their insurance policies, particularly business interruption cover. However, difficult issues can arise. In particular, most policies require an identifiable instance of “physical damage” in order to trigger interruption cover. Policies often contain exclusions for disease-related losses. The trigger for any property insurance policy and resulting time element coverage is physical damage to insured property by an insured peril. Insurers are likely to argue that the introduction of a virus does not constitute direct physical loss or damage to insured property, nor is it a covered peril. While the introduction of Covid-19 to insured property may be considered a fortuitous (unforeseen) event, similar to other triggers that are typically covered under property policies, it is most likely not covered due to standard policy exclusions. Insurers may point to exclusions related to loss or damage arising from delay, loss of market, loss of use or indirect or remote loss or damage. Alternatively, a policy may contain a contamination exclusion, which embeds virus, disease or

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illness-causing agent in the definition of contaminant. Most property policies, including ISO, specific insurer forms and most manuscript policies, do not cover a loss resulting from a virus. Where there is no physical loss or damage, the prospects of a traditional business interruption claim succeeding are likely to be remote. Some policies may, however, contain sub-limits or endorsements for diseaserelated losses, although these appear rare. TRAVEL Covid-19 has also been a focus for the travel insurance market. Many insurers were willing to meet claims arising from travel that was booked before the impact of the virus was known. However, most travel policies will no longer respond following the World Health Organisation’s announcement that Covid-19 is a Public Health Emergency of International Concern, meaning that the disease is no longer an unexpected event.

BUSHFIRES, CLIMATE CHANGE AND RISK The 2019/2020 Australian bushfires have brought a renewed focus on the impacts of climate change, with many drawing a link between the two. Fortunately, loss of life and property damage was not as severe as in past events, notwithstanding the large geographic areas affected. However, insurers are focused more and more on climate-changerelated risk, including fire, flood and storm risk, in determining the extent and terms upon which they are prepared to write property and related covers. As well they should be, with Marsh Australia commenting that environmental threats dominate the top five long-term risks by likelihood

and occupy three of the top five spots by impact in this year’s Global Risk Report produced by the World Economic Forum, in conjunction with Marsh and McLennan Companies and Zurich Insurance Group. This report further identifies that failure of climate change mitigation and adaption is the number one risk by impact and number two by likelihood over the next 10 years. Environmental insurance products can play a key part in mitigation against environmental risks.

UNCERTAINTY IS THE ONLY CERTAINTY THERE IS, AND KNOWING HOW TO LIVE WITH INSECURITY IS THE ONLY SECURITY. JOHN ALLEN PAULOS, AMERICAN PROFESSOR. Climate change also presents increased risks for companies and their directors and officers. It remains a top priority with the Australian bushfires and their link to climate change, providing yet another reminder to directors of the seriousness of the issue and the risk to businesses which do not take action. Directors should consider their risk profile in respect of the risk of climate change liability. We expect to see the insurance markets react as the number of climatechange-related claims increase, both in New Zealand and abroad. www.covernote.co.nz

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BROKERS TACKLE COVID-19 By Angela Cuming

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nsurance brokers have felt the impact of Covid-19 swiftly and keenly. From dealing with slow home office internet speeds and the demands of junior “co-workers” home from school to managing clients who are suffering financial hardship, they have had to adapt swiftly in uncertain times. “Overall, the brokers I’ve spoken to are coping reasonably well,” Melanie Gorham, chief executive of IBANZ, said. Brokers having to work from home during the lockdown period was the biggest change to hit the industry, she said, and it came with both benefits and challenges. Many member firms had the ability for work-from-home as required, she added, noting remote working en masse and for an extended period of time was a brave new world that happily had worked out well – for most of the time at least. “Some brokers have even commented on how much faster the computer response is from home,” Gorham said. “[However] security of remote access is obviously a matter for review.” A number of brokers had limited capacity for remote working before the pandemic so had some initial teething problems or had to find alternate ways of doing things if they encountered unexpected issues, Gorham said. Overall, the reaction from brokers to working from home was mixed, she said. “Those with children or dependents they are caring for and support through schooling found it particularly challenging to keep working as well,” she said. “There has been talk of issues with a lack of devices to share with, a feeling of crowding or not being able to fund a quiet space. And of course, bandwidth.” Other brokers have fared a little better under lockdown. “There are brokers who have found lockdown works well as they have what they need and no dependents to cater for,” Gorham said. “The key is appreciating everyone is different and so are their personal circumstances. Being conscious of this enables the teams to pull together.” Isolation has been a factor, so daily meetings or frequent catch-ups

were being undertaken to keep everyone connected and maintain the sense of being part of a team, she said. “Trust is another point, a leap of faith that can be difficult to take – remote working has forced this on many, now that we are out of face-toface contact in offices,” she said. “But in general, this seems to be working well - better than some had expected.” Gorham said she had observed several immediate changes to the industry due to the pandemic.

IT IS MORE ENJOYABLE AND MORE PRODUCTIVE - ZOOM IS JUST NOT THE SAME. AND BEING STUCK IN FRONT OF A COMPUTER ALL DAY ISN’T THAT MUCH FUN, REALLY. VICKI SQUAIR “Covid-19 has had the short-term effect of increased contact with clients and greater communication between brokers and insurers, focussing on solutions for their clients during what can only be described as extraordinary times,” she said. “Many members have acknowledged a willingness from New Zealand insurers to understand clients’ challenges and issues, and work with brokers to provide assistance, appreciating that a one-size-fits-all approach isn’t likely to work.” Some members had spoken of their relationships with clients strengthening as they work through problems and possible solutions with them. www.covernote.co.nz

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Brokers were also taking part in more and more regular meetings to stay in touch with each other and to talk about the constantly changing landscape in the post-pandemic business sector, she said. But what next for brokers and the way they work? That was difficult to say, Gorham said, noting it was difficult to predict the long-term effects of Covid-19 on the industry. “There is a lot of conjecture on what the impacts could be, but currently it is too early to be able to determine what they would be,” she said. “There is almost a holding of breath as countries around the world relax their restrictions, and New Zealand will be no different, with a lot riding on the experience from lowering to level 2.” The one point that has come up is the value that some place on working from home, including wanting to see flexibility to continue to do so after the restrictions are lifted, Gorham said. “The lack of interruptions is a factor for some; saving in travel times for others; and the convenience of being able to stop for a break and return to complete work later, are all reasons,” she said. “It will be interesting to see if there is a change to workplaces as a result. There will be indirect implications to increasing work from home including on office space, transport and businesses local to the workplaces.”

COVID-19 HAS HAD THE SHORT-TERM EFFECT OF INCREASED CONTACT WITH CLIENTS AND GREATER COMMUNICATION BETWEEN BROKERS AND INSURERS, FOCUSSING ON SOLUTIONS FOR THEIR CLIENTS DURING WHAT CAN ONLY BE DESCRIBED AS EXTRAORDINARY TIMES. MELANIE GORHAM For Hamilton-based broker Vicki Squair, the lockdown period has meant not seeing her clients in person and lots more emails, phone calls and Zoom conference calls. “I am definitely missing those face-to-face catch-ups with clients,” she said. “It is more enjoyable and more productive - Zoom is just not the same. And being stuck in front of a computer all day isn’t that much fun, really.” Of course, it is not just brokers who are affected by Covid-19 but their clients. There have been escalating job losses during the lockdown period and many policyholders have suddenly found themselves in uncharted financial territory. That was a big challenge that brokers needed manage going forward, Squair said. “Helping clients find ways to keep their insurance in place when they are stretched financially is the main focus right now,” she said. 14

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There were several options available to clients if they suffered a loss of income, Squair said. While the policy depended on the specific insurer, they could include a premium waiver, premium deferment, a policy suspension or a reduction or adjustment in cover, she added. But one silver lining to come out of the whole Covid-19 crisis might be a renewed appreciation of the insurance industry, Squair said. “These events tend to help people understand how important insurance is,” she said. “One they are back on track financially; many people want to discuss insurance options that they hadn’t rated so highly before. “I’m sure the insurers will review their risk exposures and profiles, and some will make adjustments, but that is something they are doing all the time anyway.” It is a sentiment echoed by the Insurance Council of New Zealand, which says the industry acted fast and early to “actively support” its customers facing increased financial hardship as a result of Covid-19. “Since March, our members have ensured they are fully open for business and have worked to keep New Zealanders and their assets protected by easing the financial pressures they faced,” said Tim Grafton, ICNZ chief executive. The industry was “acutely aware” of the financial pressures Covid-19 was placing on people. He pointed to a range of measures being implemented by insurers to support the “changing needs and challenges” of customers. They include: changes to excesses to reduce premiums; extending credit terms to brokers out to 120 days so they can extend the same terms to the end customers (meaning the insurer goes on risk for four months without premium income); continuing cover for vacant properties including construction sites; and exercising flexibility around WOFs and vehicle registrations to allow insurance to stay in place. It was important to remember, Grafton said, that while some risks had changed due to the lockdown, risks had not disappeared. “While motor collision claims are certainly down, vehicles are still subject to risks even when parked, such as theft or vandalism,” he said. “Similarly, it is wrong to think that house insurance risks decrease with everyone at home,” he added. “And actually, many risks increase…half of all fires start in the kitchen, which are definitely being used more, and the risks of property damage also go up.” It was also worth noting that extensive steps to support customers had been taken at a time when insurers themselves are coming under financial pressure, Grafton said. “All these measures have been done when insurers’ income has also been heavily hit by the collapse in equities, record low interest rates and looming business closures coupled with few new businesses opening,” he said. This was matched, he said, with the higher levels of solvency that insurers must maintain above any other business to meet regulatory and policyholder obligations. “In this way, our members can balance the needs of those in genuine hardship with their obligation to be there for all its policyholders should the worst happen, like an earthquake or major flooding.” The coming months would bring many new challenges to insurers, brokers and their respective customers, Grafton said. “Should a customer find themselves facing financial hardship, we urge them to contact their insurer or broker, who can talk them through a range of measures to ensure their cover best meets their current needs,” he said.

