New Zealand's biggest insurer has well and truly bounced back from the Canterbury earthquakes, but the same cannot be said for all of its customers. Richard Meadows reports.
"You can imagine - I can sit in an airport, people know who I am, and everybody wants to tell the story of their claim," says Jacki Johnson, chief executive of insurer IAG New Zealand. "I don't mind that; I love engaging with the community."
Unsurprisingly, some of that engagement can be fairly heated.
Australian-owned IAG dominates the local insurance market, with its brands AMI, NZI, State and Lumley accounting for up to two thirds of all home and contents and vehicle policies.
In the wake of the Canterbury earthquakes, it topped a "worst insurer" list, while journalists' inboxes overflowed with horror stories from its customers.
On Tuesday, IAG NZ took another pasting over its enormous 56 per cent leap in pre-tax profit to A$183 million (NZ$202.5m) during the year to June 30.
As a spokeswoman for advocacy group Insurancewatch.org.nz put it; "many Cantabrians facing more winter weather in broken houses would find [the profit] obscene."
To top things off, Johnson is also president of the Insurance Council; "which is not an easy gig when everyone hates insurers".
She's joking, sort of.
Three-and-a-half years have passed since the events of February 22, 2011, and it's been almost four years since the first major quake rattled the city.
While IAG is back to business as usual, homeowners' premiums are still rising, and thousands are still waiting for claims to be settled.
The industry has blamed the price hikes on higher costs, as reinsurers woke up to the real risks of an island nation straddling two tectonic plates. The necessity for insurers to carry higher reinsurance cover was driven home by AMI having to be bailed out by the government when it didn't have enough. AMI was later bought out by IAG in 2012.
"We've returned [to pre-quake profitability], but the conditions in the marketplace, globally and locally, are no longer like they were before the earthquake," says Johnson.
Insurers are now licensed by the Reserve Bank, which has imposed its own solvency requirements.
IAG NZ will ultimately need enough reinsurance to cover a one-in-1000-year catastrophic event, meaning there'll be further costs to come.
The good news is that resinsurance prices have flattened over the past few years, says Johnson.
"I don't think I'd be foolish enough to think we'd ever get a decrease, but flattening out. It means that as we're buying more, we're not buying it at an accelerating cost."
What that means for consumers is in the next year, premiums should rise only by the inflation rate "at worst", Johnson says.
"What we're trying to do is manage our costs so we don't keep those pricing jolts coming through," she says.
However, that doesn't include the portion outside insurers' control - including the Earthquake Commission (EQC) levy, Fire Service levy, and GST.
With the worst of the price hikes over and done with, the focus is squarely on the rebuild.
Johnson is no stranger to big natural disasters, having cut her teeth on them with IAG and others in her home country.
The Australian arrived here in 2010 and says despite her extensive experience, the Christchurch quakes were different.
"A cyclone happens - it's very tragic, heavy rain for a while, but you're not as worried about your people on the ground," says Johnson. "Same with bushfire; it tends to be a short, intense period."
IAG had around 1000 staff in the garden city, ironically as a back-up headquarters should Wellington fall.
Trying to keep people safe through endless aftershocks took its toll, says Johnson. "In the middle of the night, you're just monitoring the app on your phone constantly."
Auckland-based Johnson still visits Christchurch as much as possible, usually once a fortnight.
She's a social scientist by training, and previously treated burns victims and amputees as an occupational therapist. She's no stranger to grief or what she describes as the "emotional rollercoaster" many Cantabrians are still riding.
Johnson's take is that IAG's desire to help people may have actually contributed to its reputational backlash.
As at June 30, the insurer had still only settled 58 per cent of all earthquake-related claims.
Johnson says IAG's reinsurers can't understand why it hasn't simply thrown cash at the problem, and then walked away.
"They want it off their books. If you're sitting in Munich, we're a little bit of a nuisance value. We're a very small part of their world," she says.
Doing as they suggested would certainly have saved her from getting mired in technical debates over the likes of soil, foundations and liquefaction, she says.
"But should we leave a community to have to settle that and sort that out?" she asks.
"We've been very deliberate right from 2011 to say, if people want us to build their houses, we will do that."
IAG could have forced the issue with many of its policyholders, "but we said no, there's an emotional piece here".
"[It's] about giving people choices that empower them, when they feel there's very little choice left," says Johnson. "They can't control the shaking of the land."
IAG has taken a lot of the reputational heat for the delays in the build programme, and this week, it pushed out its expected completion date to mid-2016.
