Insurer Vero concerned at Treasury’s sum insured findings

Insurer Vero concerned at Treasury’s sum insured findings | Insurance Business New Zealand

Insurer Vero concerned at Treasury’s sum insured findings
Insurer Vero has said it is concerned at the findings revealed in a NZ Treasury report on sum insured take-up in New Zealand.

The report ‘Sum insured’ cover for household insurance – what are the risks?, was released last week with senior analyst, financial markets at the NZ Treasury, James Sergeant, concluding that under-insurance was ‘a real issue across New Zealand’.

Suncorp New Zealand EGM of portfolio and products, Adam Heath, said huge efforts had been made by the industry to educate the public of the implications of changing from open-ended replacement policies to sum insured cover, but the figures shown in the report indicated there was still work to be done.

“When Treasury ran a hypothetical earthquake event in Wellington, it found the impact on 5% of households would be ‘severe’, with several thousand households facing a shortfall of around $40,000,” Heath said in the company’s latest blog post.

“Such underinsurance continues to be a concern given the level of education and awareness we, and the New Zealand insurance industry as a whole, have endeavoured to provide to our customers and New Zealand households in general.

“Statistics are one thing, but for our customers the real question – and sobering thought – is whether or not they could be one of the 5% or several thousand homeowners affected by a significant insurance shortfall.”

Heath said it was important for customers to get the right level of cover, but also to only pay for the cover they actually need and that online tools weren’t always straightforward.

In his blog, he reminded customers that Vero had introduced a ‘more flexible approach’ since conducting its own research on the subject last year.

If customers qualified for Vero’s SumExtra product, they had an incentive to stay up to date on their Sum Insured estimate.

Heath explained: “By qualifying for SumExtra, our customers can benefit from up to 10% more cover if their home is destroyed by a natural disaster like an earthquake or a tsunami and, if their house is damaged or destroyed by another insured event like a fire, we’ll repair or replace their home even if the cost is more than the Sum Insured amount.”

To be eligible for this, customers just had to check and update their Sum Insured amount once every three years using Vero's Cordell calculator or by getting an approved valuation.