Feature

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HUMANS of A backpacker soul and diversity advocate A love of travel runs through the veins of Claire Shepherd, Strategic Growth and Retention Manager for NZI’s personal lines team

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orn and bred in North Wales (except for three years in Brisbane as a young girl with her family), Claire started her insurance career over 20 years ago as a part-time job while she was studying environmental science at university in Manchester. After university, Claire, backpacked through South East Asia and Australia, before settling in Sydney, and starting her career at IAG. Claire has had a variety of insurance roles, including in claims, underwriting, commercial, consumer, and was even involved in a start-up insurance company. “Many people I know would say they fell into insurance, it wasn’t something they aspired to get into or become, but it’s been great and that’s why I’ve stayed for this long. It’s been really good to me, and I’ve never looked into doing anything else since. This industry has given me lots of opportunities.” Claire’s insurance career has been woven in with her love of embracing different cultures. After she settled in Australia, she married a Kiwi, her son was born in Dubai and her daughter in Sydney, and she has now been living in Christchurch for three years. Claire loves her current role in personal lines, building relationships with peers and partners, and particularly supporting the business development managers (BDMs) across New Zealand. “I love leading my team of BDMs. It’s all about coaching and development; empowering them to make decisions and building strong relationships with our broker partners, but also making sure they are on the right path.” For Claire, regular, open and honest conversations is the key for all broker relationships. “Developing a personal relationship and a professional friendship where you can. Things aren’t always going to go right, but if you have a good relationship, you can always have those up-front conversations when needed.” Claire has always been a strong promoter of equity in the workforce. “My philosophy has always been that nobody is going to tell me that I can’t do something because of my gender. I’m quite passionate about changing people’s mindsets and changing the pathway for females. “It’s great to see women in senior leader roles balancing work and family. I think it is very important to have diversity of thought in all our decisions too. So, it’s not just male and female. It is also young, old, various ethnicities, and different thought processes that people bring to the table.”

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June 2020

Having a son and daughter, Tom (11) and Emily (8), Claire would like her kids to see everyone as equal regardless of their gender, ethnicity or background. “I want them to know that they can both achieve whatever they set their minds to.” With a long wish list of travel destinations currently on hold due to Covid-19, Claire is looking elsewhere for her cultural fix. “I speak Welsh and I would love to learn Te Reo Maori. I think it’s very important as a nation, to embrace the cultural language. As a leader in personal lines, the key for me, is ensuring that we all drive a culture that embraces diversity and diversity of thought."

Cover Story

INSURERS TACKLE COVID-19 Fewer claims, more hardship – insurance companies navigating pandemic are in uncharted waters.

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nsurers are used to crises: earthquakes, floods, fires and accidents. But this year’s pandemic has thrown a new set of challenges at New Zealand’s insurance industry. Insurers have had to grapple with the potential impact of their customers suffering financial strain and struggling to keep up their payments – and almost two months when life as we know it went on hold, taking some claims with it. Cris Knell, executive general manager of distribution at Suncorp, said his business had quickly moved online as the country went into lockdown. “By day two of lockdown, we had close to 90% of our business development managers online supporting their clients.” He said, by the time the country shifted to level 3, then 2, much of the business’s activity had been re-engineered to be delivered digitally. Professional development days, webinars and even conference events shifted online. “The shutdown’s shown us that in the short term, we can manage contact and travel restrictions effectively. Suncorp New Zealand’s meetings right up to board level are now being held remotely as our 18

June 2020

1200-strong team gets on with business. We’re anticipating higher flexibility and more agile and remote ways of working into the future.” He said Suncorp had also committed to paying broker bills immediately, to help with their cash flow. “We then looked at the people side of our business and aligned our BDMs and BDCs to support their networks digitally. This included giving customers more time to pay and enabling premium deferrals, premium holidays and premium and cover suspensions if these options were needed due to hardship. “I’ve seen examples internationally where other insurers have focused on speed, but in doing so left their brokers and advisers without income for months ahead, and potentially in a worse situation than the customers they were trying to help. We’re all

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Cover Story

in this together, so we’ve concentrated on developing solutions that are right for our customers, our brokers, advisers and us.” CLAIMS For general insurers, five weeks of lockdown, then another two of almost-lockdown, made a difference to claims. Insurance expert Michael Naylor, from Massey University, said there was a significant drop in car crashes and burglaries. “The key question discussed in the media is 'have our social habits been changed long term?' “Some have been optimistic, but I can't see much change occurring apart from an increased tendency for people to work more from home. This may impact mostly on small business, where owners may discover that a rented premises is not required. Even travel insurance will be back within 12 months.” Research by actuarial firm Finity Consulting showed that the savings on personal motor claims in the level 4 lockdown would be about $35 million. New Zealand’s motor insurers paid out $1.159 billion in claims in 2019. Lower traffic volumes would lead to an 80% reduction in collision claims frequency, the actuaries said. But they said that could be offset by things such as potentially larger claims when they did happen, supply chain constraints, inflation and exchange rate impacts. Their report also noted that other perils, such as theft, might experience a smaller decrease than collision claims. Insurance Council chief executive Tim Grafton said his members had already moved to respond to this and to support their customers. “We have seen a range of support offered including deferral of premium payments, changes to terms resulting in different premium levels, changes to excesses as well as some rebates of premiums.” He said the industry was acutely aware of the pressure Covid-19 was placing on Kiwis and had been actively supporting customers at a time when they too are coming under financial pressure. “It is critical that each insurer responds in a way that is most appropriate for their customers and for them to maintain solvency. In this way, our members can balance the needs of those in genuine hardship with their obligation to be there for all policyholders.” The Financial Markets Authority made it clear to insurers that it expected them to step up and help customers. FMA director of banking and insurance Clare Bolingford wrote to insurance representatives telling them that it expected insurers to “remain cognisant” of the challenges faced by New Zealanders, offer support and do what was possible to maintain or reduce costs for consumers, including offering reductions or refunds of premiums when they experience lower-than-planned claims ratios. Tower Insurance said it would pass on any savings it made due through the outbreak in refunds to car insurance customers before the end of May. Chief executive Richard Harding said the company would not profit from Covid-19 and would make further refunds if needed. "We know that people are driving less, and this is resulting in lower claims, so any savings we make will be passed back to our customers. "There is still a whole lot of uncertainty at the moment and we have not processed refunds on this scale before, which is why we need some time to calculate and arrange them. But customers can be assured that refunds will be paid, and we will let them know all the details beforehand. "In the meantime, any customers experiencing financial hardship should call us.We have a specialist team on hand and a range of options to support customers and help reduce any financial pressure.” QBE Insurance directed AUD$2.6 million ($2.79 million) to support the global response to the crisis. 20

June 2020

Funds will be deployed through the QBE Foundation’s existing charity and not-for-profit partners around the world, to help them deal with increased demand for their services and help offset a decrease in donations and funding due to the economic impact of Covid-19. AA Insurance said the drop in car insurance claims in March and April meant it was able to introduce three new initiatives: A $2 million fund for customers in hardship, a freeze on car, home and contents premium increases, and the potential for premium reductions for car insurance customers. “This is about fairness and doing the right thing by our customers and the communities we live in,” chief executive Chris Curtin said. “We are mindful people are driving less, which is reflected in fewer claims being made. We do not intend to take advantage of this at the expense of our customers. “At AA Insurance, we define our purpose as ‘we care, we help, we get things sorted’,” Curtin said. “And while this isn’t the expected insurance event that we would typically respond to, it’s just as important to look after our customers now, as ever, as we work on a fair solution and get through this pandemic together.” AA Insurance would continue to absorb operating expenses, as well as any impact on its investment portfolios to ensure customers saw the full benefit of the reduction in claims, particularly car insurance claims.

BY DAY TWO OF LOCKDOWN, WE HAD CLOSE TO 90% OF OUR BUSINESS DEVELOPMENT MANAGERS ONLINE SUPPORTING THEIR CLIENTS. CRIS KNELL Suncorp, the majority shareholder of AA Insurance, matched AA’s $2 million customer hardship fund by establishing a further $2 million hardship fund for its Vero and Asteron Life customers. Knell said Suncorp had not yet seen significant shifts in demand. “But the conversations we’re having have changed. The pandemic’s put many New Zealanders under significant financial pressure. “We’ve responded with practical support solutions intended to give them peace of mind. Motor claims have been accepted even if a customer’s WoF or Driver’s Licence expired during lockdown. We’ve covered office equipment for employee use at home and we’ve relaxed our conditions on vacant business premises. We’ve flexed our approach to help customers get through and retain their insurance wherever possible.” Knell is relatively bullish about what might lie ahead for the sector from here. “There’s a lot of talk of New Zealand going into recession and unemployment spiking to 9% or higher, but this sentiment needs to be balanced against the huge fiscal stimulus currently being provided by the Government, banks and financial institutions. I’m confident that most brokers and advisers will come through this event with a more agile and responsive business. I am also sure that connecting with customers in a time of crisis provides brokers and advisers with the opportunity to show the value they add in managing client risk as they respond to changing circumstances. “

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Cover Story

REGULATORY CHANGES ON THE HORIZON By Jeremy Muir, Maria Collett-Bevan, Minter Ellison Rudd Watts CONDUCT OF FINANCIAL INSTITUTIONS BILL

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he Government has made it clear that ensuring that financial institutions’ “conduct and culture” result in good outcomes for all customers is a priority, following reports from the Financial Markets Authority and the Reserve Bank of New Zealand on conduct failures in the financial sector. To that end, it has introduced the Financial Markets (Conduct of Institutions) Amendment Bill (CoFI) which received its first reading in February 2019. The deadline for submissions on the bill was extended to April 30, because of the Covid-19 disruption. Next steps are for the Finance and Expenditure Committee to consider the bill and report back by August 12. The CoFI Bill proposes a new regime for specified registered banks, licensed insurers and licensed non-bank deposit takers. The proposed regime will apply broadly to all services and associated products provided by specified financial institutions and, to varying extents, to other financial businesses and intermediaries which deal with or represent specified financial institutions. As insurers and brokers will be captured by this new regime, they should keep a close eye on its progress through Parliament. KEY ELEMENTS OF THE PROPOSED REGIME If passed, the CoFI Bill will amend the Financial Markets Conduct Act 2013 to ensure that specified financial institutions and their intermediaries comply with a principle of “fair conduct” and associated duties and regulations. The CoFI Bill proposes the following: • Specified financial institutions that are in the business of providing relevant services must obtain a licence from the FMA under Part 6 of the FMC Act. “Relevant services” are defined as acting as an insurer (in relation to a consumer insurance contract, or other life or health insurance), being a creditor under a consumer credit contract, providing other retail financial services (of the kind that require registration as a financial services provider), or acting as a paid intermediary to a consumer for any of those activities. • Specified financial institutions and intermediaries must comply with a fair conduct principle to treat consumers fairly, including by paying due regard to their interests 22

