Amid a decrease in the use of cars in the past two years, motor insurance is among the lines of business that the pandemic has had a greater impact on compared to others, and here Protecta Insurance New Zealand Limited chief executive Phil Hibbert (pictured) explains how so.
“New Zealand has had quite a long duration of lockdown through the latter part of last year,” noted the CEO. “And more recently – December, January – mobility has still been subdued due to New Zealanders going on their summer break.
“So, from an incident point of view, the incident and crash rates are still down, but what we are experiencing are further supply constraints, and cycle time to repair has pushed out and increased. So, it is quite interesting.”
According to Hibbert, the average incident repair cycle, from first notification of loss, normally lasts three weeks. “At the moment, that’s pushing out to a minimum of 35 days,” he said. While the duration also depends on the type of incident, Hibbert cited the abovementioned trend based on Protecta Insurance’s portfolio.
Trading since 1987, the specialist underwriting agency has pretty much seen it all when it comes to car insurance. Protecta Insurance also administers every part of the policy, including claims.
The chief executive told Insurance Business: “I think the biggest challenge we’ll see is that we still grapple, as executives managing a portfolio, trying to understand where our baseline underwriting performance is.
“When there’s low incidence, the loss ratios are trending fairly well compared to pre-COVID conditions, but there is that reluctancy of holding our premiums where they are as a result of we do expect more inflationary pressure and we do expect, as a result of increased cycle time, reserves holding longer and more pressure on parts and supply in terms of costs.”
Hibbert stressed that it is more the ancillary industries such as logistics, supply, truck drivers, and delivery of parts that will continue to be impacted as countries the world over tackle Omicron.
“But hopefully,” he said, “in parallel with New Zealand’s cautious approach to border restrictions, [we’ll see] an improved position of the market in the second half of 2022.”
In terms of reinsurance and underwriting capacity, meanwhile, Hibbert highlighted that there are no issues on that front – unlike with other insurance products wherein coverage isn’t as accessible at present.
Moving forward, the chief executive is excited about the resumption of the investment cycle that was disrupted by the coronavirus crisis.
“I think what COVID has presented in quite a good way,” Hibbert told Insurance Business, “is where we need to push that digital environment for both the business expectations and delivery, and the consumer expectations and customer outcomes.
“We talked about insurtech pre-COVID; there was a lot of buzz and a lot of things that we weren’t too sure what to do and why. I think COVID has really shaped our thoughts better. I’m really looking forward to picking up that investment again with our shareholders to get a more normalised, stable environment to determine where those next real priorities are.”
The Protecta Insurance boss, meanwhile, echoed the sentiments of many that opening up to migrant talent is necessary to fill those specialist roles, including posts related to insurance technology.
Hibbert asserted: “To move the dial in technology quick, we need immigration. We need that Trans-Tasman, Trans-Asia Pacific border territories to open up.”
“Also,” he added, “I think there’s more opportunity for large organisations that are probably repositioning themselves like most, to look wider to MGAs (managing general agents) / MGUs (managing general underwriters) /underwriting agencies to specialise solutions.”
Headquartered in Auckland, Protecta Insurance specialises in car, motorcycle, and classic vehicle insurance, and also offers mechanical breakdown coverage. NZ-owned and operated, the business is backed by wholesale underwriter Virginia Surety Company, Inc.
