Government regulation, underinsurance, flood, taxes, fraud and improving the industry’s image are the top priorities for the Insurance Council of New Zealand (ICNZ), according its annual review.

ICNZ President and IAG NZ CEO David Smith says the industry is “at the heart of the challenges thrown up for our country by climate change and increased volatility of weather patterns. In the last year alone, New Zealand has had at least two 100-year floods.”

The first flood in February last year cost the industry more than $112 million, and just a few months later the second cost another $21 million.

Mr Smith says the floods have highlighted the prevalence of non-insurance and underinsurance. Last year’s floods showed that more than 40% of some NZ communities were not insured.

Mr Smith says the NZ Government is “very clear that it can no longer be the insurer of last resort”.

“The major deterrent to insurance is affordability,” he said. “Taxes applied to premiums must be removed to ensure adequate levels of insurance are present in our communities. The Government has recognised it is not able to simply pay out $20-30 million at a time to those who are uninsured.”

On regulation, Mr Smith says two Government reviews have significant implications. “Trans-Tasman discussions are at the forefront of issues for the whole industry in 2005,” he said. “Where regulation is merited, we could align it with Australia.”

The ICNZ report says further regulation may be beneficial in the areas of financial reporting, solvency reporting, more detailed rating disclosures and reinsurance analysis and ratings.