June 2020

in specific circumstances. The specific circumstances are when a financial institution: (a) designs any relevant service or any associated product; (b) offers to provide any of those services or products to a consumer; (c) provides any of those services or products to a consumer; or (d) has any dealing or interactions with a consumer in connection with any of those services or products). The fair conduct principle also applies when an intermediary is involved in the provision of any relevant service or any associated product to a consumer. • Specified financial institutions must establish, implement, and maintain an effective fair conduct programme which meets the minimum requirements set out in the FMC Act. This requires operationalising the fair conduct principle through policies, processes, systems, and controls throughout every relevant part of their business, from the governance level to day-to-day interactions with consumers, whether those interactions are made directly or indirectly through intermediaries. • Specified financial institutions and their intermediaries must comply with the fair conduct programme, and specified financial institutions must ensure the intermediaries comply. This is aimed at ensuring that the chain of distribution of services and products is captured and so institutions take responsibility from the top down. • Specified financial institutions and intermediaries must comply with any regulations that regulate incentives based on volume or value sales targets. The possible regulations may apply to incentive arrangements entered into before the CoFI Bill or its regulations have been enacted. • An insurance contract may be brought outside the scope of this new regime if a policyholder certifies in writing before entering into the contract that they are entering into the contract wholly or predominantly for business purposes. INSURANCE CONTRACT LAW REVIEW The Government has also been reviewing insurance contract law to ensure that it facilitates insurance markets that work well and enable individuals and businesses to protect themselves against risk effectively. An issues paper and an options paper were released in mid-2019 seeking

Cover Story

public comment on the proposed policy decisions. In December 2019, MBIE proactively released a paper and minutes of the Cabinet Economic Development Committee indicating what the Government intended to reform. In summary, the committee has agreed: • to change policyholders’ duty to disclose material information so that: • consumers must simply take reasonable care not to make a misrepresentation • while non-consumers are required to make a fair presentation of risk • to change the remedies for non-disclosure and misrepresentation for both consumers and non-consumers to provide proportionate consequences based on how the insurer would have reacted to the information at application time, and whether the policyholders intended to mislead or deceive the insurer or were reckless; • to require insurers to inform policyholders of the duty of disclosure and its consequences before they enter the contract; • that if an insurer seeks permission to access a consumer’s medical or other third party records, the insurer must inform consumers of the types of third party information they are likely to access and when this is likely to happen, which the FMA will be responsible for monitoring and enforcing compliance; • to remove insurance-specific exemptions from the unfair contract terms provisions in the Fair Trading Act 1986 and clarify how the generic exemptions apply to insurance. The FMA will share responsibility with the Commerce Commission for enforcing unfair contract terms in relation to contracts for financial services or in relation to financial advice products; • to require consumer insurance policies to be presented and worded clearly to help with consumer understanding; • that the duty of utmost good faith be codified in legislation and will apply to both parties in an insurance contract; • to introduce a legislative requirement for intermediaries to pass on to the insurer all known material information – so that the insurer can recover losses against the intermediary if the intermediary fails to pass on information; • that certain policy exclusions will not be subject to section 11 of the Insurance Law Reform Act 1977 (which provides that if a

policy exclusion applies in relation to a claim but the exclusion did not cause or contribute to the loss, then the insurer must accept a claim); • to replace section 9 of the Law Reform Act 1936 (which allows a third party wronged by a policyholder to place a statutory charge on the policyholder’s insurance proceeds in certain cases) with a provision that allows third parties to claim directly against the insurer; • to amend section 9 of the Insurance Law Reform Act 1977 to provide that an insurer under certain types of liability policies can decline a claim if the policyholder notifies the insurer after a defined period after the end of a policy term. We are expecting the release of an exposure draft bill, which may be supplemented by new regulations, for consultation in 2020. REGULATION OF FINANCIAL ADVICE The new financial advice regime introduced by the Financial Services Legislation Amendment Act 2019 will come into effect in March 2021, at the earliest, on which date all new obligations, aside from transitional requirements around competency, will come into effect. Anyone providing financial advice to retail clients from that date will need to hold a transitional licence and comply with all obligations. For those solely providing financial advice to wholesale clients, there is no licensing obligation but there may be other obligations that apply. The regulations supporting this regime are intended to be formally released in the coming months, with likely transitional provisions for disclosure requirements. We understand that the custody and broking requirements will continue in substantially the same form under the new regime with minor amendments. The Code of Professional Conduct for Advice Services was finalised in 2019 but may have further guidance released to aid in applying the requirements. ADDITIONAL POLICY UPDATES The Reserve Bank suspended active work on the review of the Insurance (Prudential Supervision) Act 2010 in April 2018 following a careful prioritisation exercise. It is intended that this work will resume in due course. Over the course of the review the RBNZ intends to undertake further consultation to identify policy concerns and develop proposals to address these concerns effectively. www.covernote.co.nz

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Opinion

Avoidance for material non-disclosure Recent English case provides lessons for NZ

By Crossley Gates

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Parliamentary Bill is due later this year to start the process of reforming New Zealand’s duty of disclosure law, as well as many other insurance law reforms. However, given the Covid-19 pandemic, we expect this may not appear now until next year. Even if Parliament enacts it sometime later next year, it will inevitably allow a lead-in period of at least 12 months. This means the law may not change until 2022 or 2023 at the earliest. In the meantime, the current duty of disclosure law applies. A recent decision of the English High Court (Niramax Group Limited v Zurich Insurance Plc [2020] EWHC 535) clarifies some interesting issues about avoiding a policy for material non-disclosure under New Zealand’s current law. England’s former duty of disclosure law applied to the case. That former law is essentially the same as New Zealand’s current duty of disclosure law. In any event, the decision deals with interesting issues about the insurer proving inducement. This requirement will likely remain as part of the reformed duty of disclosure law in New Zealand. BRIEF FACTUAL BACKGROUND Niramax recycled waste. It had a number of sites for its operations.The main site was at Thomlinson Road, Hartlepool (Thomlinson Site). It also had a site at a nearby town called Washington (Washington Site). Niramax held a mobile plant policy (Plant Policy) with Zurich. It insured its buildings separately with other insurers (Building Policy). In 2015, Niramax placed an order for a new specialist plant for 24

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recycling waste (New Plant). It sought cover under the Plant Policy. Zurich agreed to extend cover under the Plant Policy to the New Plant from September 2015 until expiry of the current policy year, although there were issues about this discussed below. On 4 December 2015, before expiry of the Plant Policy, a fire broke out in the engine compartment of a machine at the Thomlinson Site. Niramax extinguished the fire promptly. However, staff failed to notice that embers from the fire had drifted to a neighbouring building housing the New Plant, destroying it. Niramax claimed under the Plant Policy for the destroyed New Plant. The claim was for approximately £4.5 million. Zurich elected to avoid the Plant Policy for material non-disclosure. BUILDING POLICY Zurich’s primary justification for avoidance of the Plant Policy was that Niramax had materially non-disclosed facts in relation to both the Plant Policy and the Building Policy before Zurich insured the New Plant. For the 2014/2015 year, Niramax obtained cover for its buildings with Millennium Insurance (Millennium). Millennium accepted the cover subject to a satisfactory survey of the buildings. As a result of the survey, Millennium required Niramax to undertake a number of riskmitigation measures. One of the measures required Niramax to install a fire-suppression system in relation to machines at the Thomlinson Site within 30 days. Niramax failed to do so.

Opinion

After several reminders, Millennium decided to impose special terms on the cover by increasing the excess and requiring Niramax to selfinsure 30% of any loss. Despite this, Niramax still did not install the firesuppression system by the end of the current Building Policy period. Niramax sought renewal of the Building Policy with Millennium, but Millennium would only do so on the basis that it didn’t cover the Washington Site. In the light of this, Niramax decided to renew the cover for its buildings with another insurer, Aspen. In Aspen’s proposal, Niramax denied that its buildings had ever been the subject of special terms. This was plainly incorrect. PLANT POLICY Zurich increased its premium for the Plant Policy for the 2014/2015 by 20%. This amount was still below what it should have been because of a miscalculation by Zurich. When Niramax sought cover for its New Plant under its existing Plant Policy with Zurich, Zurich initially refused because the policy was for mobile plant and the New Plant was static plant. However, after persistence by Niramax’s broker, Zurich relented and agreed to add it to the current Plant Policy subject to special conditions and only until expiry of the current policy period. ZURICH’S DEFENCES Zurich’s defence to Niramax’s claim for the destroyed New Plant under the Plant Policy was to avoid Niramax’s Plant Policy for the following reasons:

1. Niramax’s failure to disclose to Zurich the following when Zurich extended cover under the Plant Policy for the New Plant: a. The existence of the risk-mitigation measures that Millennium imposed on Niramax under the Building Policy for the 2014/2015 year, and b. The existence of the special terms under the Building Policy imposed by Millennium subsequently, when Niramax failed to implement one of them. This was Zurich’s primary defence. 2. Niramax’s failure to disclose to Zurich that Niramax had failed to disclose to Aspen Millenium’s refusal to insure the Washington Site at the last Building Policy renewal, and Niramax’s failure to disclose to Zurich its incorrect denial in Aspen’s proposal for the Building Policy that Niramax had special terms imposed on it. 3. In combination, Niramax’s failure to disclose all the following: a. A failure to disclose to Zurich Niramax’s broker’s false assertion that a Lloyd’s broker had said the Niramax risk had ‘surveyed very well’, and b. A failure by Niramax to disclose to Zurich a fire at its premises in 2012, and c. A failure by Niramax to disclose to Zurich that Niramax was convicted of illegally stockpiling tyres in 2005/2006, and d. A failure by Niramax to disclose to Zurich that a former

