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Why insurance is more expensive [VIDEO] · The SME Stream

• 0:00
  Speaker 1: The information provided in this program is of a general
• 0:02
  Speaker 1: nature and is not intended to be personalized financial advice.
• 0:05
  Speaker 1: We encourage you to seek appropriate advice from a qualified
• 0:07
  Speaker 1: professional to suit your individual circumstances. Insurance in every aspect
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  Speaker 1: is getting more expensive, even outpacing general inflation. The head
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  Speaker 1: of a transtasment insurance giant explains why.
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  Speaker 2: It gives me no pleasure that insurance inflation is sitting
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  Speaker 2: above CPI. It's uncomfortable, but it's necessary in terms of
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  Speaker 2: having a sustainable insurance market going forward.
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  Speaker 1: Tropical cyclone Jasper and Christmas storms were Australia's most catastrophic
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  Speaker 1: weather events in the past year, with insurance costs in
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  Speaker 1: the billions. While New Zealand is holding its breath to
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  Speaker 1: see what comes next after the Anniversary floods and cyclone Gabrielle,
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  Speaker 1: the cost of fixing damage from such significant events is
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  Speaker 1: now higher, meaning policy premiums are going in the same direction.
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  Speaker 1: Insurance inflation rose by fourteen percent in this economy in
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  Speaker 1: the year to June. According to Statistics New Zealand. It's
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  Speaker 1: one of the biggest contributors to CPI increases, which has
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  Speaker 1: been forcing interest rates to stay high. It's also helping
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  Speaker 1: boost the bottom lines of the biggest general insurance players IAG, NIB,
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  Speaker 1: SUNCRP and Tower have all reported recent jumps in their profits,
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  Speaker 1: but they're also all grappling with more expensive reinsurance, effectively
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  Speaker 1: paying more to ensure their own insurance offerings. Over the
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  Speaker 1: past five years, Sun Corp, which owns Vero and AA,
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  Speaker 1: had to increase its hazard claims, allowance and reinsurance by
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  Speaker 1: one billion Australian dollars. In New Zealand alone, its reinsurance
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  Speaker 1: costs grew thirty six in the past year after Cyclone
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  Speaker 1: Gabrielle and the Auckland floods. Since those events, it's premiums
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  Speaker 1: here have risen by seventeen percent on average. Sun called
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  Speaker 1: Group's Australian CEO, Steve Johnston, was in the country last week,
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  Speaker 1: so I asked him to explain why it's biggest hikes
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  Speaker 1: are happening on this side of the ditch. Well, Steve,
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  Speaker 1: thank you so much to doing this, really appreciate it.
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  Speaker 3: No trouble.
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  Speaker 1: What are you doing in New Zealand.
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  Speaker 3: Well, I'm over here for board meetings.
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  Speaker 2: So every year we have a series of board committees
• 2:28
  Speaker 2: and board meetings. So I've been on a around the
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  Speaker 2: world trip as we do this time of year, with
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  Speaker 2: talking to investors, talking to reinsurers, talking to some of
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  Speaker 2: our suppliers. We're a very exciting point for Sun Corp,
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  Speaker 2: having just divested our banks. So here we are in
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  Speaker 2: New Zealand for a couple of days and.
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  Speaker 1: About to divest your life business in this country.
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  Speaker 2: Too, aren't and the life insurance business in New Zealand
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  Speaker 2: part of our simplification agenda. So at the end of
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  Speaker 2: all of that process will be a what we call
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  Speaker 2: a pure play trans Tasman insurance company general insurance company,
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  Speaker 2: and that's really exciting.
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  Speaker 1: We are definitely going to talk about general insurance and
• 3:01
  Speaker 1: more detail. But I'd love for you to explain for
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  Speaker 1: me the different dynamics that you see for the insurance
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  Speaker 1: markets on different sides of the ditch. What would you
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  Speaker 1: say is kind of the biggest differentiating factor.
