Recently, the Insurance Council of New Zealand took a small but long overdue step to change its logo to include its name in Te Reo, Te Kāhui Inihua o Aotearoa. Coincidentally, the Reserve Bank of New Zealand at the same time refreshed its brand:
Ko matou nga Te Pūtea Matua.
Toitū te Ōhanga, Toitū te Oranga.
We are the Reserve Bank of New Zealand.
We enable economic wellbeing and prosperity for all New Zealanders.
Although Te Reo Māori has been one of Aotearoa New Zealand’s three official languages for over 30 years, these changes signify a broader commitment to cultural diversity and inclusion. This is important for insurers and others in the financial sector for several reasons.
We know that if people cannot obtain insurance that meets their needs, they are more vulnerable than others. It can present a barrier to home ownership. If you are not a homeowner and do not have contents insurance, then in the event disaster makes your home uninhabitable your whole family is left to State support or leaning on family who may also be struggling.
If you had a second-hand car and caused a crash involving other vehicles, you could end up with large debts if you were uninsured and likely be unable to replace the car you may need for work.
We know only too well the consequences of not having insurance and the benefits of having the right type of insurance appropriate to someone’s needs. Also, we probably know that Māori and Pacific peoples’ uptake of insurance is generally lower than others.
Affordability is a primary reason and that too may be unsurprising. Research by the Commission for Financial Capability tells us Māori and Pasifika are more likely to say the future will take care of itself, a perspective that would alarm an insurer. Our own research tells us that these communities’ declared knowledge of insurance is lower than others.
An insight from this is that the diversity of insurance cover across society is not what we would like it to be. When people are excluded from insurance it compounds their vulnerability because when they suffer sudden and accidental loss it often cannot be restored, so they are worse off than before.
It is not the role of insurance to create jobs or build incomes to address affordability. But there is a role, as demonstrated in the sector’s response to the pandemic, to identify, understand and respond to vulnerability in tangible ways that offer access to insurance protection. Hardship funds and micro insurance products for motor and contents policies are also finding their way on to the market.
There is more work to do though. Many low-income people who buy insurance can only afford it by paying weekly or fortnightly from pay packet to pay packet. It is often more costly to buy insurance this way due to an admin fee or, for some, it is priced higher because insurer data shows customers who pay fortnightly or monthly claim more than those who pay annually.
Although this practise is not universal, the perverse effect is that those who can least afford it, pay more.
Shared equity arrangements are emerging to assist those on low incomes into home ownership. More traditional housing arrangements involve Māori housing on iwi or hapu owned land have presented themselves to some insurers as complex risks. Lack of understanding has led some to be wary of providing cover. So, here is a challenge to better understand the customer and their needs to work out how to provide cover.
Many insurers have been quick to adopt diversity and inclusion policies in the workplace and to outwardly describe themselves in a more inclusive way. The natural extension of that for the sector is how we can think smarter to make insurance cover more diverse and inclusive.
And here is a message for the Government. Continuing to apply taxes and levies to insurance policies makes them less affordable and contribute to poor outcomes for the vulnerable in society. It also makes it more difficult to put innovative, competitive products on the market.