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Opinion

director was convicted and fined £250 in 2009, and e. A failure by Niramax to disclose to Zurich material facts on earlier renewals with Zurich. THE DUTY OF DISCLOSURE LAW The Court reminded itself of the duty of disclosure law: 1. Zurich faced the onus of proving the material non-disclosure. 2. A fact is material if it would influence the judgement of a prudent insurer in fixing the premium or determining whether to take on the risk. In this regard: a. The Court must take an objective approach to assessing the materiality, based on the Judge’s independent appraisal of the alleged material facts in the light of the relevant facts. b. Expert evidence is ‘helpful and important to ensure that the court’s findings are grounded in commercial reality’. c. However, ultimately it is for the Court to decide whether it is rational to take any particular matter into account. 3. Zurich had to show that any non-disclosure it relied upon induced it to underwrite the policy that was in fact underwritten, on a ‘but for’ basis, i.e. Zurich must show that but for the relevant non-disclosure it would not have entered into the contract on those terms. The Court said: a. The burden of proof is ‘not a heavy one’. b. However, the Court must exercise caution as avoidance is a draconian remedy and genuine evidence of inducement could be inaccurate due to hindsight and self-interest, and the difficulty of examining hypotheticals. ZURICH’S PRIMARY DEFENCE – NON-DISCLOSURE OF RISK MITIGATION AND SPECIAL TERMS FOR THE BUILDING POLICY In relation to materiality, both parties’ experts broadly agreed that Niramax’s non-disclosure of its failure to implement one of the riskmitigation measures, and the subsequent imposition of special terms by Millennium were material. Those facts demonstrated Niramax’s attitude towards risk management and demonstrated ‘poor housekeeping’. In relation to inducement, the position was more difficult. It raised three key issues: 1. The identity of the ultimate decision maker within Zurich. The Court found that within Zurich, the decision would have moved up the chain of underwriting to a Mr Penny. This meant that ‘what Mr Penny would have done’ became the crucial issue. 2. The effect of any extra information if Niramax had provided fuller disclosure to Zurich. Niramax argued that fuller disclosure would have resulted in Niramax providing other more positive information to Zurich, which the Court should take into account. However, the Court was not satisfied that hypotheticals like this were helpful. 3. The nature of the underwriting process. Niramax argued that fuller disclosure would not have had any impact on Zurich’s position in the real world. Zurich treated its Plant Policy in a ‘commoditised and streamlined’ way. There was no proposal and Zurich calculated premiums based on sums insured, trade and claims experience. The Court rejected this and found that Zurich would not have followed its usual process for ‘vanilla’ risks once presented with fuller disclosure; it would likely have undertaken a more detailed analysis. This left the ultimate question to be answered – what would Mr Penny have done? The Court found, ‘it is more likely than not that if he had been aware of the facts in question, Mr Penny would have reluctantly offered renewal terms in December 2014 but would have refused the extension to cover the [New Plant] in September 2015.’ 26

June 2020

The Court found Mr Penny: a) Viewed recycling risks as undesirable, particularly due to fire losses. b) Had, in mid-2013 instructed his underwriting team to stop covering fixed plant waste risks on engineering contractor’s plant policies. c) Had subsequently imposed a 10% rate increase on those risks. d) Had effectively stopped by late 2014 writing new policies for waste risks. e) Would have still written Niramax’s policy in December 2014, though with a higher premium to reflect the correct multiplier. f) Would not have agreed to extend the policy in 2015 to include the New Plant. Mr Penny said that adding the New Plant after coaxing by the broker was a marginal decision by him without the fuller disclosure. He said that will the fuller disclosure his decision would have changed, ‘from a very reluctant write to a polite but firm refusal’. The Court accepted that the non-disclosure did induce Mr Penny to insure a risk that he would not otherwise have underwritten. Zurich was successful. ZURICH’S OTHER DEFENCES In the light of this, the Court did not need to consider the second defence listed above. In relation to the third defence, the Court’s view are summarised as follows in the same order: a) There was no evidence that Niramax was aware of the misrepresentation allegedly made by the broker, and the representation itself was a piece of ‘broker’s puffery’ that was not material. b) Materiality was in doubt about the 2012 fire. It was small and it occurred on a site not owned by Niramax. Mr Penny was not fazed by it. c) The fine was unlikely to be material due to the lapse of time and the fact that it related to a different location. d) The former director’s fine was not material. He was not a director at the time of the fire. e) The non-disclosure at previous renewals also failed. There was no evidence that Niramax knew it had previously failed to disclose material facts. This case provides a good example of how a Court approaches its task of assessing whether a material non-disclosure has occurred. In addition, it demonstrates several practical issues that insurers face to prove inducement. In particular: 1. Before making the decision to avoid, the insurer should identify the person in the organisation who was the ultimate decision maker. 2. This person should feel sufficiently confident about his or her decision to be prepared to give evidence under oath in Court about it potentially, and to be cross-examined about it. 3. However, even the best potential witness does not guarantee success; the employee’s evidence goes to whether the insurer grounded its decision in commercial reality. The Court makes the final decision. The requirement on insurers to prove inducement is likely to remain part of the duty of disclosure law after it is reformed. Crossley Gates is a partner at Keegan Alexander. Email: cgates@keegan.co.nz Direct Dial: (09) 308 1809

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If you have a car you’re proud of, eventually you’re going to want to take some memorable—and shareable—photos of the wonderful machine. You can, of course, take it to a cool spot, snap some images with your smartphone, and be done. But, with a bit more thought and deliberate effort, you can create images that you’ll be as proud of as you are of the car Itself. Every vintage car has a story, and your pictures should help to tell it. Here are a few incredible photography tips to help you not just take a picture of your car, but to put it to use as the work of art that it is.

1

Lighting is one of the most important and basic aspects of photography. When taking pictures of cars, especially beautiful vintage masterpieces, lighting helps to make the difference between a simple snapshot, and a well composed work of art. Schedule your shoot close to dawn or dusk, to provide plenty of soft, natural, low-angle light. Then, walk around your car to find the perfect angle from which to best capture an image. Pay attention to environmental reflections in the car’s windows or finish, which will often act like a mirror. You’ll want to avoid accidentally including a reflected image of yourself, or a random ugly building that you happen to be standing near. Instead, pick out reflections that will enhance the picture overall, and consider deliberately incorporating them into your composition.

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Nothing feels quite as annoying as lining up the perfect shot, only to have the image ruined by blindingly bright glare coming off of a nearby window, or a body of water. Using a polariser can help to reduce glare, making it easier to incorporate light effects into your image, which is especially important when shooting at dawn or dusk. That means it not only improves the quality of your pictures by default, it also expands your options with regard to the kinds of pictures you can take.

Vintage cars have a lot of history, and the setting in which you shoot can help to tell that story, or at least to complement it in some way. This doesn’t necessarily mean taking vintage style photos with a historically accurate background—though you can certainly do that if you like. Rather, it’s about being deliberate about your location, and what viewers take away from what they see besides the car itself. A classic car in front of an ultra-modern building or sitting in a gorgeous vineyard can both result in incredible photos, but they’ll evoke very different emotions. The difference between a good photo and a great one starts in knowing why you chose one over the other.

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When looking at something as exquisite as your classic vintage car in person, it can be difficult to know where to focus your gaze. As a photographer, it’s your job to frame the picture in such a way that the viewer looks exactly where you want them to. Basically that just means controlling the amount of clutter in your image, and being deliberate about the angle at which you shoot, and your background. Taken further, it means recognising the unlimited potential that a car offers a photographer. Well composed close-up shots can make whatever detail you love most stand out as the focal point of your image. Hood ornaments, vintage tyres, headlights, or any unique quirks your vehicle has can all be used to create beautiful pictures, helping to the viewer to better appreciate the unique elements that make the car into the work of art that it is.

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Controlling your depth of field is an important way to help you reduce clutter and make it easier to compose a beautiful image. By using a larger aperture size and a longer lens, you can make the area of focus in your image smaller, while a smaller aperture and shorter lens translate to a larger area of focus. This allows you to blur the back or foreground of your image, so that inconsequential details literally fade out of the picture, therefore emphasising the details that you want in the spotlight. Knowing which will garner the best results in any given shot requires experimentation and experience, so don’t be afraid to try out a variety of things until you can achieve the results you’re looking for.

While zoom lenses do allow photographers to take different kinds of images by adjusting their focal length. They’re more expensive than prime lenses, which only have one set focal length. For most people, choosing a zoom lens sounds like a no-brainer, but it’s a trap! A professional photographer has the knowledge and years of experience to use a zoom lens to incredible effect for many different kinds of photos, but an amateur photographer can often have a better experience using just a few prime lenses. For an amateur photographer, a prime lens is a blessing. Having just a single focal length per lens allows you to quickly get a feel for exactly how to get a great shot, while having and using multiple lenses ensures that you can take more than just one type of photo.

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Choosing a high or low angle at which to photograph your car isn’t just an aesthetic choice, it’s also psychological. While most people don’t get to see a vintage car everyday, cars are a very familiar and “ignorable” part of our everyday lives. Besides that, our most typical eye-level perspective is frankly the least flattering that most cars have. Seeing something from an extraordinary perspective is fundamentally more interesting than seeing it the same way we would just walking down the street. An extraordinary car shouldn’t be associated with a boring, everyday visual experience.

Your vintage car is a work of art, and it should be celebrated as such. Whether you’re just taking a few pictures to show your friends, or looking to create a centrepiece for your office decor, these tips can help you take the kind of photo your car deserves. Similarly, unique cars deserves the protection offered by Star Enthusiast Vintage Cars, our insurance plan for owners of Vintage cars. It covers the use of genuine parts in repairs, costs for a vehicle valet after an accident, as well as a number of other features offered to our most discerning customers.

Talk to your Star Insurance Specialists Key Account Manager for a quote today!

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Our custom car insurance protects your client’s vehicles in an ever-changing world If your client’s vehicle is unique it deserves specialist insurance. As the industry-leading niche vehicle insurance specialist, we design extraordinary, custom policies for Kiwis with exceptional vehicles. We do this by engaging in a deeper level of insurance analysis, and performing precise policy tweaks to craft custom insurance that protects your clients in an ever-changing world. We never let algorithms determine the policy or its price, and we handle everything in-house so that you only deal with decision makers for everything from quotes to claims. Star Insurance Enthusiast comes in five highly customisable insurance packages: Classic Car, Vintage Car, Project & Performance, Motorsport and Modern Hobby. We also deliver better customer experiences for owners of RVs, Caravans, Motorcycles, Prestige, European, Luxury and Elite cars.

