(Originally published in TransportTalk)
We all know that the weather in Aotearoa can be unpredictable. Claims analysis by our largest insurer IAG New Zealand, which owns State Insurance, AMI Insurance and NZI Insurance, shows there were 10 significant weather events between September 2022 and March 2023.
The 10 events combined saw 41,596 claims lodged with 23,497 of them coming from flooding in the North Island. Cyclone Gabrielle alone contributed 14,396 claims. Of all claims lodged for the two major storms, 15% were either private or commercial motor. As of May 5, this year, 85% of affected vehicles are likely to be written off.
Combined claims numbers across all insurers for the Auckland Anniversary Weekend flooding and Cyclone Gabrielle now stand at 96,586 worth $2.5 billion according to the Insurance Council of New Zealand Te Kahui Inihua o Aotearoa (ICNZ). So far, insurers have paid out more than 15% of these claims to a value of $375 million.
ICNZ chief executive Tim Grafton cautioned: “while insurers have made a good start on settling claims, it’s important to remain realistic about the rate of settlement from now on. Many private motor and contents claims are straightforward to settle. Re-lining a house can take months, full rebuilds over a year. The most complex claims, typically with land issues, can take longer still. Insurers are in this for the long haul.”
Transport and logistics companies have been living with a lack of competition among insurers in the New Zealand heavy motor market for several years. Historic COVID supply chain issues delaying parts importation for claims repairs coupled with our fluctuating currency performance against the greenback and Euro have added unprecedented pressure to a sector that pays big and claims big. With inflation at a 32-year high and all vehicles becoming more complex to repair, premiums are rising to combat the resultant price increases.
Businesses that are experiencing and navigating heavy motor claims are now also facing delays in the processing and approval of the claims.
Like most industries in New Zealand, insurance is experiencing an acute and sustained shortage of willing, able and experienced staff. That has meant that basic processing and approval of mid-range motor repairs around $10,000 and less is now taking several weeks rather than several days.
Brokers and their insurance clients are having to adapt to a world with lower expectations of insurers. Though patience has been afforded to insurers in the immediate aftermath of the two main storms that patience has expired. In an insurance sector as combative as heavy motor, savvy buyers with the assistance of their brokers should not only be analysing price and strength of wording but also the real-world performance of claims teams during and in the wake of the two main storms.
Our office has recorded several buyers electing deliberately to partner with insurers that are more expensive but provide comfort and proven ability to discharge their claims function competently. Engage and question your broker about what you need to do to ensure that your annual insurance expenditure is truly representative of your risk profile. If the answers you’re getting are inadequate or ambiguous then get a second opinion. As insurance buyers, there’s little to be excited about in the immediate future so choose wisely who manages that process for you.