The insurance industry is going through a period of significant change in response to the natural disasters experienced both in New Zealand and around the world over the past two years.
Balancing everyone’s needs in this environment is challenging. NZI are determined to maintain their leading position so that they can continue to support you when you need them the most. That means having the right products available and being there to pay claims if the unexpected happens.
The challenges faced by the industry include:
Higher reinsurance costs – that’s the cost of the insurance cover taken out with global reinsurers which enables NZI to offer protection against major natural disasters
Significant increases in non-controllable elements in premiums – the EQC levy and taxes such as the Fire Service Levy and GST combined can contribute to over one third of the cost of your total premium
Regulatory changes - the Reserve Bank of New Zealand requires insurers to hold much more capital and reinsurance to cover the potential costs of future major natural disasters. While the level of cover helps to ensure a stronger industry, holding reserves and reinsurance at such increased levels means a significant increase to the cost of doing business
Also, as major events happen, the insurance industry learns more about costs and risks. To ensure we’re here to support you in the long term these need to be incorporated into our products and pricing.
Excess and other policy changes
To help keep premiums as affordable as possible NZI have made some changes to your home policy including adjusting certain excesses and clarifying how claims are to be settled based on the floor area noted on your policy. Policy changes will be outlined within your renewal documentation.
Why you need insurance
Insurance is vital to help families and individuals overcome the financial impact of unexpected events and the challenges the changing world and environment can present.
As a prudent insurer, NZI needs to make sure that premiums properly reflect the costs and risk associated with the cover being provided.
NZI recognise the impact of price changes on you and strive to retain the right balance between keeping our premiums affordable, ensuring they offer quality products whilst maintaining the financial strength that enables them to continue paying claims in the long term.
Keeping costs down
NZI is conscious of the impact premium increases have on clients so they’re focused on controlling their own cost of doing business. NZI is also committed to supporting you with the best insurance options. There are a number of ways you can manage your insurance costs:
Voluntary excesses – if you don’t claim regularly, you could choose a higher excess (ie, the first amount you pay when claiming on your insurance) which can NZI to offer discounts on your premium.
Instalment payments – spreading the cost of your premium over the year helps spread the financial impact (Note: this will result in a slightly higher amount being paid overall).
We appreciate these are challenging times but we encourage you to talk with your broker to ensure you have adequate cover in place and are aware of the options available.
Summary
The changes being made are a necessary response to the high cost of the natural disasters that have hit New Zealand and other parts of
the world over the past few years.
They are also associated with:
- The need to price more accurately based on the costs we incur, the services we offer and the understanding we have of the risks being insured against
- The rising cost of reinsurance
- New regulatory requirements
Making these changes in response to these challenges is a step to ensure that NZI remains at the forefront as a provider of insurance
solutions that meet your needs.
