Crombie Lockwood urges businesses to update their cover

Crombie Lockwood urges businesses to update their cover | Insurance Business New Zealand

Crombie Lockwood urges businesses to update their cover

Crombie Lockwood is urging its clients to make sure that their businesses’ insurance coverages are up-to-date and adequate in the midst of a challenging economic climate.

In its latest advisory, the brokerage listed several factors that could gravely affect customers’ coverage, including general inflation, rising construction costs, increasingly expensive shipping and supply chain issues.

Government figures showed that consumer price index inflation in New Zealand was 6.9% for the year ended March 31. According to Crombie Lockwood, New Zealand is experiencing a steep increase in the cost of repairing and replacing assets across all sectors and industries, including residential housing. The price of oil also rose 68% over the past 12 months, making materials and fuel more costly.

Over the past year, construction costs rose by 12.4% for residential and 8.3% for non-residential buildings.

“You risk being underinsured if you do not account for higher rebuild costs,” Crombie Lockwood said. “Our general advice for commercial building clients to get a professional valuation every 12 months to make sure buildings remain correctly insured at the right levels. We are seeing some massive increases in valuations, with 20+% not uncommon.”

Shipping costs have also skyrocketed, with the price of shipping a 20-foot container from Shanghai to New Zealand currently at $4,000 to $5,000, up from $450 to $650 prior to the COVID-19 pandemic. Shipping delays are also much more common, due to lockdowns and port congestion.

“High shipping costs [impact] the cost to land imported items, be it inventories, plant and equipment, vehicles,” the advisory said. “Insurance cover of stock levels need to reflect not only the increased cost of the goods due to inflation but also the now large increase in freight costs to get the goods in from overseas. Similarly, imported replacement plant and equipment is now more expensive.”