More Innovation, Competition Urgently Needed in NZ Insurance Market

“We’re not having the right conversation about insurance.”

That from Christchurch based insurance claims preparer, Dean Lester, who says following the LA fires and recent comments in the media about insurers pulling out of some areas in Aotearoa, a much bigger conversation is needed.

“There’s every type of insurance cover available anywhere in the world,” he says. “What we have in New Zealand is a lack of innovation, competition and regulation.”

Lester says insurance is a key part of a modern society, and if it isn’t available, there will be a breakdown in the financial and broader structural makeup of that society. He says this is illustrated by the recent moratorium issued by the California Insurance Commissioner, Ricardo Lara, who has ordered insurance companies to have a one-year moratorium on insurance non-renewals and cancellations for people impacted by the Palisades and Eaton fires (LA fires).

“The Insurance Council used to promote how essential insurance cover is; now they seem to be focused on repeating commentary around the concern that insurers will withdraw cover here in New Zealand. Insurance is not, and should not be, discretionary. Insurance is essential for business, homes, for everything”, says Lester.

He adds that as well as stronger regulation and innovation, a ‘disrupter’ is needed in the New Zealand insurance market in the form of catastrophe insurance.

“Nothing should be uninsurable”, he says.

“If someone provided catastrophe insurance that, for example, allowed for a $5k-$10k excess, affordable premiums and had all the bells and whistles, I am confident it would fill a gap. By bells and whistles, I mean full cover for alternative accommodation (including pets), assistance with your claim, a stress payment for loss of mental health and so on.”

Following his work with Iwi after recent weather events in the North Island, Lester believes a disrupter could potentially come from a Māori iwi, for example Ngāi Tahu.

“Ngāi Tahu is large, financially smart and strong, and well connected with their communities,” he says.

Lester adds something like the Californian Insurance Department headed by a Commissioner is also something that should be considered here.

“We have a grocery commissioner looking into how that sector innovates and has greater competition; local government is under pressure from central government to get rates increases under control; the banking sector has also been called out on its profits, fees and costs; and mortgage rates are a focus. The only sector which is also a key contributor to the rising cost of living – insurance – is not being examined and questioned.”

This concern is exacerbated by the fact we don’t have innovation, competition or a greater choice of products in the sector which is urgently needed.

Insurance will remain a key part of our society, the role and need now is no different from when insurance was traded in the Lloyd’s coffee house in the 1600s, it is a necessity and not a “nice to have”, says Dean Lester.