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Opinion

INSURANCE HAS A CRITICAL ROLE IN THE CRISIS AHEAD Insurers have opportunity to show support for New Zealand in Covid-19 recovery process. By Tim Grafton, Insurance Council chief executive

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avigating the turbulence of a global economic crisis requires insurers to maintain an even ballast between the cargo of customer interests and buoyant solvency. In New Zealand, rated one of the riskiest for its size, the challenge is arguably more difficult. Treasury’s scenarios are bleak.The most optimistic sees unemployment rising to 10% and under the bleakest scenario to 26%. Major contractions in GDP and business failures are part of the mix. Much depends on the global economy, additional Government fiscal support and the duration of Covid-19 restrictions. Insurers are supporting their customers with a range of measures to maintain protection for them while cushioning the financial impact for those in hardship by adjusting terms to reduce costs and payment arrangements. ICNZ has also developed links with those who work with the most vulnerable in the community to ensure a dedicated 30

June 2020

person with each insurer is there to respond to hardship issues. Insurers must also have an eye to their own finances. Regulators require insurers to maintain higher levels of solvency than other companies, so they can be there to meet commitments to all policyholders, especially when natural catastrophes occur as they have done in recent years. But insurers, like everyone else, face a drop in income as interest rates and assets values fall. Looming business closures and general economic downturn will also impact future premium income. With that in mind, insurers will prudently stress-test their solvency positions against the bleakest scenarios, mindful that regulators will want them to preserve their capital positions and if possible, to build them. For that reason, in many countries, dividend distributions have been strongly discouraged by the regulator. Regulators want to see healthy buffers above minimum levels of solvency to ride through the extreme economic uncertainty and to

Opinion

support customers. That is what insurers here are doing. The rationale is that insurers’ long-term interests lie in protecting customers, so if everyone came out a bit stronger, then it is better for all in the long term. If the downturn is deeper and longer, though, it could result in bigger challenges, but we are a long way off that. Till then, each insurer must carefully balance their ability to assist their customers now with ensuring their long-term sustainability and meeting obligations to all their customers should a natural disaster strike. Looking to the supporting wider recovery, insurance has a vital role to play too. Insurance capacity is available here to support major construction projects and the multiple risks including Advanced Loss of Profits and Delayed Start-up cover. Although Covid-19 is causing disruption, delay, and potentially increasing project costs, these will not be covered by insurance as standard pandemic exclusions will apply.

However, that will not be an obstacle to progress these projects if the impact of Covid-19 on project costs is well understood. Winter-month delays are factored into projects all the time, so a new dynamic needs to be factored into calculations. Looking still further ahead, unless we experience a benign economic period, then all countries will enter the next crisis with less collective fiscal firepower than they had for Covid-19. This has led some to promote the need for public-private insurance arrangements to be developed to better meet the systemic, economic fall-out of a pandemic. Much the same could be said for climate change losses which will dwarf that of Covid-19. As we prepare for the future, insurers will have the opportunity to deploy their risk expertise and learnings from Covid-19’s impacts to develop products for their customers and work with governments to reduce the impact of the next global pandemic. www.covernote.co.nz

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Feature

GST payable on insurance proceeds received by third-party claimants By Andrew Ryan and Simon Akozu, Minter Ellison Rudd Watts

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nland Revenue has confirmed that a third party claimant who is GST-registered can be liable for GST where they receive a payment from an insurer in settlement of an insured person’s liability. This applies irrespective of the third-party claimant not being party to the insurance contract, and can apply where the settlement payment is for damages or loss incurred that would otherwise not ordinarily attract GST. THE ISSUE Ordinarily there is no GST payable on a damages award, being compensatory in nature and with no reciprocity of supply. This is unless the damages are paid in respect of something that was itself a taxable supply, e.g. if a dispute is about non-payment for goods or services purchased. The act of settling a dispute is not, in and of itself, a taxable supply. However, there has been some confusion about the GST treatment of a settlement payment that is funded by an insurance policy and paid directly by the insurer to the third-party claimant. In its recent statement, Inland Revenue expressed its concern that some taxpayers are adopting the view that such settlement payments made directly to a third-party claimant are not subject to GST. Inland Revenue cites section 5(13) of the Goods and Services Tax

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Act 1985, which provides that “if a registered person receives a payment under a contract of insurance, whether or not the person is a party to the contract, the payment is, to the extent that it relates to a loss incurred in the course or furtherance of the registered person’s taxable activity, deemed to be consideration received for a supply of services performed by the registered person.” This means that, even where a settlement is for compensatory damages, a third-party claimant receiving an insurer-funded settlement payment is deemed to have made a taxable supply under section 5(13) and is liable for GST on the insurance proceeds. This is provided that the claimant is GST-registered and receives the payment in relation to a loss incurred in the course of its taxable activity, and the premiums under insurance contract were subject to GST (i.e. which is not usually the case where a non-resident is the insurer). The following example illustrates how section 5(13) operates in practice: • an insured person and an insurer have entered into a contract of insurance; • a third party has agreed to settle a claim brought against the insured person in consideration for $1,000,000; • the insurer pays the $1,000,000 agreed settlement amount directly

Feature

to the third party claimant; • the third party must pay GST of $130,435 on the sum received, and retains a net sum of only $869,565; and • the insurer will be entitled to an input tax credit of $130,435. OUR VIEW Inland Revenue has advised taxpayers that, because there has been no change in the commissioner’s practice, it will continue to apply this treatment in all cases, including retrospectively. We agree that Inland Revenue’s position correctly states the intended effect of clause 5(13), and is consistent with the view that has broadly been adopted by GST experts. However, while Inland Revenue stresses that this reflects its long-standing position, in our experience the GST obligation imposed on third party claimants comes as a surprise to some and is difficult to apply. In practice, a third party claimant will often not appreciate that it will be liable for GST on the insurance proceeds, or even be aware that the settlement payment will be funded by an insurer (thereby triggering a GST liability) and can risk leaving it undercompensated in settlement of its claim. This is especially harsh given that the claimant would also need to know whether GST was charged on the premiums under a contact of insurance to which it was not a party.

Inland Revenue’s statement reinforces that failing to address GST during settlement negotiations can mean that a claimant will be out of pocket, receiving less than what was expected. FUTURE IMPACT OF INLAND REVENUE’S GST ISSUES PAPER On February 24, Inland Revenue released an issues paper seeking feedback on a wide range of GST-related policy matters, which included discussion on potential options for mitigating this GST issue. The first (and most disruptive) option proposed by Inland Revenue is to make insurers responsible for the GST obligations. This could be achieved through a reverse charge mechanism, or by denying the insurer’s input tax deductions for insurance payments to a GST-registered person (the latter would mean that section 5(13) of the GST Act would consequentially be repealed). Two alternative options being considered are: • requiring insurers to disclose in writing to the third party that the amount of their settlement payment is covered by insurance and may be subject to GST; and • retaining the current rules but providing education and guidance for advisors and GST-registered businesses. Inland Revenue is inviting submissions on the potential compliance costs and system impacts of these three policy options. www.covernote.co.nz

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FSCL Case Study

COVID-19 COMPLAINTS AND THE IMPORTANCE OF CLEAR COMMUNICATION AND RECORD-KEEPING FSCL expects more complaints about insurance brokers as the pandemic effects are felt. Don’t become one of them. By Susan Taylor, FSCL chief executive

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e are starting to see a few complaints about insurance brokers arising out of Covid-19 disruption and expect we may see more as time goes on. We anticipate that as clients, in particular small businesses, discover that their insurance policy does not cover them for losses arising from a pandemic, they will turn to their broker asking why they were not given a policy that would cover pandemics, or why they were not told that there was no cover for pandemics, which would have enabled them to better prepare for a loss or shutdown of business as a result of a pandemic. In one complaint that is currently being investigated, it appears that the broker gave misleading advice about the extent of cover under the policy, so that the client thought they had broad cover for a pandemic, when in fact the level of cover available was far more limited. Although in this particular case, there may not have been any cover available for a pandemic, we will have to look at the inconvenience caused to the client, who would have arranged his business commitments differently had he not received misleading information from the broker. As with so many complaints we investigate, clear communication and good record-keeping are key. The first case note below concerns poor communication by the broker in not fully explaining the type of cover to the client and the circumstances in which cover under the policy would be triggered. 34

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That communication led to the broker losing the client and paying compensation for inconvenience. In the second case, again the client had not understood the type of insurance cover he had bought. The client thought that his income protection policy would cover him if he was made redundant when, in fact, the policy only provided cover in the event of disability. The client blamed his broker for arranging the wrong type of cover. Fortunately, the broker had very good records which did not support the client’s recollection and so we did not uphold the complaint. However, the complaint may have been avoided altogether if the broker had taken more time and care in fully explaining the policy benefits to the client at the time the client bought the policy.

CASE ONE: FUNGI FIASCO The insured operated a natural beauty product business and imported a mixed-fungi product to make his lotions. One fungus became listed as a “new organism” and was prohibited from entering New Zealand. The insured contacted his manufacturer and requested that his mixed-fungi orders exclude the prohibited fungus. A shipment of fungi was caught at the border and quarantined by border security. The insured needed the mixed-fungi product

FSCL Case Study

immediately for his lotions so that the lotions could enter the market at the most profitable time of the year.To avoid missing this window, he had to have another batch of fungi flown to New Zealand. Unfortunately, the air-freighted fungi did not arrive in time and he was not able to sell his lotions within the window of demand. The insured lodged a business interruption claim to claim for his lost income and a marine cargo claim for the spoiled shipment. In the meantime, it came to the attention of the relevant Government Ministry that the ingredient list on the quarantined bottles of the shipped product included the prohibited fungus. The insured, with the support of the manufacturer, said that the product was incorrectly labelled and did not contain the prohibited fungus. The Ministry tested the shipment. The investigation found the prohibited fungus and then destroyed the shipment.The insured contacted his broker to ask it was possible to claim under his statutory liability policy for this further loss. After an extended period, he did not receive any updates from his broker about his claims. He began to feel increasingly desperate for information and complained to his broker. When the broker told him that he was only covered for his marine cargo claim, the insured alleged that his broker had failed to arrange the insurance that would have covered his other loss. He also felt that the service and communication from his broker was unsatisfactory. He complained to FSCL. DISPUTE The insured complained that his broker failed to provide product recall insurance that would have responded to the situation that had caused his financial loss. After complaining to FSCL, he moved his business to a new insurance broker who said he had identified a policy that would have responded to his loss. The insured also believed that his previous broker’s service, when he was making the claims, was unacceptable. He felt that he was not given any information about progress on his claims and that his broker had failed to advocate for him to the insurer. The broking firm stated that there was no insurance policy that would have responded to the loss caused by the Ministry quarantining and destroying the fungus. The firm felt that the broker had been diligent and had apologised for any mistakes that occurred throughout the claims process. REVIEW We explained to the insured that we could only require the broker to compensate him for any financial or economic loss that was a direct cause of the broker’s actions or omissions. We asked him to provide a copy of the policy that his new insurance broker said would have covered his situation. After considering the insured’s situation, we formed the view that although the policy provided his business with some extra benefits, it did not cover this particular loss. This was because the policy provided for “product recall”, which was the recall or withdrawal of the sale or use of the insured’s product. The quarantining and destruction of imported fungi was neither recall nor withdrawal.The policy also required the product to be defective for there to be cover. The fungus was as it was supposed to be, but it was now on a list of banned substance. We recommended that the insured contact his supplier to seek a remedy for his loss. The manufacturer of the fungi had erroneously confirmed in writing that the fungus being quarantined was because of a labelling issue, not because it contained the prohibited fungus. We found that his loss was the result of the manufacturer’s error, not any fault by his broker. However, although some parts of the insured’s claims had been handled diligently, we considered that, overall, the level of communication was inadequate. The broker had not responded to direct questions and had failed to keep him informed about any developments on his claims.