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  Speaker 2: There's a lot that differentiates this, but there's a lot
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  Speaker 2: of similarities that I find. So if I quickly talked
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  Speaker 2: to the similarities. Firstly, we all buy out of the
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  Speaker 2: same reinsurance markets, and those global reinsurance markets have been
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  Speaker 2: significantly dislocated over the past two or three years now,
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  Speaker 2: global reinsurers were happy to put their capital into Australia
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  Speaker 2: and New Zealand forever based on the diversification they got
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  Speaker 2: for the risks they wrote around the world. Unfortunately, they
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  Speaker 2: don't think they did enough modeling of primary and secondary
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  Speaker 2: peril and they paid for it. So what we've seen
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  Speaker 2: is a reset in both Australia and New Zealand, and
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  Speaker 2: that's flowed through from reinsurers to primary insurers and then
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  Speaker 2: onto consumers. So it's been a very challenging time for consumers.
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  Speaker 2: That's one of the similarities that we have. We also
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  Speaker 2: have challenges around the built environment has been built in
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  Speaker 2: areas they should never never have been built. In terms
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  Speaker 2: of differences, there's not a lot really. I think we
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  Speaker 2: offer a different sort of products here in New Zealand
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  Speaker 2: than we do in Australia. I think I look at
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  Speaker 2: the New Zealand business that we have here and it's
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  Speaker 2: fantastically positioned.
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  Speaker 3: The Vero business well positioned.
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  Speaker 2: We've got a fantastic joint venture arrangement with aa WEE
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  Speaker 2: right up and down the vertical of insurance where we
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  Speaker 2: do limited amounts of that in Australia.
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  Speaker 3: We've got a great corporate.
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  Speaker 2: Partner business and we've got a great via liability business.
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  Speaker 2: So I think we are probably better placed in terms
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  Speaker 2: of our insurance capability in New Zealand than we are
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  Speaker 2: in Australia.
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  Speaker 1: I definitely do want to talk to you a lot
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  Speaker 1: about reinsurance. Will get there, but just on the physical environments.
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  Speaker 1: Who is riskier from an insurance perspective, Australia or New Zealand.
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  Speaker 2: Oh look, I think the earthquake risk is always something
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  Speaker 2: that you know. That's one paeril that both primary insurers
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  Speaker 2: and the insurance market have been able to model pretty effectively.
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  Speaker 2: So there's no doubt the shaky asles as they call it,
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  Speaker 2: is one of the reasons why New Zealand is a
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  Speaker 2: little bit different and why that risk is sort of elevated.
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  Speaker 2: Having said that, we've had quite a deal of seismic
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  Speaker 2: activity in Australia of the past month Touchwood, that's limited
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  Speaker 2: to the sort of levels of magnitude that it's been
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  Speaker 2: and when that happens we actually call on New Zealand
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  Speaker 2: colleagues to help us. Because of the experience that you've
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  Speaker 2: got in this part of the world.
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  Speaker 1: So if I look at your premiums, then they've increased
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  Speaker 1: across all categories. You were one and the same almost
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  Speaker 1: every insurer that I've spoken to as doing the same thing.
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  Speaker 1: Home was up around ten percent, Commercial was up a
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  Speaker 1: little bit more, and then in New Zealand it was
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  Speaker 1: up by seventeen percent. On average, consumer policies here were
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  Speaker 1: up by twenty three percent. Steve, If the risks, in
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  Speaker 1: your opinion, are relatively similar physically speaking, and reinsurance costs
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  Speaker 1: are one and the same, why are we paying so
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  Speaker 1: much more on the site?
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  Speaker 2: Yeah? Look, I think obviously the events of twenty twenty
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  Speaker 2: three in Auckland and the cyclone that flowed after the
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  Speaker 2: flooding event was an uninsured, unmodeled risk, and what we
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  Speaker 2: saw from the global reinsurers in the immediate aftermath of
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  Speaker 2: that is just a pause and reflect on what New
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  Speaker 2: Zealand risk was. They were very familiar with earthquake risk
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  Speaker 2: and they'd been able to model that and price that effectively,
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  Speaker 2: but the flooding risk and the weather events that we
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  Speaker 2: had in Auckland really meant that they had to pause
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  Speaker 2: and the market was dislocated for six months, and that's
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  Speaker 2: sort of very extreme pricing going through. Now we've had
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  Speaker 2: to follow that through with pricing back to the consumer.
