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New Zealand has been ranked among the top 190 countries to deal with by the World Bank, with its Doing Business 2019 report listing it among the top three economies for ease of doing business.
New Zealand, along with Singapore and Denmark, was noted for “exemplifying a business-friendly environment,” and a number of overseas companies have established or expanded their foothold within the country over the last 12 months. Insurance Business spoke to two major industry players about the ins and outs of how insurers and clients deal with New Zealand, as well as the country’s unique risk landscape and its potential for future growth.
“Globally, you’ve got a number of geopolitical factors that are starting to influence where companies think about taking their operations,” Marsh’s head of risk consulting, Pacific, Costa Zakis explained.
“For example, the Brexit situation in the UK will become a factor in whether or not companies decide to place their HQ in the UK, or whether they would instead want to do that in continental Europe. If you are a company that’s looking to do business in a particular country, you will always look at the risk factor of economic and political stability. When you look at Marsh’s Global Risk Report for this year, the vast number of respondents said that the political uncertainty has a major bearing on the decisions they make.”
“In comparison to the rest of the world, New Zealand is very politically stable,” he stated. “It’s a very predictable economy; it by and large knows its government policies, so any geopolitical risk of doing business in New Zealand is fairly small. While there is a potential for government policy to present some problems for businesses, good business practice says you just need to be nicely diversified in what you’re doing in terms of markets and products.”
Zakis says the top risk for businesses operating in New Zealand is natural disasters, which is significant and needs to be addressed with a strong insurance framework. Nonetheless, he says this risk is insurable in a way economic or political instability is not – making the country an attractive area for business investment.
“The top risk in New Zealand is in the area of natural catastrophe exposures, and what that means for your critical infrastructure,” he said. “That has been consistent on our Global Risk Report for a number of years in comparison to somewhere like Australia, where their risks include energy price shortfalls and cybersecurity, which is a major and growing risk in both countries. But if you look at the top risks in New Zealand, they are all insurable.”
Mark Searles, outgoing CEO of AUB Group, says New Zealand has been a top performer for his company over the last three and a half years, and believes the country’s economic outlook will likely mean a safe two-three years of strong, sustained growth.
AUB Group entered the New Zealand market in 2014 when it acquired 50% of insurance brokerage BrokerWeb Risk Services, and recently acquired the remaining 50% to solidify its presence within the market.
“We entered New Zealand just under four years ago, and we’re now the largest broker management group in the country,” Searles said. “Our GWP is in excess of $675 million there, and we’ve got 67 members within NZbrokers and very strong representation, especially in the SME market.”
“We’ve also started to really build up our underwriting capability, and we’ve started working with Rosser Underwriting to acquire that business,” Searles continued.
“We’ve grown the management and office infrastructure of our group, and, looking at the New Zealand marketplace, we’re anticipating several years of really solid growth. I think people are really starting to appreciate the transparency and collaboration that we bring into the marketplace, and I’m really impressed with what New Zealand has yielded.”
Searles says that although New Zealand has been beset by some of the market concerns affecting Australia in the wake of the Royal Commission, transporting Australian operations to New Zealand is relatively simple, given the core underlying principles of a business do not change.
“The Royal Commission has resulted in a number of similar investigations in New Zealand, but everything we do in Australia is transportable,” he stated. “The only key difference is in the mix of business – our Australian operations are 90% commercial lines, whereas New Zealand is approximately 70% commercial and 30% personal. That’s to do with the way the broking market is structured, which is a little different.”
“From an insurance manufacturing perspective, there’s a predominance of two strong incumbents – NZI and Vero, and we have very strong relationships with both of them,” he explained. “So while there are some local characteristics that may be a bit different, the general way of working mirrors what we already have, and we also bring a lot of IP and learning to benefit the New Zealand marketplace.
“That business has grown really well, and we have a lot of ambition in the market,” he concluded. “New Zealand has really been a shining star for us, which is great news.”
