New Zealand’s insurance sector posted a 4% rise in gross written premium (GWP) for the year to June 30, KPMG says.

The market performed well, with GWP reaching $NZ4.64 billion ($4.12 billion) across all classes, according to its latest Insurance Update.

Property risk underwriting has changed, with global reinsurers unwilling to take on unquantified cover, KPMG Financial Services director Jamie Munroe says.

“We’ve seen most of the industry moving from the traditional open-ended replacement cover to fixed-sum insurance policies.”

As a result, the level of data required by insurers for earthquake cover has increased.

The Treasury has revised its estimate for the cost of the Canterbury earthquake rebuild from $NZ30 billion to $NZ40 billion ($26.65 billion to $35.53 billion).

Insurers made substantial progress on the 468,004 claims lodged with the Earthquake Commission by October 25; 41,559 were closed and total settlements stood at $NZ6.3 billion ($5.59 billion).

New Zealand’s combined ratio moved to 96% from 101% in the year to June 30, thanks to an absence of severe natural events and reduced Canterbury claims costs.

In the previous year the combined ratio moved to 101% from 151%.

Insurers have committed to settle Canterbury earthquake claims by 2015 and have made good inroads into recovery, the report says.

“They now have an increased understanding on the factors affecting settlements, as well as clarity from court cases coming through,” Mr Munroe said.

The NZ Court of Appeal provided certainty on rebuilding when it ruled Christchurch City Council could not set a higher-than-minimum strength standard for repairs to quake-damaged buildings.

Insurers must now address insurance affordability following premium rises, KPMG says.

“We are already seeing insurers introduce more flexibility in excesses on property cover, in an effort to make insurance more affordable to customers.”

Insurers must also adapt to changing trends in technology, it says.

“Compared with the banking sector, insurers have been comparatively slow and unadventurous when it comes to investing in new technology.”

Insurers should consider cloud computing, mobile services and current and new data sources such as social media to gain competitive advantage, the report says.