The Insurance Council of New Zealand (ICNZ) Conference may have focused on climate change and customer trust, but there were a couple of elephants in the room.

The fallout from the Australian royal commission and its impact on the New Zealand insurance industry were generally glossed over, or arose only in question time.

Likewise, the issue of risk-based pricing, after the earthquakes and major storms that hit New Zealand, seemed a sensitive subject.

Civil Affairs, Commerce and Consumer Affairs Minister Kris Faafoi reflected on what is happening in Australia and the implications for New Zealand.

He says customers need to trust insurers, which must be seen to be acting fairly and transparently. “Insurance sold to customers needs to be what they need and can afford,” he said.

Earlier this year the minister released an issues paper on a Government review of New Zealand’s insurance contracts law.

He says the final paper has yet to be made public, but warns “some changes are well overdue”.

In question time he was asked about risk-based pricing and the possibility some communities may find insurance less affordable.

Mr Faafoi says he met with the ICNZ board and this was one topic of conversation.

“If it becomes the new norm, the narrative must be extremely clear and balanced. We will be keeping a close eye on to see it’s fair for consumers.”

In a panel session primarily about climate change, the question of risk-based pricing again arose.

Tower CEO Richard Harding says research has shown most people think it is fairer, but insurers need to emphasise the need for resilience. “We have to drive conversations with not only consumers but with local governments, councils and other stakeholders that this is the way of the future.”

Stephen Mills, Director of UMR Research, told delegates the latest poll figures show more than three-quarters of New Zealanders are concerned about insurers deciding not to offer cover to those in high-risk areas.

Most New Zealanders believe insurers are unfair if they do not offer cover, with people saying it is “typical of insurance companies looking to maximise profit”.

In a panel discussion, Suncorp’s CEO Customer Marketplace Pip Marlow noted the Hayne royal commission in Australia is “looking at misconduct, not conduct”, so it highlights the negatives.

She says to maintain customer trust “behaviour must be consistent inside and out. Hopefully any changes [from the royal commission] will make it a better experience for customers. It will be good for our customers at the end of the day.”

A poll of delegates asked about the biggest issue facing insurers, with the loss of consumer confidence and trust a resounding winner.

A chief executive leadership panel was somewhat defensive in its responses, particularly following a presentation by the New Zealand Privacy Commissioner John Edwards, who says protection of privacy is one way to build customer trust and insurers are not doing a good job of it.

AA Insurance CEO Chris Curtin says making it easier for customers to receive cover requires greater use of data, but this may bring “quite significant risk of making mistakes or breaches”.

He says on consumer trust New Zealand insurers “do a good job, but we can always work harder at the way consumers look at insurance.”

And he warns there is “no silver bullet” as to how insurers keep that trust.

Ando CEO John Lyon said: “What is missing is that customers’ expectations have shifted, and the insurance sector has not done well in appreciating that.”

He says rhetoric needs to be turned into “genuinely taking the customer’s perspective in what we do.”