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New Zealand Insurance Report Q3 2011
Business Monitor International, June 2011, Pages: 49
Business Monitor International's New Zealand Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on New Zealand's insurance industry.
- The government has intervened to save many households in Christchurch from losing not only their homes but their insurance cover, after AMI, which said it is the largest wholly New Zealand-owned fire and general insurer, found itself thoroughly under-reinsured.
- In March 2011, credit rating agency Standard & Poor’s revised the outlook on New Zealand’s nonlife market from stable to negative. It highlighted its expectation that the earthquakes there will affect the earnings and capital strength of the country’s insurance companies.
- The life sector is underdeveloped and needs some innovative ideas to bring it to the forefront of the consumers’ minds.
- The overall insurance sector remains fairly resilient. There are two fundamental aspects characterising New Zealand’s insurance industry in 2011. The first aspect is the outcome of several large catastrophic natural events.The country suffered significantly from earthquakes earlier this year and there were severe blizzards last winter. To highlight the scale of the country’s damage costs, according to International Insurance News, a breakdown of Ace’s estimated costs for three large individual natural events showed that the earthquake in Christchurch accounted for the largest proportion, US$115mn, while events in Australia accounted for US$80mn and the winter storms in the US for US$15mn.
The second aspect is that the life sector in particular is very underdeveloped. Life penetration in the country (ie: premiums per capita) is broadly the same as in Poland or the Czech Republic and well behind the UK, the US and Australia. Some large insurance companies that had expanded into New Zealand have gently withdrawn themselves.Product development is certainly underway and we must wait to see if the natural disasters cause the general public to have a change of heart towards life insurance. As this is unlikely, we expect life penetration to remain constant throughout the forecast period to 2015.
Non-life penetration in New Zealand is not much better but it is better.The difference is that market protagonists seem to see plenty of scope for penetration to increase. The development of new, attractively priced products is underway to meet the challenges that the country faces from nature. New products include those dedicated to compensating for similar disasters to those that have recently occurred, such as the winter blizzards that destroyed much livestock.
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