Cover under the insured’s statutory liability policy would only be triggered if he was prosecuted. The Ministry never laid charges against him in relation to the product and the policy did not respond to the situation.The broker was aware of this from the outset but did not explain this to the client. The communication fell below an acceptable standard and had caused the client to lose faith in the competency of his broker. RESOLUTION We found that the client’s financial loss was not his broker’s fault, but the level of service and communication was not satisfactory and caused unnecessary stress and inconvenience. We proposed that his broker pay compensation of $1000. The parties accepted our proposed resolution.

CASE TWO: GOOD WRITTEN RECORDS SAVE THE DAY The insured believed he had arranged income protection cover for redundancy in 2012 through an insurance adviser who worked for a large company. He did not think too much about it again until 2020 when he was made redundant. He contacted his insurer and discovered that the redundancy income protection cover he thought he had arranged, was in fact disability income protection cover. When he was unable to resolve the complaint directly with the adviser, he referred the complaint to FSCL. DISPUTE He complained that his adviser had failed to follow his instructions. He would never have asked for disability income protection cover because he already had disability cover through another provider. He also said that English was his second language and he may not have understood the word “redundancy” when he applied for the insurance. However, he said he certainly told the adviser that he wanted insurance to cover him if his employer “got rid of me”. The adviser’s company replied that the adviser the client spoke to in 2012 no longer worked for the company, but all the records related to disability cover, not redundancy cover. The insurer had sent him both the policy and a summary setting out the cover available. All the information related to disability. The company also said that the client did not tell it about the existing disability cover he had in place. He had only mentioned a life insurance policy through a bank. He had not asked for a comprehensive insurance review and the advice had been limited to disability insurance cover. REVIEW It is not unusual for us to have to evaluate events that happened a long time ago. We were fortunate in this instance that the adviser had kept clear records. The written records contained no reference to redundancy cover in either the fact find or the actual insurance application. The client obviously did not have written records to fall back on. We did give considerable weight to his recollection, given that this would have been an important and unusual event in his life. However, the written record was overwhelming, particularly the insurer’s letter, which set out clearly and in a straightforward manner the cover he had purchased. We considered that if he had read this letter, as well as the letter from the adviser, he would have been in no doubt that he had purchased disability cover. If he had realised the mistake in 2012, the misunderstanding would have been rectified within the insurer’s “free look” period. We did take into account that English was his second language, but noted that the adviser had recorded on the form that he was very well qualified and held the equivalent of a tertiary education. RESOLUTION We were unable to uphold the complaint. The client was very disappointed but agreed to discontinue his complaint. www.covernote.co.nz

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IFSO Case Study

WHEN THE CRACKS BEGIN TO SHOW T

he Fair Insurance Code was developed by the Insurance Council of New Zealand (ICNZ) and applies to all ICNZ members. It encourages good conduct and professionalism and describes how the relationship between insurers and their customers should work. The most recent version of the Fair Insurance Code came into effect on April 1, 2020. In the following complaint, vibration from road works caused damage (cracking walls) to the insured’s home. While her house insurance claim was initially accepted, the insurer later reversed the decision and declined the claim. She complained. The role of Insurance and Financial Services Ombudsman (IFSO) Scheme is to apply the Fair Insurance Code. As part of the complaint investigation, the IFSO scheme case manager considered what amounts to a breach, and a significant breach of the code. THE CASE In February 2017, the woman made a claim for cracking walls in her house caused by vibration from roadworks. In April 2017, the insurer accepted the claim. However, as the roadworks were ongoing, the insurer confirmed it would undertake temporary repairs, monitor the situation, and follow up with the construction company about its liability.

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Temporary repairs were undertaken to the exterior cladding. However, the job was incomplete as the builder told the insurer he did not have access to a cherry picker, so could not seal the second floor. Ongoing monitoring of the cracking continued, with the insurer paying the costs for experts. In February 2018, the insurer reversed its position. They informed the policyholder about the policy exclusion for costs or claims directly or indirectly related to vibration. She was also told recent expert evidence that suggested water egress into the house raised questions about whether it was a leaky home. The insurer said it was now declining her claim based on the vibration exclusion. However, the insurer offered to continue to investigate the claim on the basis of holding the road construction company responsible. She made a complaint. As a member of ICNZ, the insurer needed to meet the standards in the Fair Insurance Code. During the complaint investigation, the IFSO Scheme found the insurer could rely on the vibration exclusion to decline the claim. However, the IFSO Scheme had serious concerns about the delays, and the lack of transparency and follow-up relating to incomplete repairs. These concerns amounted to a

IFSO Case Study

significant breach of the Fair Insurance Code. After discussions with the IFSO Scheme, the insurer agreed it had significantly breached the code. The insurer provided a detailed apology and offered the insured an unconditional ex-gratia payment of $50,000 in recognition of customer service issues and Code breaches, and $5,000 towards hers legal fees. She accepted the offer and apology. The IFSO Scheme determined the significant breach was resolved. Complaint settled. IFSO AND THE CODE When considering breaches of the Fair Insurance Code, the IFSO scheme’s dispute resolution process aims for resolution. If a significant breach of the code is found, IFSO can ask the insurer whether it wants to resolve the significant breach, giving it the opportunity to try to make it right with the customer, within its own internal process. If significant breaches remain unresolved, IFSO will refer these to the ICNZ Code Compliance Committee. The ICNZ considers a significant breach of the code to be a material breach of any provision in the code – or a series of breaches of the code that, taken together, are material – with the potential to bring the insurance industry into disrepute.

In this case a signifcant breach was found due to the delays and poor process. In the words of the code, the claim had not been resolved quickly, fairly or transparently. The insurer was given the opporunity to resolve it. THE RESOLUTION What amounts to a resolved significant breach will vary case by case. However, if mistakes have been made, the best approach is to be open and to accept and acknowledge the mistakes and provide evidence that those mistakes will be remedied. This case is a good example of that acknowledgement. The insurer provided a detailed apology, without reservation. The apology expressed sincere regret for unacceptable conduct. It accepted the significant breach of the code, and it accepted the claim was not dealt with in a timely, transparent, or fair manner. The insurer also accepted its claims process had caused the customer extra stress and offered to continue to deal with the claim on a without prejudice basis. It confirmed that, if the failure to undertake the repairs caused further damage, it would pay for that. The insurer also offered a $50,000 ex-gratia payment. The complainant accepted the offer and apology, IFSO determined the significant breach had been resolved. www.covernote.co.nz

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Ask an Expert

Coronavirus and travel QUESTION… We appear to have an unusual situation with travel policies and their response to the coronavirus. In general terms, the current advice is as follows. For any travellers proceeding with travel plans, there is no coverage provided due to exclusions for pandemics or in some cases, known events. This is, of course, understandable because the Insurers consider the risk too high to cover. However, with the exception of China, and in some cases, limited to specific areas within China, should a traveller decide to now cancel their travel plans to, say, Italy, because they accept the travel insurer's expert opinion that it is financially too risky to travel currently, then there is likely no cover for nonrefundable cancellation costs. I believe this is considered to be a disinclination to travel.. Might this be a Fair Trading Act breach? Any thoughts or ideas greatly received.

Credit card definition QUESTION… Is a "fuel card" deemed to be the same as a "credit card" ? Client has had a fuel card stolen and used. We are trying to put a claim under a crime policy but there is not definition under the policy for what a credit card is deemed to be under the policy.

REPLY… CROSSLEY GATES The law is that words not specially defined in a policy are given their ordinary dictionary meaning (as a starting point). The Collins English Dictionary defines 'credit card' as: "a card issued by banks, businesses, etc, enabling the holder to obtain goods and services on credit" So long as the fuel card provides credit (and is not a debit card only) then it seems to fit the definition.

REPLY… CROSSLEY GATES It is hard to respond to your query without specifics However, I agree with your sentiment that underwriters can’t have it both ways. As I see it, for people with an existing policy in place, albeit they haven’t started their journey yet, an underwriter can’t vary the terms of that policy without the insured’s agreement. So whether there is cover for loss of deposits will be governed by the policy’s existing terms, including its exclusions. In relation to buying a policy now, the underwriter is, of course, free to decide whether to insure a journey or not, and if so, on what terms, like any insurance policy. REPLY… PAULINE DAVIES It seems that the insurers are aware of the conundrum. This came out yesterday from Allianz in relation to the policy sold by Helloworld Travel: "The general exclusion for epidemic and government intervention took effect from 10am Friday February 28, 2020. However, we are not currently applying these general exclusions for medical and emergency medical transportation claims related to Covid-19. “Although travel insurance policies generally exclude losses caused by events that were known or foreseeable at the time the policy is purchased, we are now considering valid medical and emergency transportation claims related to Covid-19 irrespective of when customers purchased their policy, when they depart on their journey and where they are travelling worldwide...We are offering customers directly impacted by Covid-19 the ability to amend the travel dates of their policy at no charge so they can assess their travel plans as the situation evolves."

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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Ask an Expert

Who to take directions from? QUESTION… My clients have recently separated, and their house and contents policies are in joint names. One party has moved out into another jointly-owned home. The separation, after many years of marriage, is far from a happy one, and I recently received instructions from the person remaining in the home to cancel both policies, several weeks after renewal, as she has made other arrangements and insured elsewhere. Whilst seeking confirmation from the other joint owner, I advised that I would not be in a position to accept cancellation instruction until such time as I received such confirmation from the other joint owner, and outlined the “other Insurance” clauses in both the existing and “new” insurer's wordings which could jeopardise, or at least delay, any claim acceptance, and suggested deferment of the new insurance until resolved. Neither party is inclined to seek legal advice, (due to cost?) or indeed to try to resolve, and there is apparently some form of legal impediment to correspondence between the parties other than via their legal advisers. The other owner has now advised me that they do not agree to the cancellation and 'status stands until a judge decides'. I'm somewhat stuck in the middle of this issue between the two parties, and was just enquiring whether there is anything else anyone can suggest that I ought to be doing?

Tenants and carpet QUESTION…

We have a claim with significant damage, but not yet looking like a total loss, on a six-month-old digger. While the repairs are being undertaken by the official manufacturer, they are saying that the repairs will void any ongoing manufacturer’s warranty. If the repairs are completed, the loss of the manufacturer’s warranty is a big concern to the client. Does this have to be considered by the insurer when considering the claim costs?