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  Speaker 3: The good news.
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  Speaker 2: The good news is that seems to settle, and certainly
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  Speaker 2: in our renewal that we just completed on the first
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  Speaker 2: of July, we saw a far more constructive approach to
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  Speaker 2: New Zealand risk and in the discussions I've had with
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  Speaker 2: Global Reinsurance in the last couple of weeks.
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  Speaker 3: That's continuing.
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  Speaker 2: So it's a better story than it was twelve months ago.
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  Speaker 2: But the reason why there's a slightly increased elevation of
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  Speaker 2: premium in New Zealand relative to Australia has just been
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  Speaker 2: those events in early twenty twenty three.
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  Speaker 1: Do you recognize that insurance premiums increasing to the degree
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  Speaker 1: that they have, and the contribution that they're making to
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  Speaker 1: generalized inflation in this economy, it's keeping interest rates higher,
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  Speaker 1: it's one of the biggest contributors to CPI and this economy.
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  Speaker 1: Do you recognize that that's kind of making our economy worse?
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  Speaker 2: I absolutely do, and you know it gives me no
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  Speaker 2: pleasure to have insurance inflation sitting above the consumer price
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  Speaker 2: index levels of inflation. Now that always is going to
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  Speaker 2: be the case in an environment like this, and it
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  Speaker 2: goes back to this global disslocation and reinsurance market that's
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  Speaker 2: driven up insurance premiums at a greater rate than underlying inflation. Now,
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  Speaker 2: of course we have construction costs and supply chains and
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  Speaker 2: motor insurance has been particularly problematic in both Australia and
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  Speaker 2: New Zealand. So it gives me no pleasure that insurance
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  Speaker 2: inflation is sitting above CPI. It's uncomfortable, but it's necessary
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  Speaker 2: in terms of having a sustainable insurance market going forward.
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  Speaker 1: So how do you think about that premium price and
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  Speaker 1: going forward? Then the increases that we've seen to date,
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  Speaker 1: are they playing catch up or do they also cover
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  Speaker 1: for some future inflated increase costs?
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  Speaker 2: Now, I think we look at input costs annually, so
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  Speaker 2: obviously we're dictated by the level of inflation. The costs
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  Speaker 2: repair things like labor, supply in repair chains and smash
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  Speaker 2: repair centers, and those sorts of things will always flow
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  Speaker 2: into it. I think the more that we see stability
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  Speaker 2: in the reinsurance markets, the less requirement is for reinsurers
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  Speaker 2: the price back to us and therefore the less requirement
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  Speaker 2: for us to pass through to the consumers. So I'm
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  Speaker 2: hoping that we're going to see insurance inflation and CPI
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  Speaker 2: start to get an equilibrium, and that will happen I
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  Speaker 2: think over the next twelve to eighteen months.
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  Speaker 1: You mentioned in one of your earlier answers that you've
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  Speaker 1: just been obviously is talking to European reinsurers. I believe
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  Speaker 1: what are they saying, you having to negotiate with them
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  Speaker 1: to keep covering this country and Australia.
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  Speaker 2: I think that that was probably last year's discussion. You know,
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  Speaker 2: there was a concern that I had that they would
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  Speaker 2: walk away from New Zealand particularly and as a sort
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  Speaker 2: of purchaser of insurance, we buy insurance for both New
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  Speaker 2: Zealand and Australia. So that's a big benefit for New
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  Speaker 2: Zealand in the context of us being able to buy
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  Speaker 2: a package of reinsurance and a portion it appropriately between
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  Speaker 2: the two countries. The good news is that they're significantly
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  Speaker 2: more constructive now than they were twelve months ago. I
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  Speaker 2: think the good news is that we're able to buy
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  Speaker 2: more cover than we were last year, and that's good.
