Customer wellbeing was a central theme at the Insurance Council of New Zealand (ICNZ) annual conference last week as the event examined rising pressures from climate change and issues around cyber protection gaps.

ICNZ CEO Tim Grafton says the conference returned this year as an in-person event, held in Auckland, as customers face challenges from the increasing cost of living and severe weather, as well as ongoing impacts from the pandemic.

“Wellbeing and insurance go hand in hand, and it is much bigger than looking at insurance as a transactional event, it is asking the questions around the vulnerability of customers and looking at how to support them through the times ahead,” he told insuranceNEWS.com.au.

In the past year, New Zealand’s Parliament has passed financial conduct legislation and laws to introduce mandatory climate-related disclosures for large organisations from next year.

Mr Grafton says ICNZ has developed various climate change scenarios with members around physical and transition risks and opportunities, while it is pressing for more government action to reduce flood risks.

“Again, customer vulnerability comes into play here, so where you have areas where there is the risk of frequent flooding, posing the question of how we can best provide information and advice to customers so they are well aware of the risks they face, and perhaps what they can do to reduce the risk to their homes,” he said.

“But often the real solutions are area-wide that really lie in the lands of central and local government.”

A New Zealand Radar report released by Taylor Fry at the conference says insurers have remained profitable, with rising premiums offsetting pressures from inflation and natural disaster impacts.

“With inflationary pressures expected to continue and a recently declared third La Nina weather pattern, it’s likely insurance premiums will continue to rise for the next year, with flow-on effects for customer affordability,” the report says.

The impact natural perils and climate change will have on the country will be the main focus for the insurance industry throughout next year Taylor Fry says.

The report also says cyber risk is recognised as a growing problem in New Zealand, and no organisation is immune from the threats.

“This recognition doesn’t seem to be reflected in cyber insurance uptake in New Zealand, with fewer than 10% of companies having policies,” Taylor Fry says. “By comparison, across the Tasman organisations are showing relative higher cyber insurance rates - up to 70% for large Australian enterprises and 20% for small.”

The report highlights increasing reinsurance costs and shifts as a result in the increase in the Earthquake Commission cap to $NZ300,000 ($273,300). At the same time, some private insurers are moving to risk-based pricing for earthquake.

“EQC levies use a single national rate, which results in low-earthquake-risk regions subsidising high-risk earthquake regions,” it says. “This means increasing the EQC cap reduces the impact of risk-based pricing and may result in an increase in premiums for low-earthquake-risk regions.”