Insurance Companies in New Zealand Must Improve Claims Processes Amid Rising Risks

Strategic Insights -

The New Zealand Financial Markets Authority has released a report highlighting the improvements made by insurance companies in their claims processes since the Canterbury earthquakes, but also identifying areas for further improvement. The report, which focuses on the insurance sector's response to the Auckland Anniversary Weekend flooding and Cyclone Gabrielle, has made six recommendations for improvement, including better communications, project management, and oversight. The FMA commended insurers on their rapid response to the events, but emphasized the need for enhanced consumer experience and confidence in the insurance sector.

Key Takeaways:

  • The insurance sector has made significant improvements in their claims processes since the Canterbury earthquakes, but there is still room for improvement, particularly in extreme events.
  • The FMA has identified six areas for improvement: communications, project management and oversight, identifying and treatment of customers in vulnerable circumstances, resourcing, complaints handling, and business continuity.
  • The report highlights that the insurance sector has done further work to improve, but there are still areas for improvement, particularly in consumer experience and confidence.
  • Insurers have learned from the Canterbury earthquakes and the Auckland Anniversary Weekend flooding and Cyclone Gabrielle, but need to continue to adapt to emerging risks and challenges.
  • The FMA acknowledges the rapid response of insurers and brokers to the events, but notes that the sector needs to ensure that consumers' expectations and needs are being met.

Statistics:

  • 118,000 insurance claims were received as a result of the Auckland Anniversary Weekend flooding and Cyclone Gabrielle.
  • Close to $4 billion in damage to insured property was sustained during the Auckland Anniversary Weekend flooding and Cyclone Gabrielle.
  • New Zealanders face increasing risks around extreme weather events.
  • The Conduct of Financial Institutions (CoFI) regime, introduced in March, is designed to protect consumers by putting them at the forefront of insurers' decisions and actions.
  • Insurers fall under the CoFI regime, which includes the Fair Conduct Programmes (FCPs) for product and service reviews.

Sources:

  • FMA (2023). Insurance processes improved but more to do: extreme events. Retrieved from https://www.fma.govt.nz/news/all-releases/media-releases/insurance-processes-improved-but-more-to-do-extreme-events/