This week, Insurance Business NZ caught up with Andrew Hooker, managing director of Shine Lawyers NZ.
With more than 30 years of experience in the insurance industry, Hooker feels that it is time for the NZ government to pay closer attention to the insurance industry’s behaviour.
“I think that in comparison to other service industries, the New Zealand insurance industry has enjoyed a relative lack of regulation,” said Hooker. “And I’m not sure that’s the best model.”
More concerning, he says, is the perception that the industry often pushes that insurance is a privilege.
“Insurance is not a privilege, it’s a basic human necessity,” notes Hooker. “Houses and cars are just two examples – if you don’t have insurance, you can’t own one. Accordingly, if it’s a necessity, there need to be greater controls in place to regulate pricing.”
Hooker also remains sceptical about risk-based pricing as a path forward for the industry. Notably, Tower has announced a move to the model for earthquake-prone areas of the country.
“Don’t pretend that risk-based insurance is something new, because it’s always been factored into the products,” says Hooker. “If these companies are serious about keeping premiums fair, we should see that reflected in the overall GWP – people in risky areas should be paying more, while those in lower-risk areas should accordingly be paying less. The overall GWP should remain the same.”
Hooker also stresses that the government has a significant role to play in ensuring that consumers are getting a fair deal. With government regulation already affecting numerous other aspects of life that are considered essential – such as petrol and electricity – Hooker sees no reason why insurance should not also be included.
“Insurance shouldn’t be isolated from these essentials,” says Hooker.
Hooker’s remarks echo his commentary on Newstalk ZB earlier this week, in which he likened the New Zealand insurance industry to the “wild west.”
With the insurance industry currently under heavy scrutiny in Australia as part of an ongoing royal commission into financial services, it remains to be seen whether the NZ industry will take any cues after the final findings are released.
