IN THE FIRING LINE

New Zealand’s biggest insurer has well and truly bounced back from the Canterbury earthquakes, but the same cannot be said for all of its customers. Richard Meadows reports.

Jacki Johnson, boss of insurer IAG, on claims, delays and making a

difference

‘‘YOU CAN imagine – I can sit in an airport, people know who I am, and everybody wants to tell the story of their claim,’’ says Jacki Johnson, chief executive of insurer IAG New Zealand. ‘‘I don’t mind that; I love engaging with the community.’’

Unsurprisingly, some of that engagement can be fairly heated.

Australian-owned IAG dominates the local insurance market, with its brands AMI, NZI, State and Lumley accounting for up to two thirds of all home and contents and vehicle policies.

In the wake of the Canterbury earthquakes, it topped a ‘‘worst insurer’’ list, while journalists’ inboxes overflowed with horror stories from its customers.

On Tuesday, IAG NZ took another pasting over its enormous 56 per cent leap in pre-tax profit to A$183 million (NZ$202.5m) during the year to June 30.

As a spokeswoman for advocacy group Insurancewatch.org.nz put it; ‘‘many Cantabrians facing more winter weather in broken houses would find [the profit] obscene.’’

To top things off, Johnson is also president of the Insurance Council; ‘‘which is not an easy gig when everyone hates insurers’’. She’s joking, sort of. Three-and-a-half years have passed since the events of February 22, 2011, and it’s been almost four years since the first major quake rattled the city.

While IAG is back to business as usual, homeowners’ premiums are still rising, and thousands are still waiting for claims to be settled.

The industry has blamed the price hikes on higher costs, as reinsurers woke up to the real risks of an island nation straddling two tectonic plates. The necessity for insurers to carry higher reinsurance cover was driven home by AMI having to be bailed out by the government when it didn’t have enough. AMI was later bought out by IAG in 2012.

‘‘We’ve returned [to pre-quake profitability], but the conditions in the marketplace, globally and locally, are no longer like they were before the earthquake,’’ says Johnson.

Insurers are now licensed by the Reserve Bank, which has imposed its own solvency requirements.

IAG NZ will ultimately need enough reinsurance to cover a one-in-1000-year catastrophic event, meaning there’ll be further costs to come.

The good news is that resinsurance prices have flattened over the past few years, says Johnson.

‘‘I don’t think I’d be foolish enough to think we’d ever get a decrease, but flattening out. It means that as we’re buying more, we’re not buying it at an accelerating cost.’’

What that means for

‘They want it off their books. If you’re sitting in Munich, we’re a little bit of a nuisance value. We’re a very small part of their world.’

consumers is in the next year, premiums should rise only by the inflation rate ‘‘at worst’’, Johnson says.

‘‘What we’re trying to do is manage our costs so we don’t keep those pricing jolts coming through,’’ she says.

However, that doesn’t include the portion outside insurers’ control – including the Earthquake Commission (EQC) levy, Fire Service levy, and GST.

With the worst of the price hikes over and done with, the focus is squarely on the rebuild.

Johnson is no stranger to big natural disasters, having cut her teeth on them with IAG and others in her home country.

The Australian arrived here in 2010 and says despite her extensive experience, the Christchurch quakes were different.

‘‘A cyclone happens – it’s very tragic, heavy rain for a while, but you’re not as worried about your people on the ground,’’ says Johnson. ‘‘Same with bushfire; it tends to be a short, intense period.’’

IAG had around 1000 staff in the garden city, ironically as a back-up headquarters should Wellington fall.

Trying to keep people safe through endless aftershocks took its toll, says Johnson. ‘‘In the middle of the night, you’re just monitoring the app on your phone constantly.’’

Auckland-based Johnson still visits Christchurch as much as possible, usually once a fortnight.

She’s a social scientist by training, and previously treated burns victims and amputees as an occupational therapist. She’s