Minister warns insurers
Finance Minister Grant Robertson told insurers they must not allow a class of uninsured homeowners to emerge.
Insurers had been moving to individually pricing risk on homes leading to some homeowners seeing sharp increases in premiums, and even some homeowners who couldn’t get insurance at all, he said at the Insurance Council of New Zealand conference in Auckland yesterday.
Part of insurers’ social licence to operate was not leaving New Zealanders without cover, Robertson said, and the Government was investigating the shift, which was begun by Tower last year.
‘‘I’m particularly concerned about the impact of the move to more granular risk-based pricing, which could reduce the availability and affordability of property insurance for some New Zealanders,’’ Robertson said.
If these trends continued to reduce property insurance coverage, he said, it would reduce the country’s ability to rebuild after natural disasters.
‘‘I would hate to imagine the recovery of Christchurch, if we had not had such high rates of insurance coverage,’’ he said.
While stopping short of telling insurers they would face government intervention to ensure widespread access to house insurance, especially in earthquake-prone Wellington, he said: ‘‘The Government is currently investigating pricing and access issues in the property insurance markets and the drivers behind those changes.’’
He also told insurers they had to do much more to ensure the public understood their insurance, and had help from insurers to reduce and manage their risks.
He said some owners of Wellington flats had found themselves facing huge increases in premiums, if they could get cover at all.
‘‘In a number of cases premiums have doubled, tripled and even quadrupled. In some cases insurance has almost been impossible to find.’’
Robertson said some flat owners had paid to bring their homes up to 100 per cent of earthquake code, and still found their premiums going up massively, due to their postcode.
Reserve Bank of New Zealand (RBNZ) governor Adrian Orr, speaking at the same event, had a different warning for insurers, telling them to be ready to prove they were competent and treating customers well.
Orr said RBNZ had lost a bit of its faith in the insurance industry being able to exert ‘‘self-discipline’’ following the collapse of AMI and CBL.
After the collapse of CBL, RBNZ paid for an independent review of how it had handled the insurer.
Orr said the report found RBNZ had been too trusting of assurances made by CBL directors. The International Monetary Fund had made a similar criticism, Orr said.
The regulator had been investing in improving its capability to regulate insurers, and following its joint review of life insurers, which found widespread under-investment in systems and failure to focus on policyholders’ interests, he wrote to the directors of all general insurers.
‘‘We wrote . . . and said, ‘Please, take heed of these results. Please, review your own systems, outcomes, activities, policies and procedures,’ and we are going to come back and hear why we’re confident that it’s not in the general insurance sector as it is with the issues we found in the life insurance sector.’’
‘‘In some cases insurance has almost been impossible to find.’’
Finance Minister Grant Robertson