A tap was left on in a commercial building. Flooding caused saturated carpets and damage to walls and skirting boards. The LA is suggesting split the cost 50/50 as the tenant is responsible for the carpet per the lease, ADLS 1993 (2) clause 10.1 (d) Keep all floor coverings clean and replace worn or damaged floor coverings with coverings of similar quality when reasonably required by the landlord. However, clause 10.1(a) says “keep and maintain the interior of the premises including the landlord's fixtures and fittings in the same clean order, repair and condition as they were in at the commencement of this lease and will at the end yield up the same clean order repair and condition. In each case the tenant shall not be liable for damage by fire...flood...inevitable accident or any risk against which the landlord is insured.... I would have thought clause 10.1(a) would apply, e.g. the landlord has the building insured for flood/any risk. There is the question of the carpet ownership, which I think the tenant originally paid for, but now becomes a landlord's fixture.

REPLY… CROSSLEY GATES The loss of the warranty will be a consequential loss to the insured damage to the digger. Therefore, it is unlikely to be covered under the policy as consequential losses are usually excluded. If the repairs are being done by the manufacturer, it seems odd that the manufacturer won't stand by its original warranty (and by implication, stand by its own repairs). I suggest your client applies commercial pressure.

REPLY… CROSSLEY GATES Property belonging to both the lessor and lessee was damaged, so each can claim under its own policy for that damage. Is the issue trying to decide which property belongs to which party? If they are both insured with the same insurer, this seems academic as long as each party is comfortable with its settlement? The application of the terms of the lease and the Property Law Act are usually only relevant if one or both insurers subrogate and try to hold the other party liable.

REPLY… CROSSLEY GATES No, you have done everything correctly.You act for them both and you owe a duty of care to them both. You should not carry out any further instructions until they both agree to them. The fact that they cannot agree is not, of course, of your making.

Loss of warranty QUESTION…

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Here’s how to burst your bubble Going back to ‘normal’ may not be as easy as you expect By Rod Severn

I

need to practice social distancing…from my refrigerator! Here at the Professional IQ College we used to only worry about Level 5. Now we have a whole new range of levels to be concerned about. Still, most of us have managed to find the funnier side. My body has absorbed so much hand-sanitiser and disinfectant, when I pee, I clean the bowl as well! What a strange and unique time we find ourselves in. This morning I saw a neighbour talking to her cat. It was obvious she thought her cat understood her. I came into my house, told my dog..... we laughed a lot. You’ve probably all been sent these jokes already but humour is a great foil for tough times. Some of you will be doing it tougher than others. For those of you with children at home, how’s that going? We have been going spectacularly well. On the first day of home schooling we suspended two students for fighting and fired the teacher for drinking on the job. On the third day, one of these little monsters called in a bomb threat! On day six, I heard one of them say, “I hope I don’t get the same

teacher next year!” By the way try, on your jeans every few days. Pyjamas will have you believe everything is fine in your kingdom. As we approach level 2 of this pandemic (and please behave yourselves so we do not have to go back to level 3 or 4) we will be faced with many new challenges. I want to focus on the emotions of being allowed to return to an environment that is outside of the world we have lived for the past six weeks. Bursting your bubble will be a real challenge for some. For others, the chance to get away from their enforced bubble and join the “real world” can’t come fast enough. For those who are nervous, we need to be very aware of the reasons why. We need to allow this emotion to be real and not minimised or ridiculed. Like me, there are many in the population who have compromised health issues. (I have no spleen thanks to a very nasty racing boat accident many years ago). These people will need to be catered for in our brave, new world. www.covernote.co.nz

41

Can they continue to work from home when everyone else is in the office? Does that compromise the office structure and flow? What does that do to your IT systems? OTHER QUESTIONS THAT NEED ANSWERS MIGHT BE: 1) Is your office set up for social distancing? 2) Is there segregation in the communal areas like: • Photocopier/printer room • Lunchroom or breakout room – can you make changes in your breakout areas i.e. remove some tables and chairs to allow for social distancing rules? • Can you stagger breaks so that fewer staff are in the breakout rooms at one time? • Do you share toilet facilities with other businesses or offices? If so, how are you going to ensure everything is clean after each visit? • Is there someone in the office responsible for ensuring all the above issues are being addressed? i.e. front door handles, common grab rails, reception desks etc. • Do you have enough provisions of cleaning/sanitising materials on site so staff can undertake additional sanitising as required? • Do your staff car-pool? Is it okay to allow this? • Do you have a protocol in place to allow for non-contact pick-up and delivery with couriers? • Can you set your staff up into two (or more) teams so they come into work on alternate days and teams don’t cross over until the risk of transmission is gone? Many things will never be the same again, and that’s not necessarily a bad thing, but plenty will. It is up to each of us to manage our new environment as best we can. We, at the Professional IQ College, are here to help where we can. I have fielded many questions recently about the Training Agreement rebate, and the possible impact on the eight-month programme of the

Government announcement that they are pushing the start date of FSLAA back to at least March next year. The long and short of it is: it has no bearing at all on the timeframe allotted to complete your Level 5. They are not linked at all. No additional time has been allowed to complete the qualification with regard to the rebate. Once you go past the allocated time (we do have a little bit of wriggle room but not much) the rebate is forfeited. The extension relates to the delay of the legislation and the implementation of the Transitional Licensing and nothing else. However, I am very conscious of the fact some of you have been impacted by the lockdown. If so, please contact us to see if we can give you additional time to complete your studies past the eight months. Some of you are waiting for Version 2 of Level 5 to be available. We are delighted to announce, we are ready to launch Version 2 now, so please contact the college for more information. In a nutshell, the differences between Version 1 and 2 is that the Financial Advice piece and the six-step process have been removed from Core and placed into the relevant V2 strands. This has reduced the size and complexity of Core but increased each of the Strands accordingly. This makes for a better flow and easier qualification. The other piece that has changed is that there is a new Unit Standard in V2 covering Regulations and Legislation that is not in V1. At some point in the future (in keeping with the new FSLAA rules), everyone who completed V1 will need to do this bridging paper. Lastly, I am immensely proud and grateful to all my staff at both IBANZ and PIQ. They have worked tirelessly from home to keep both businesses running efficiently and effectively. To Robyn, Karen, Sylvia, Zeeshan, Marianne, Lisa and June, a huge thank you. Please call us for more information. Stay well, New Zealand. Cheers from me and the staff at PIQ and IBANZ. Remember, be kind to customer service people - some are doing it tough too. Rod

Big changes are coming to our industry. Are you equipped to weather them? Apex are prepared to meet the demands of a changing world. Considering selling your business or working under our licence? Let’s talk options. Email jamesm@apexinsurance.co.nz or phone 021 625 634 42

June 2020

DATE

TITLE

PRESENTER

WHERE

TIME

COURSE DESCRIPTION

10

Mindset & Motivation in Times of Challenge

Natalie Cutler-Welsh

Webinar

10.3011.30

More details to come.

11

Tips to reduce stress & avoid burnout

Shelley Gawith

Webinar

10.3011.30

So we all know about workplace stress and emotional stress, but many of us do not know the impact that inflammation has on our bodies and how much of a stress burden this places on our bodies. Remember our bodies are with us 24/7 days a week, so if there is an internal stress burden, than this load is massive.

16

Microsoft Office Mastery: How To Free Up So Much Time Working With MS Word & MS 365 Word

Debbie MayoSmith

Webinar

10.3011.30

Gaelene will share the three core areas that must work in harmony for you to have all the Respect, Control and Freedom you want in your business to create Team Flow.

17

What Do I Bring to the Negotiation Table?

Trevor Slater

Webinar

10.3011.30

Why are good outcomes from a negotiation sometimes reached and other times not, and there is no clear explanation for this happening? One reason may be the unconscious behavioural traits you bring to the negotiation table.

18

Personal Branding - How to win people over in 1/7th of a second

Kieran T. Bird

Webinar

10.3011.30

Personal Branding is about much more than just fashion tips from Gok and social media promotion. It takes 1/7th of a second for the human brain to classify other as attractive or otherwise, and from there we extrapolate wildly to assess trustworthiness and likeability. This session explains how to take advantage of this human bias in order to increase personal authority and trustworthiness.

23

Understanding Tomorrow's Technology Today

Steve MayoSmith

Webinarr

10.3011.30

Technology continues to evolve at a rapid pace, infiltrating all aspects of our lives and work. The average person now spends six hours and 42 minutes online. However, the changes you have seen so far pale in comparison to what’s heading your way.

24

Gross Profit: Don't get it wrong (Calculating business interruption sums insured)

Mark Anderson

Webinar

10.3011.30

This session will cover the importance of gross profit when putting a business interruption programme together.

25

How to plan creatively for marketing after the pandemic

Clifton Warren

Webinar

10.3011.30

In this webinar we’ll explore how to get ready for what’s next in a radically altered business landscape.

2

Business Risk Analysis

Trevor Slater

Webinar

10.3011.30

Do you know the risks to your success? To reach a destination or achieve a goal you must have a plan and/or a map of how you are going to get there.

8

Keeping Positive: The 14 'Secrets' of the Slow Release Dopamine Diet

Kieran T. Bird

Webinar

10.3011.30

Attendees will learn 14 different techniques to increase the production of dopamine (‘happy chemicals’) in their brain in order to be happier and more enthusiastic about life, no matter what challenges they face.

14

Grow. Convert. Keep Clients - Part One

Debbie MayoSmith

Webinar

10.3011.30

How To Write, Send, Manage The Perfect Update/Newsletter. Part One – Strategy. Planning. Content.

15

The Appointment: What to Say and Do During a Faceto-Face Meeting with a Prospective Client

Clifton Warren

Webinar

10.3011.30

An initial face-to-face appointment with a qualified prospect is like gold. It is hard to get, but extremely valuable. Because of the potential value of every face-to-face appointment you need maximise this golden opportunity. Learn exactly what you need to say and what you need to cover to get in front of more prospective clients.

16

Business Interruption – Importance of cover for Additional Increase in Cost of Working

Mark Anderson

Webinar

10.3011.30

BI is more than just the insurance of Gross Profit. Cover is automatically provided for Increased Costs as part of the Gross Profit item. But there are limitations to what can be claimed under this item – often referred to as Item 1(b).

21

How to increase your resilience

Shelley Gawith

Webinar

10.3011.30

More details to come.

22

Risk - non disclosure

Karen Stevens

Webinar

11.0012.00

More details to come.

