The Insurance Council of New Zealand (ICNZ) held its annual conference in Auckland this week, where it discussed the biggest issues facing the insurance sector today – namely climate change and consumer trust.
ICNZ chief executive Tim Grafton opened the conference stating that the two issues would ‘reshape’ the way insurance is handled, and are likely to have far-reaching effects across every corner of the industry. He also touched on the prospect of impending digitisation, commenting that the rising trend brings both benefits and consequences to the insurance space.
“Ten days ago in Luxembourg the International Association of Insurance Supervisors (IAIS), the global regulatory body, held a conference titled ‘Reimagining Insurance,’ and they saw themselves at a pivot point in terms of regulation across the globe,” Grafton stated.
“My take away from that conference was that there are three key issues that are reshaping the way insurance is being thought out. The first is climate change, and the unique contribution insurance will play – not just as underwriters striving to close the US$160 billion protection gap, but also as investors of US$30 trillion in assets that will help steer the transition to a low carbon economy.”
“The solutions that insurance provides are the ones that governments worldwide will require,” he said. “They are in a very privileged position to be able to help the globe.”
Grafton said that digitisation was the second key take away – the combination of artificial intelligence and big data can bring many benefits to enhance the customer experience, however it also brings with it a more precise discrimination of risk, along with potential adverse consequences.
“Those two issues raise fundamental questions around solvency and conduct, both of which matter a lot to the regulators,” he continued.
“It is significant that our conduct and prudential regulators – the FMA and RBNZ – have joined together to review conduct and culture in banking and life insurance this year. It reflects an inevitable trend identified by the IAIS conference for much closer cooperation between the two types of regulation, and their view is that poor conduct will likely correlate with poor solvency management, and vice versa.”
Minister of Commerce and Consumer Affairs Kris Faafoi also offered his remarks, commenting that the insurance sector is a vital aspect of New Zealand’s ability to weather every type of storm.
“The government recognises the importance of the insurance industry to New Zealand,” Minister Faafoi stated.
“An affordable and sufficient insurance provision is crucial for individuals and communities to recover from natural disasters and other life events. As Minister of Commerce and Consumer Affairs and Minister of Civil Defence, I have a dual interest in making sure that our insurance markets work for insurers, consumers and, importantly, for businesses as well.”