Every fortnight, Johnson chairs a meeting of insurance sector CEOs and government body bosses working together to try and iron out the various issues causing delays.
She says the first major obstacle was the physical environment itself, with some 12,000 aftershocks, liquefaction, and then flooding.
A whole cohort of flood-hit landowners still haven't been able to join the build programme, waiting on the outcome of a declaratory judgment lodged by the EQC, which goes to court in October.
Port Hills landowners also face ongoing delays over the safety and stability of the slopes, with insurers having to work out who replaces expensive retaining walls.
Then there's the EQC, which handles the first $100,000 of every claim, and has copped heavy criticism over its own delays, including a major security botch-up last year that put another spanner in the works.
IAG's commercial customers, who don't deal with EQC, have had 84 per cent of their claims settled already.
Even now, Johnson says insurers still receive the odd fresh claim as it tips past the EQC threshold.
However, she's careful not to cast all the blame at the government department's feet.
"I work very closely with them, and I have a lot of respect for [chief executive Ian Simpson's] leadership," she says.
"Anyone that had to ramp up from 22 people to what they had to, is not an easy leadership thing to do."
In general, Johnson says the idea of having an organisation that insures land is a great thing for the country.
Crucially, it means banks will continue to lend in times of property damage, as they have something tangible to secure against.
Johnson says IAG wants to get the rebuild right the first time, to avoid further issues down the track. That means not taking any shortcuts on the likes of council and government inspections.
None of these factors are being offered as excuses, she says.
"We take our responsibilities very seriously. We like feedback. We know people aren't always happy."
Looking after staff while also meeting customers' needs and keeping shareholders happy has been a major balancing act.
Have the events of the last few years taken a personal toll?
"You could ask my husband that," says Johnson. "He's a nurse by background, so he's very good at looking after my health, and making sure that I have time out."
As a veteran of the corporate world, she says heavy criticism from media and other parties has affected her husband and daughter more than it has her.
"If you took it too personally, I'd find it very difficult to be on the ground in Christchurch to do my job," says Johnson.
"There are times when you can't stick your head above the parapet either, and protest too much.
"I tell my people, keep doing the job we're supposed to be doing."
If all goes according to plan, Johnson says she believes Christchurch will eventually become one of the safest and most insurable cities in the world.
Whatever happens, she intends to see it through to the end: "I never think of throwing it in, ever."
Johnson's mates from her medical days can't believe she's stayed in the insurance business for 25 years.
She tells them she's doing it for the same reason she chose to become a therapist - to make a difference in people's lives.
"I ultimately believe in the social and economic purpose of insurance. Otherwise you wouldn't stay in it, if you thought it was just a capital-gaining process."
The big four Australian-owned banks dominate the financial services landscape in New Zealand. But IAG NZ's latest pre-tax profit of $202.5 million suggests it could be in line to usurp AMP's "fifth pillar" status as the next largest financial services firm.
Having dropped as low as $5m in 2011, gross profits steadily moved upwards in 2012 and 2013 before leaping 56 per cent in the latest financial year to June 30. There's plenty of growth to come, as IAG's latest result does not include the acquisition of smaller rival Lumley Insurance, which took effect from July 1.
The latest Companies Office records suggest the new business could contribute another $46m worth of pre-tax profit to the company coffers. The Commerce Commission justified its controversial decision to allow the merger by saying tough competition would restrain IAG from increasing prices or reducing the quality of its service.
However, some commentators have said the market was beginning to resemble a "cosy duopoly", with Suncorp-owned Vero the only competitor of scale. Market consolidation is an undeniable driver of IAG's recent good fortunes. In February 2012, it was given clearance to buy out Christchurch-based AMI, while leaving its earthquake liabilities for the Government deal with.
The $380m investment boosted IAG's market share significantly, while saving it $35m in the latest financial year through greater buying power and fewer premises, an even higher sum than expected. At the same time, higher premiums for homeowners have driven gross written premiums up 3.7 per cent to $2.04 billion.
IAG NZ's insurance margin, which is a key metric of profitability, has also increased from 8.9 per cent to 11.5 per cent. Its loss ratio eased from 60.1 per cent to 57.2 per cent, despite several major weather events including storms in Canterbury last year, Cyclone Ita in April, and heavy rain and storms nationwide in June.
IAG's local arm contributed 19 per cent of the overall Australian group's gross written premium. The IAG Group posted an annual net profit of A$1.22b (NZ$1.35b), up 59 per cent on the previous year.
- Sunday Star Times