Insurance body welcomes local government insurance review

Insurance body welcomes local government insurance review | Insurance Business

Insurance body welcomes local government insurance review
A two-pronged approach to stimulate discussion about natural hazard management and to review options around risk management and insurance by local government groups has been praised by the Insurance Council of New Zealand (ICNZ).

Local Government New Zealand (LGNZ) has formed a cross-sector Natural Hazards Steering Group which is shortly due to produce a discussion paper for wider review.

The paper, Managing Natural Hazards in New Zealand: Towards More Resilient Communities is designed to stimulate discussion about  natural hazard management and the impact on communities and councils given a range of long-term risks, opportunities and changes.

Examples cited in the paper are extreme weather events driven by climate change which contribute to rising sea levels, reduced crops, droughts and increased risk of floods and storms.

The second approach – the Local Government Insurance Review – is designed to help councils spend more resources on risk profiling, risk management and risk mitigation to improve self-reliance and resilience.

LGNZ president Lawrence Yule said: “The review’s work to date makes it very clear that the bigger issues for local authorities is access to skills and expertise to consider and manage risk, not just the purchase of insurance which tends to be the main risk mitigation option.

“Councils need to more actively embrace risk management, including the selection of funding techniques and insurance condition tradeoffs such as premiums, deductibles and exclusions.

“The sector needs to think smarter about self-reliant, sustainable, resilient solutions including the most efficient pathway from local authority to global reinsurer support.”

At the LGNZ AGM yesterday, a remit that LGNZ advocate to the Government to introduce a more flexible framework to assist building owners to strengthen earthquake-prone buildings, including a variety of financial incentives and tools for meeting the challenge of relatively high insurance costs was voted overwhelmingly in favour.

ICNZ CEO Tim Grafton welcomed the moves by LGNZ saying the two organisations had been meeting quarterly for the past year with these issues being at the top of the agenda.

“We applaud the work LGNZ is leading in that area. To have a much stronger focus on risk reduction, which we feel has been the poor cousin of the focus so far, is a useful and helpful contribution to the debate.

“We’re very strong on managing risk, and local government plays a pivotal role right round the country because they’re the key decision makers around development and infrastructure build to reduce the impact of trends like climate change. So it’s great that they’re taking such a strong focus on this issue.”