Rising rates and a capacity shortage are beginning to be felt in New Zealand, a year after Australia was hit. And AM Best’s Regional Manager Selina Man thinks risk management will need to be adopted by Kiwis to deal with the new environment.

Speaking in Auckland, she suggested that brokers work with clients on “comprehensive risk analysis and responsible premium rate quotes and terms”.

“More than ever local brokers and risk managers will have to respond to these new market conditions with more technical risk evaluation and risk amelioration skills,” she said. In a presentation to members of the Corporation of Insurance Brokers, she said the NZ insurance market is “only just beginning to feel the pressure” of rising rates brought on by September 11.

With the difference in treaty renewal dates, NZ has so far enjoyed a “reprieve” from the capacity crunch.

Dr Mann told NZ brokers the capacity crunch will mean even higher rates, although commercial rate increases are unlikely to be as steep as Australia. “However, upcoming reinsurance treaty renewals may experience even higher rate quotes than treaties completed in December ’01 and January ’02,” she said. 

September 11 has forced insurance markets worldwide to reassess risk management, a move that is sure to benefit business and on a much wider scale, the global economy.