As part of Tower Insurance’s annual report for 2023, the Kiwi insurer shared updates on the firm’s risk-based pricing initiative, customer experience innovations, operations streamlining, sustainability efforts, and more.
Tower CEO Blair Turnbull, acknowledging 2023 as an “incredibly challenging year,” highlighted the clear strategy for the insurer across selected markets.
“We are focused on delivering solid underlying operating performance through robust risk management and continued rating actions to mitigate inflation, the effects of motor crime and weather events,” Turnbull said. “We also continue to focus on targeted customer and premium growth while enhancing our margins through efficiency and organisational improvements. Tower is committed to mitigating the volatility caused by large events through risk-based pricing and our robust reinsurance arrangements. And while we manage the effects of the changing climate now, we will continue to invest in future business resilience and sustainability.”
Tower has been at the forefront of advocating against construction in high-risk areas. In November 2021, Tower was the first insurer in New Zealand to introduce an innovative inland flooding risk-based tool, developed in partnership with RMS, a renowned global entity in risk modelling.
The flood tool is underpinned by an extensive array of data, encompassing 5 million data points and a comprehensive simulation spanning 50,000 years of the entire precipitation cycle. Aimed at enhancing risk awareness, Tower shares earthquake and flood risk profiles with its customers through the My Tower platform. The company also collaborates with central and local government bodies, offering data insights to aid in more informed decision-making.
Risk-based pricing, a key component of Tower's approach, is essential for maintaining competitive pricing and robust underwriting practices. It plays a vital role in addressing challenges posed by climate change. Earlier this year, Tower expanded its risk assessment tool to include landslide and coastal risks.
Looking ahead to FY24, the company plans to launch customer-facing ratings for these newly incorporated risks.
The company successfully completed the implementation of its flagship digital self-service platform, My Tower, across its Pacific operations. This platform is now set to be extended to all markets where Tower operates. The company also launched a parametric Cyclone Response Cover pilot in Tonga, following its successful trial in Fiji during the 2022/2023 cyclone season.
FY23 also saw Tower streamline its business operations. Notably, this included the sale of its subsidiary in Papua New Guinea and the announcement of the sale of its business in the Solomon Islands. Additionally, Tower continued to develop its Suva hub. With its core platform now operational across all territories, the company can efficiently adjust resources between Fiji and New Zealand, which are its largest markets.
This year also marked the second year of Tower’s commitment to sustainability reporting, aiming to enhance transparency about the impact of its business activities. The company has continued to focus on managing its most significant sustainability impacts, especially in reducing operational emissions. This effort resulted in a 23% reduction in emissions compared to the previous financial year (FY22), putting Tower on track to meet its five-year emissions reduction goal of 21% by 2025.
Tower is also progressing towards obtaining B Corp accreditation, with the goal of achieving this in the coming year. The company also plans to make its first Climate-related Financial Disclosure in 2024, further emphasising its commitment to sustainability and responsible business practices.
“At Tower, our purpose is to inspire, shape and protect the future for the good of our customers and communities. After a challenging year navigating the impacts of catastrophic weather events in New Zealand and across the Pacific, widespread inflation and increasing crime, our purpose is more important than ever,” Turnbull said.
In other recent developments, Tower has also disclosed its annual financial results for the year ending Sept. 30, revealing a mix of revenue growth and controlled expenses, but with profits negatively affected by extreme weather events.
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