We all know that the weather in Aotearoa can be unpredictable. Claims analysis by our largest insurer IAG New Zealand, which owns State Insurance, AMI Insurance and NZI Insurance, revealed ten significant weather events between September 2022 and March 2023.
Those ten events combined saw the lodgement of 41,596 claims with 23,497 of those coming from flooding in the North Island. Cyclone Gabriele in isolation contributed 14,396 claims. Of all claims lodged for the two major weather events, 15% of these were either private or commercial motor. As of May 5, 85% of affected vehicles are likely to be written off.
Combined claims numbers across all insurers for the Auckland Anniversary Weekend flooding and Cyclone Gabrielle now stand at 96,586 worth $2.5 billion according to the Insurance Council of New Zealand Te KāhuiInihua o Aotearoa (ICNZ). Insurers have so far paid out over 15% of these claims to a value of $375 million being returned to policy holders and communities.
ICNZ chief executive Tim Grafton cautioned: “while insurers have made a good start on settling claims, it’s important to remain realistic about the rate of settlement from now on. Many private motor and contents claims are straightforward to settle, re-lining a house can take months, full rebuilds over a year. The most complex claims, typically with land issues, can take longer still. Insurers are in this for the long haul.”
Transport and logistics companies have already been living with a lack of competition between insurers in the New Zealand heavy motor market for several years. Historic COVID supply chain issues delaying parts importation for claims repairs coupled with our fluctuating currency performance against the greenback and Euro have added unprecedented pressure to a sector that, put simply, pays big and claims big.
With inflation rates at a 32-year high and all vehicles becoming more complex to repair, premiums are rising to combat the resultant price increases. Businesses that are currently experiencing and navigating heavy motor claims are now also facing delays in the processing and approval of these claims.
Like most industries in New Zealand, the insurance industry itself is experiencing an acute and sustained shortage of willing, able and experienced staff. This has meant that basic processing and approval of mid-range motor repairs around $10,000 and less is now taking several weeks to be processed rather than several days.
Both brokers and their insurance clients are having to adapt to a world with lower expectations of insurers. While patience has been afforded to insurers in the immediate aftermath of the two main weather events, this patience has now expired.
In an insurance sector as combative as heavy motor, savvy buyers with the assistance of their broker representatives should not only be analysing price and strength of wording but also the real world performance of claims teams both during and in the wake of the two main weather events.
Our office has recorded a number of buyers deliberately electing to partner with insurers that are more expensive but provide comfort and proven ability to discharge their claims function competently. Engage and question your broker about what you need to do to ensure that your annual insurance expenditure is truly representative of your risk profile. If the answers you are getting are inadequate or ambiguous then get a second opinion.
As insurance buyers, there is little to be excited about in the immediate future, so choose who manages that process for you wisely.
*Isaac Mutu is a director at O’Connor Warren insurance brokers.
