In a hardening market, brokers need to sell on service

The hardening of the property insurance market will mean that brokers will need to sell on service rather than price alone, Runacres Insurance has said.

Runacres Insurance senior Christchurch-based broker Brian Reedy said he expected to see an increase of 5-20% nationwide for commercial property insurance, and an increase of 5-30% nationwide for residential property insurance over the next 12 months.

Those increases, coupled with the 40% increase to the Fire Insurance Levy on July 01, and the pending 33% increase to the Earthquake Commission Levy (affecting residential property insurance only) on November 01, will mean brokers are going to have to work hard to add value to their clients through claims services and offering advantages in cover.

“The increases in property insurance (costs) will hit affordability, there could an increase in the uninsured or less type of cover taken out, which will be a concern for the wider economy,” Reedy said.

“But New Zealand does have one of the highest uptakes in (property) insurance in the world, around 80%, and insurance is a lot more affordable here than in other parts of the world.”

NZbrokers CEO Jo Mason said the rising cost of cover for methamphetamine damage in tenanted buildings, as well as the 2017 levy increases, could see the cost to insure some properties increase by up to 56%, according to research conducted by NZbroker.

Mason warned there could be devastating consequences for those who were under-insured or not insured at all if struck by a natural disaster such as an earthquake.

“My advice to commercial property owners and homeowners is to talk to their broker about making sure you have the right level of cover with the right sums insured,” she said.

Insurance Council of New Zealand (ICNZ) CEO Tim Grafton told Insurance Business that brokers have a role to play in representing the insured and keeping them informed about the market.

Last week, he said the 2016 Kaikoura earthquake would cost ICNZ members roughly $2 billion in insured losses, while weather related damage, such as the Edgecumbe floods, would cost $231 million, with remaining losses covered by offshore providers not part of ICNZ.


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