News eDaily25 Sep 2017

New Zealand:Call for insurers to be forced to supply price info

25 Sep 2017

Technology entrepreneur Michael Speight has said that rules need to be introduced to force motor and home insurers to disclose their premium rates, for improved transparency and promote competition.

Mr Speight, co-founder of price comparison site Glimp.co.nz, said that this would be similar to action taken against energy providers, according to a report in stuff.co.nz. Since 2010, the Electricity Industry Participation Code has compelled electricity retailers to provide their prices to any person upon request. The move made it easier for users to shop around, and check if they could be saving money by getting a better electricity supply deal.

New Zealand has one of the most concentrated general insurance markets in the world. IAG, which owns State, NZI and AMI, and Suncorp, which owns Vero and AA Insurance, control over three quarters of the house and car insurance markets.

Dr Michael Naylor of Massey University's School of Business said: “The market for personal house and contents insurance is already highly concentrated and uncompetitive. The current market structure can be characterised as a duopoly. My figures show that IAG has 50%, Suncorp has 28%, Tower 7%, and FMG 4%."

In the year to 30 September 2016, insurers collected NZ$1.64 billion (US$1.2 billion) in private and commercial vehicle insurance.

However, Mr Tim Grafton, Chief Executive of the Insurance Council of New Zealand, says that insurers fear online price comparison sites would lead to drivers buying car insurance on price alone.

Insurance is not like electricity, he says. Each insurance policy is a contract between an insurer and the policyholder, and the terms of those contracts are different from insurer to insurer.

"There's a significant risk that people will purchase on price alone without informing themselves of the policies that lie beneath," he said.

There are other considerations too, including the financial strength of insurers, and their willingness to pay claims, though no insurer reveals their claim decline rates.

Glimp is also setting its sights on travel insurance and life insurance.


 

 

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