NZ's insurers worried about reputations
Local insurers are feeling far more threatened by public opinion and social media than their overseas counterparts, according to a new survey by accounting firm PriceWaterhouseCoopers.
Asked to rank the biggest threats to their businesses, insurers predictably ranked the threat of another big earthquake or natural disaster affecting their profitability as their No 1 concern.
New Zealand insurers ranked reputational issues as No 2 compared with it being ranked 14th worldwide, and they ranked social media as ninth, compared with 21st worldwide.
That different approach among New Zealand insurers appears to be a reaction to widespread accusations of the slow assessment and payment of claims after the Christchurch earthquakes.
In that city, many people remain in unrepaired earthquake-damaged homes more than two years after the 2010 and 2011 quakes.
PwC partner David Lamb said: "A perceived risk area for the New Zealand industry is that of reputation which has jumped to No 2. Again, this isn't that surprising, given recent public and media scrutiny over the time it is taking to settle certain claims in Christchurch."
However, although the industry said there was "a perception of claims not being paid" because of a contagion effect from Christchurch, that is exactly what is happening.
Figures from IAG, Suncorp and Southern Response show many outstanding claims. Reasons given for this include legal complexities, waiting for the Earthquake Commission to do its job, and the length of time Christchurch continued suffering aftershocks.
For example, Vero has already paid out more than $2.3 billion and is about 60 per cent through its claims, and IAG's companies, including State and NZI, said in a June newsletter that only 28 per cent of its claims were completed, 27 per cent were in progress and 45 per cent were "programmed".
Although some people in Christchurch accuse insurers of having a policy of "deny, delay and settle" to wear down policyholders to accept lower settlements, that is rejected by the Insurance Council of New Zealand. It said its members were simply swamped by the scale and complexity of the task at hand.
On its website, the council said: "It has been suggested insurers are delaying the settlement of insurance claims in Canterbury and benefiting from this practice. Nothing could be further from the truth."
About 170,000 properties were damaged in Canterbury, including more than 20,000 that resulted in claims greater than $100,000.
"Insurers are managing their repair and rebuild projects to provide best outcomes for their customers. They are working with urgency and expect to complete most assignments by the end of 2016," the council said.
On a positive note, those surveyed indicated policyholders were becoming less price sensitive.
Lamb said: "On the flipside, there is a greater awareness by New Zealanders of the importance of insurance and understanding policy terms.
"In the eyes of some respondents, this has resulted in customer behaviours changing, with price now being less important and more consideration being given to the terms of . . . policies and claims quality with long-claim settlement time frames."