New Zealand: A number of insurers are repricing risk
Source: Asia Insurance Review | Jan 2020
Since mid-2019, some general insurers have been undertaking ‘property-by-property’ assessments in regions highly exposed to natural disasters, notes the Reserve Bank of New Zealand.
In its financial stability report issued in November 2019, the central bank says that the Wellington and Marlborough regions are examples where some insurers have sought to reduce their aggregate exposures in portfolios such as commercial properties and residential apartment buildings. Owners of properties that are deemed to be more exposed to earthquake damage are finding it more difficult and expensive to obtain cover. In other regions, such as Auckland, that are considered low seismic zones, premium increases, if any, have been smaller.
On average, dwelling insurance premiums have increased by 8% in the last year, and 40% in the last three years.
In addition, policyholders should be aware that as climate risks escalate, high-risk assets such as coastal properties and those assets prone to regular flooding could become increasingly difficult to insure.
The report also says that current levels of non-life insurance profits, to some extent, reflect recent benign conditions (a lack of bad storms and earthquakes) resulting in low claims expenses for insurers. However, they also represent recent margin expansion as increases in premiums for high-risk properties have not been fully offset by premium declines for lower-risk properties. A