23

Grow. Convert. Keep Clients - Part Two

Debbie MayoSmith

Webinar

10.3011.30

How To Write, Send, Manage The Perfect Update/Newsletter. Part Two – Distribution Methods. Response Management

28

Using your strengths for success

Natalie Cutler-Welsh

Webinar

10.3011.30

More details to come.

4

Excel Top Tips

Debbie MayoSmith

Webinar

10.3011.30

Super time & stress-saving tips and tricks for the everyday user: covering lists, printing, client data, setup and much more.

5

Learning from Lockdown – Tips and Advice for working on-line and on the telephone.

Trevor Slater

Webinar

10.3011.30

More details to come.

6

Sum insured and underinsurance

Karen Stevens

Webinar

11.0012.00

More details to come.

18

How to have the best brain health

Shelley Gawith

Webinar

10.3011.30

More details to come.

19

Business Interruption – Claim example – and how well would your client’s cover have performed?

Mark Anderson

Webinar

10.3011.30

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

20

The Six Elements of Six -to Seven-Figure Producers

Clifton Warren

Webinar

10.3011.30

Any financial services professionals can build a successful business. Many fail however, to reach their full potential because they simply don’t know how to build a business, or they build a business that limits their growth.

25

Win More Business: Powerfully Persuasive Presentations.

Debbie MayoSmith

Webinar

10.3011.30

A fabulous in-depth look at creating winning documents. We primarily cover PowerPoint and Word.

June

July

August

43

Contacts: IBANZ Corporate Company List PIQ BOARD

IBANZ BOARD Roger Abel (Vice President) Rothbury Group Limited PO Box 1596 Shortland Street Auckland 1140 Mob: 021 952 230 roger.abel@rothbury.co.nz Tony Bridgman (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 NZ Insurance Advisernet NZ Ltd PO Box 37670 Market Road Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz

Allan Daly Managing Director Avon Insurance Brokers PO Box 3923 Christchurch Mail Centre Christchurch 8140 Tel: 03 3710301 Mob: 0275 358128 allan@avoninsurance.co.nzz Duane Duggan (Immediate Past 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@ crombielockwood.co.nz Ramesh Mavani (Secondment) Manager Insurance People (Fire & General) Limited PO Box 47218 Ponsonby Auckland 1144 Tel: 09 360 5616 Mob: 021 078 3465 ramesh.mavani@ insurancepeople.co.nz Jo Mason (Vice President) Chief Executive Officer NZ Brokers Management Ltd

PO Box 334012 Sunnynook North Shore City Auckland 0743 Tel: 09 869 2785 jom@nzbrokers.co.nz Angus McCullough General Manager Marketing & Chief Officer Aon New Zealand PO Box 1184 Shortland Street Auckland 1140 Tel: 09 3629059 angus.mccullough@aon.com William O’Brien Manager Montage General Insurance PO Box 8307 Symonds Street Auckland 1150 Tel: 09 373 0700 Mob: 021 737572 william@mont.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

STAFF

David Crawford (Chair) Director, New Zealand Insurance Advisernet NZ Ltd PO Box is 37670 Market Road Auckland 1151 Tel: 09 926 2062 Mob: 021 905 537 dcrawford@ianz.co.nz Fred Dodds Waikanae Mob: 021 998 906 dodds@nzemail.net.nz Angi Mann Contract Compliance and Learning and Development Specialist Auckland Mob: 021 293 1724 angim@financialadvice.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 Gary Young Auckland Mob: 027 543 0650 gary@ibanz.co.nz

IBANZ Rod Severn CEO Professional IQ College DDI: 09 306 1736 Mob: 021 749 202 rod@professionaliq.co.nz

Zeeshan Ahmad Student Liaison DDI: 09 306 1739 zeeshan@professionaliq.co.nz

Lisa Herbison Student Liaison DDI: 09 600 5712 lisa@professionaliq.co.nz

Mel Gorham Chief Executive IBANZ DDI: 09 306 1734 Mob: 021 0852 5568 mel@ibanz.co.nz

Sylvia Heywood Academic Manager Professional IQ College DDI: 09 306 1737 sylvia@professionaliq.co.nz

Marianne Taljaard Student Liaison Manager DDI: 09 306 1731 marianne@professionaliq.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

June Wang Student Liaison DDI: 09 306 1735 june@professionaliq.co.nz

Physical address: Unit 4D, 2B William Pickering Drive, Rosedale, Auckland 0632 Mailing address: PO Box 302504, North Harbour, Auckland 0751 Toll free: 0800 306 173 Website: www.ibanz.co.nz

June 2020

WANT YOUR VERY OWN COPY OF 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 TO ADVERTISE... Contact Robert Johnson on: e-Mail: robert@benefitz.co.nz Phone: 09-477 4702 Mobile: 0274-970-712 44

June 2020

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, Auckland.

Brokers tackle Covid-19 Regulatory cha on the horizon nges Insurers tackle

Covid-19

www.ibanz.co.nz

visit www.cov ernote.co and keep up-t o-date with .nz news and artic live les from IBANZ it's members , and the indus try.

Contacts: IBANZ Corporate Company List IBANZ CORPORATE COMPANY LIST Abbott Group

Christchurch

Insurance Design Limited

Warkworth

Adams Trimmer Insurance 1992 Ltd

Whangarei

Insurance People (Fire & General) Limited

Auckland

Advance Insurance Services Ltd

Paeroa

JRI Limited

New Plymouth

Affiliated Insurance Brokers Ltd

Wellington

Luxor Insurance Brokers Ltd

Auckland

AIB Group Insurance Ltd

Lower Hutt

Malcolm Flowers Insurances Ltd

Taupo

AIM Associates Ltd

Auckland

Marsh Ltd

Auckland

Albany Insurance Services Ltd

Albany Village

Matt Jensen Insurance Brokers Ltd

Taupo

Amicus Brokers Ltd

Christchurch

McDonald Everest Insurance Brokers Ltd

New Plymouth

Andrew Scragg & Associates

Manukau

Montage General Insurance Ltd

Auckland

Aon New Zealand

Auckland

Multisure Ltd

Auckland

Apex General Ltd

Auckland

MW Insurance

Auckland

Atlas Insurance Brokers Ltd

Christchurch

National Credit Insurance (Brokers) NZ Ltd

Auckland

Austinsure Ltd

North Shore City

Nelson Marlborough Insurance Brokers Ltd (NIB)

Nelson

Avon Insurance Brokers

Christchurch

Neville Newcomb Insurance Brokers Ltd

Auckland

Baileys Insurance Brokers Ltd

Auckland

Northco Insurance Brokers Ltd

Masterton

Bay Insurance Brokers Ltd

Tauranga

Northcrest Insurance Brokers Ltd

Auckland

Bridges Insurance Services Limited

Hamilton

O'Connor Warren Insurance Brokers

Tauranga

Broker Direct Services Ltd

Christchurch

OFS Insurance Brokers Ltd

Dunedin

BrokerWeb Risk Services Limited

Auckland

Omni Fire & General Ltd

Auckland

Builtin New Zealand Ltd

Tauranga

Paramount Insurance Agencies Ltd

Auckland

Cambridge Insurance Brokers Ltd

Cambridge

Partridge Advisory Limited

Auckland

Capital Risk Solutions Limited

Wellington

Paterson & Co NZ Ltd

Auckland

Card Marketing International Ltd

Wellington

Penberthy Insurance Ltd

Auckland

Cartwright General Insurance Limited

Ashburton

Peter C Cranshaw Insurance Broker Ltd

Levin

CBA Insurances Limited

Tauranga

PIC Insurance Brokers Ltd

Manukau

Certus Insurance Brokers NZ Ltd

Auckland

Primesure Brokers Ltd

Auckland

Coast Insurance

Whangaparaoa

Property and Commercial Insurance Brokers

Feilding

Coastal Insurance Brokers Ltd

Papamoa

Protekt Insurance Brokers 2008 Ltd

Auckland

Commercial & Rural Insurance Brokers Ltd

Alexandra

Provincial Insurance Brokers Limited

Masterton

Crombie Lockwood (NZ) Ltd

Auckland

PSC Connect NZ Limited

Auckland

Dawson Insurance Brokers (Rotorua) Ltd

Rotorua

River City Insurance Brokers 2000 Ltd

Wanganui

Edward Ruys & Co Ltd

Hamilton

RMA General Ltd

Warkworth

Emerre & Hathaway Insurances Limited

Gisborne

Rothbury Group Ltd

Auckland

Frank Risk Management

Cambridge

Runacres Insurance Ltd

Christchurch

FundAGroup Insurance Brokers Limited

Auckland

Seneca Insurance Brokers Ltd

Auckland

Grayson & Associates Ltd

Auckland

Sit & Blake Limited

Auckland

Gregan & Company Ltd

Papakura

South Pacific Insurance Brokers Ltd

Auckland

GSI Insurance Brokers

Waitakere

Sweeney Townsend & Associates Ltd

Rotorua

GYB Insurance Brokers Ltd

Lower Hutt

Thames Valley Insurance Ltd

Thames

Harden & Hart Insurances Ltd

Auckland

The Advisers 1 Limited

New Plymouth

Hazlett Insurance Brokers Ltd

Christchurch

Thorner General Insurances Ltd

Upper Hutt

Honan Insurance Group (NZ) Ltd

Auckland

Towes Insurance Brokers Ltd

Te Aroha

Hood Insurance Brokers NZ Ltd

Auckland

Trevor Strong Ins Ltd

Auckland

Hurford Parker Insurance Brokers Ltd

Hastings

Vercoe Insurance Brokers Ltd

Morrinsville

Hutchison Rodway Ltd

Auckland

Vision Insurance (S.I.) Ltd

Ashburton

ICIB Limited

Auckland

Waikato Insurance Brokers Limited

Hamilton

ILG Insurance Brokers

North Shore City

Wallace McLean Ltd

Auckland

Ingerson Insurances Ltd

Wellington

Wanganui Insurance Brokers Ltd

Wanganui

Insurance Advisernet NZ Ltd

Auckland

Willis Towers Watson

Auckland

Insurance Brokers Alliance Ltd

Invercargill

www.covernote.co.nz

45

The world may have changed. Our appetite hasn’t.

While the world is still working out how to operate in this post Covid-19 environment, our passion for helping NZ business hasn’t changed. And being New Zealand’s only locally based specialist liability insurer means we are Kiwi at our core. We understand how Kiwi’s operate, and we have the ability to make quick decisions in the best interests of New Zealand businesses. You can count on us to be ready to help. Because for VL, it’s business as usual.

veroliability.co.nz

New Zealand’s leading liability insurer