What's affecting your insurance?

Right now, the insurance landscape in New Zealand is in what we call a "hard market cycle." During such cycles, insurers generally become more conservative with risk selection, increase their pricing, and reduce their capacity for insuring certain types of risks.

So, what does this mean for you?

What this means for you is that your insurance premiums are likely to rise when it's time to renew your policy, even if your circumstances haven’t changed throughout the year. In some cases, it may also mean that it is harder to find an insurer who will offer cover.

How your broker can help

Your broker will work with you to ensure you have the right insurance solution to best protect your assets. This includes:

• Explaining how the current market situation might specifically affect your insurance policy.
• Providing quality advice on risk management, cost-saving measures and deductible options.
• Providing Insurers more detailed information as they require during a hard insurance market cycle. Generally, for commercial insurance, insurers may want to view your risk management and mitigation strategies, supply chain management and the latest property valuations. Your broker will guide you through this process and help ensure your insurance cover is tailored to your needs.

Losses from climate-related weather disasters continue to accumulate and rise year on year. As a result, insurers face the risk of a vast influx of climate disaster payout claims, driven by high claim volumes.

This risk is already a reality in New Zealand. Tens of thousands of us were affected by the Auckland Anniversary floods (being a 1-in-200-year event*) and Cyclone Gabrielle. These combined events are expected to cost the industry NZ$3.18 billion and, so far, $NZ1.08 billion representing a third of the 107,560 claims have been settled. **

Between the Auckland Anniversary flooding and Cyclone Gabrielle, most won’t be surprised to learn that it’s been an especially wet year.  In fact, the National Institute of Water and Atmospheric Research reported that the first 6 months of 2023 were the wettest half year on record for several areas in the North Island.

“Those living in Northland, Auckland, the Coromandel Peninsula, Gisborne, and Hawke’s Bay have dealt with a constant barrage of sub-tropical lows, atmospheric rivers, and ex-tropical cyclones, which caused copious amounts of rainfall.” Ben Noll, NIWA Meteorologist.

So what does this mean for you?

• The increasing frequency and intensity of extreme weather events has put pressure on insurers due to the high volume of claims, driving up the price of insurance for businesses and homeowners alike.
• Insurers will be looking at ways to cover the increasing costs of extreme weather events. This may include limiting the availability of flood cover in some areas, and a greater use of risk-based pricing from some insurers, where insurance premiums paid by owners of flood-prone homes are typically higher compared to people with homes in lower flood risk areas.

“Insurance rates could be in for a re-think as the extent of the damage from the flooding is revealed, and that even before this event, insurers were looking with greater scrutiny at flood risk.” Mel Gorham, Chief Executive of the Insurance Brokers Association.

How your broker can help

Your broker can help you understand the implications of these changes and provide quality insurance advice to mitigate the potential risks.

There’s been a lot of talk about New Zealand’s inflation over the past year, and unfortunately, it's not just affecting your grocery bill. Many home and business owners continue to be impacted as annual inflation remains high (6% in the June 2023 quarter). ***

So what does this mean for you?

High inflation means the cost of repairing or replacing contents, equipment, stock and machinery will increase. These rising replacement costs may lead to higher insurance premiums for you.

How your broker can help

As the impact of inflation will vary depending on your circumstances, your broker will discuss what these changes may mean for you and provide quality advice to mitigate any potential risks.

In a high inflationary environment, key insurance areas for review include:

• Business Interruption: Is your indemnity period up to date? Since business interruption losses are limited to the length of the indemnity period, it’s important to choose the right indemnity period to ensure your business has sufficient time to make repairs and return to pre-loss trading levels.

• Commercial property: Is your sum insured up to date? It’s important to check regularly (at least annually) that your sum insured (cost to rebuild, not market value) is up to date. Your broker will discuss your options to help estimate your sum insured, including contacting a registered valuer to get the latest property valuation.

• Home: Is your sum insured up to date? It’s important to review the sum insured of your home at least annually. To help set the right sum insured, you can use this free Cordell Online Calculator and we can help arrange for your property to be valued and assessed by a registered valuer.

• Contents: It is important to review the sum insured for your contents at least annually to ensure the amount accurately reflects their replacement value. You may like to use this Contents Insurance Calculator[SM1] . If you have any valuable items, such as jewellery, cameras or special collections, these may need to be specified on your policy.