The Insurance Council of New Zealand (ICNZ) said that it believes the insurance industry acted fast and early to actively support its customers facing increased financial hardship amid the COVID-19 outbreak.
“Since March, our members have ensured they are fully open for business and have worked to keep New Zealanders and their assets protected by easing the financial pressures they faced,” Tim Grafton, ICNZ chief executive, said in a statement.
Grafton added that ICNZ announced a set of 10 core principles last month, which its members pledged to abide by and use to guide their individual responses. The insurance industry, he said, is “acutely aware” of the pressure COVID-19 has placed on Kiwis, especially since the country entered Alert Level 4.
According to ICNZ, while measures differ from insurer to insurer according to the needs of each customer, these include:
- Deferral of premium payments.
- Changes to terms resulting in different premium levels.
- Changes to excesses to reduce premium levels.
- Extending credit terms to brokers out to 120 days so they can extend the same terms to the end customer, which means the insurer goes on risk for four months without premium income.
- Extending policies and benefits that have expired, for example extending the dollar cap or timeframe on the insurance funded alternative accommodation allowance if a house is being repaired.
- Exercising flexibility around lapsed WOFs and vehicle registrations during the lockdown when they can’t be renewed but allowing insurance to remain in place.
- Paying suppliers within 5-15 days to help with cashflows instead of the standard 20th of the next month.
- Adjusting terms for large commercial fleets that are laid up resulting in different premiums.
- Offering broader motor premium reduction measures reflecting the reduced use of vehicles.
- Continuing cover for vacant properties including construction sites.
- Extending policies for businesses that are now working from home.
While the Level 4 restrictions have reduced some risks, such as motor collisions, Grafton said that some risks have remained unchanged, such as severe weather, or even worsened, such as kitchen fires.
Grafton stressed that that the insurers’ actions to support their customers come at a time when the insurers themselves are coming under financial pressure.
“All these measures have been done when insurers’ income has also been heavily hit by the collapse in equities, record low interest rates and little new business, looming business closures,” he said. “This is matched with the higher levels of solvency we must maintain above any other business to meet regulatory and policyholder obligations.”
As such, it is critical that each insurer responds in a way that is most appropriate for their customers and for them to maintain solvency.
“In this way, our members can balance the needs of those in genuine hardship with their obligation to be there for all its policyholders should the worse happen which it has done several times in recent years – the earthquake in Christchurch last week or the flooding in Wellington this week are timely reminders,” Grafton said.
ICNZ advised customers that find themselves in financial hardship to contact their insurer or broker, who will be able to work with them to find the best options to meet their individual circumstances and needs.a