Following a slew of changes in recent years – from regulatory reforms, the pandemic, labour market woes, to rising premiums and record-breaking disasters, among others – what might 2024 bring to the insurance broking profession in New Zealand? NZbrokers chief executive Jo Mason (pictured) shares her predictions here.
The CEO – who believes broker businesses have had little time to sit back, reflect, and work on where they would like to go next amid the tumult – told Insurance Business that she expects pricing pressures from insurers to start easing, particularly if weather-related events remain benign.
“Most insurers should have their pricing strategy sorted now, so we should not expect to see the steep increases experienced in 2023,” Mason, a panellist at next month’s Women in Insurance Summit in Auckland, said. “This, combined with more favourable conditions, should calm reinsurers down and pave the way for less aggressive terms on insurers when renewing their programmes.
“The Fire and Emergency levy change coming into effect on July 1 will add to pricing pressure, which is not good news. Insurers should bear this in mind when setting price increases.”
The levy, which is payable on contracts of insurance against the risk of fire, currently stands at 10.60¢ per $100 sum insured. The rate will rise to 11.95¢ per $100 sum insured for contracts commencing from the second half of the year.
In terms of mergers and acquisitions, meanwhile, Mason thinks there will be further consolidation in the broking market.
“The last couple of years have seen Howden, Honan, and Lockton get serious about NZ, then Marsh swallowed up Honan. It is my expectation that there will be more of this,” she said.
When it comes to challenges facing brokers this year, Mason is of the view that insurers’ actions will be a major driver.
The NZbrokers chief told Insurance Business: “[The challenges] will depend a lot on what insurers do next. If they continue with the price increases of last year, this will be extremely challenging.”
Beyond pricing, there’s also the issue of backlogs, which Mason suggested will remain – a year on following the Auckland Anniversary floods and Cyclone Gabrielle.
“The insurers are all struggling with staffing and, because of that, the knowledge base can be a bit lacking at times,” Mason lamented. “Brokers will again face the challenge of dealing with backlogs and having to show patience with insurer staff who are new to the role. This has the knock-on effect of productivity within the broking house suffering, which can mean additional staff are needed, so that’s a challenge.
“Regulation being embedded is still a change, particularly when it is not always completely clear what is expected. I’m sure this will become clearer as we see the results of some FMA (Financial Markets Authority) investigations. Staffing shortages and suitability is another challenge. This will be ongoing throughout 2024.”
What do you think will be the biggest challenges in the broking sector this year? Share your thoughts in the comments below.
