Brokers say that despite ongoing rate rises in the Christchurch region and little capacity to write new business, the New Zealand industry is now heading in the right direction as underwriters move from a market share mentality to a more prudential way of pricing risk.

Marsh NZ Associate Director and Head of Placement Services Nathan Richmond says there is now a real drive from insurers to get back to technical underwriting – looking at each risk and evaluating it on its full merit.

“Previously we had a very commercial market and now we are moving towards a more technical place,” he told insuranceNEWS.com.au. “Before, insurers tended to focus on market share and competition.”

Mr Richmond says although this is a change that needed to happen for the future of the industry, it’s probably the result of the ongoing earthquake activity in Christchurch.

“Obviously there is nothing like a catastrophic event to drive change, but I like to think we would have made it as an industry in time,” he said. “The earthquakes have caused a more rampant move in the market dynamic.”

Insurance Council of New Zealand (ICNZ) CEO Chris Ryan says the re-emergence of technical underwriting is one of the positives to come out of the growing number of earthquakes, and agrees it’s a change that had to happen.

“We are seeing a return to the traditional discipline of genuine risk assessments rather than chasing market share or price,” he told insuranceNEWS.com.au.

Mr Ryan says the return to technical underwriting, coupled with the introduction of new prudential regulations, means people can expect significant changes in the market.

“We might see rates lift in the short to medium term, but in reality we will see the risk reflected very honestly.”

Rothbury Insurance Brokers South Island Manger Greg Greenwood agrees insurance-buyers are doing it tough at present, with rates going up 30-300%, and buildings constructed before 1935 coming in for the harshest rates treatment.

But he says the biggest challenge is the lack of capacity to write any new business in the region, which was confirmed by Mr Ryan in a television interview last week.

“Insurers are not writing any new business, and it’s a real issue for people who want to rebuild and there is no cover out there,” Mr Greenwood told insuranceNEWS.com.au.

Mr Ryan told a TV current affairs program last week that capacity “is a small problem for now”, and only a few people are not able to obtain insurance.

“What people have to understand is… the earthquakes in Christchurch are still going,” Mr Ryan told insuranceNEWS.com.au. “We had another one last week which has been deemed another event.”