By Ian Mosheim, CEO - 15 Dec 2011
I’ve been asked to wrap up the year in 300 words or less, so although it’s tempting just to jump into the Christmas clichés, I will refrain from those. Equally I don’t have much room to expand.
- Earthquakes
- Rugby World Cups
- Ships on rocks
- European Union & Debt
- Insurance Premium rises
- Elections
- Future Changes to ACC
- New Regulation that governs the way Advisors act
- The Financial Markets Authority or our Licence to operate as a
Qualified Financial Entity
The short version of all of the above is you would have to be
living in a cave in the forest far from civilisation to be unaware
that it was an interesting year for Insurance.
Various Insurance companies have not been able to meet their
obligations or have withdrawn from the market with the government
(read "tax payer") needing to prop up AMI who got the reinsurance
arrangements wrong. It's fair to say the insurance landscape in New
Zealand has changed for all of us.
Premiums started climbing and have continued to do so as
Insurance companies looked for recovery of very large losses and
continued reinsurance support for our market. Why? Well I received
this paragraph from a reinsurer which puts the dollars into some
context:
"In summary, it shows that although both the Christchurch
Earthquakes and Japanese Tsunami were both large events, in
relative terms the Japanese Insurance market has a much better
ability to pay it back. Unfortunately, New Zealand has the issue of
volatility due to high level of exposure but small premium market
size.
Christchurch Earthquake Insured Losses - NZD12b (note this number
is a rough estimate as there is a range from about 8 to 15
billion) Insurance Market - NZD3b Loss Ratio
400%
Japan Tsunami Insured losses - USD35b Insurance Market
- USD103b Loss Ratio 34%. "
Please check if you insure a dwelling with us and check if the
actual area insured is correct. It appears that a significant
number in Christchurch are not. Click this link to see
what most Insurers are after or give us a call.
Ok, that was 343 words so I need to wrap up. I don't generally
pay much attention to what American politicians have said but I
liked this quote from Richard Lamm a former Colorado Governor.
"Christmas is a time when kids tell Santa what they want and
adults pay for it. Deficits are when adults tell the government
what they want - and their kids pay for it."
For whatever the Christmas break means to you and your family
enjoy.