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  Speaker 2: We were able to supplement New Zealand through internal reinsurance
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  Speaker 2: arrangements so that's been good historically, but I'm very positive
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  Speaker 2: that that constructive approach we saw at the last renewer
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  Speaker 2: will continue through the next twelve months.
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  Speaker 1: They may have considered walking away from New Zealand, what
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  Speaker 1: made you come to that potential conclusion.
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  Speaker 3: Oh, this wouldn't be us walking away from it.
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  Speaker 2: Yeah, because they whenever they see a risk that they
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  Speaker 2: hadn't modeled, they take a point of pause and reflect
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  Speaker 2: or that they price it to a point where it
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  Speaker 2: becomes unaffordable. So look, I think it's a sort of
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  Speaker 2: a natural reaction to something that they hadn't anticipated, and
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  Speaker 2: they hadn't anticipated cyclones in Auckland or flooding events of
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  Speaker 2: that magnitude. So when that happens, It's happened in Australia
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  Speaker 2: various times as well in Queensland after the floods in
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  Speaker 2: twenty eleven, So it's sort of a natural reaction and
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  Speaker 2: that until they understand something that they either take a
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  Speaker 2: very punitive approach to pricing or they step back from
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  Speaker 2: the risk. And reinsurance is a demand supply, you know,
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  Speaker 2: the more capacity you get, the better the pricing is
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  Speaker 2: and the more cover you can buy.
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  Speaker 1: So it sounds like you mightst have to go over
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  Speaker 1: there and talk them off a cliff.
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  Speaker 2: Well, not so much this year, but twelve months ago. Yes,
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  Speaker 2: we had to continue to let them understand how those events,
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  Speaker 2: while they hadn't been modeled precisely, were within the sort
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  Speaker 2: of range of things that possibly can happen. And we're
• 10:29
  Speaker 2: all dealing with climate change. There's an imprecision around climate change.
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  Speaker 2: We're anticipating, you know, more frequency and severity of large
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  Speaker 2: weather events. We think we've modeled it well and we
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  Speaker 2: can manage it well.
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  Speaker 1: So what kind of conversations have you just had with
• 10:44
  Speaker 1: them in the past few weeks. Benef it's not.
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  Speaker 3: It's about making sure that you know.
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  Speaker 2: What's happened globally is that there's been a transference of
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  Speaker 2: risk between the global reinsurers and the primary insurers. So
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  Speaker 2: we call it's a very technical point, we call it
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  Speaker 2: attachment points. Effectively, you know, like your excess on your
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  Speaker 2: home how much we versus how much they pay in
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  Speaker 2: a big event, and that doubled for us in the
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  Speaker 2: past two years. So what that has meant globally is
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  Speaker 2: that there's been a similar sort of level of events
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  Speaker 2: going on around the world, but the costs have been
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  Speaker 2: more borne by the primary insurers as opposed to the reinsurers,
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  Speaker 2: and I guess our discussion with them has been around pricing.
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  Speaker 2: We think pricing should start to come down on some
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  Speaker 2: of the covers that we offer, and we think that
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  Speaker 2: there should be availability of what we call aggregate covers
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  Speaker 2: or volatility protection covers, so that we can manage the
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  Speaker 2: larger volume of smaller events more effectively.
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  Speaker 1: How accepting were they of that argument, stall.
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  Speaker 2: Are They're reluctant to accept things at first, Blush. But
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  Speaker 2: at the end of the day, it's a demand and
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  Speaker 2: supply equation. So we're seeing more capacity coming in that
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  Speaker 2: creates more competition for programs like some Corps, which is
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  Speaker 2: one of the biggest reinsurance programs in the world. And
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  Speaker 2: so I think we benefit from, you know, in terms
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  Speaker 2: of both price and availability when alternative forms of capital
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  Speaker 2: come into that market.
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  Speaker 3: As they are now looking through.
• 12:00
  Speaker 1: Your profitability measures, and there was one that stood out
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  Speaker 1: to me purely because forig of my ignorance, but I
• 12:04
  Speaker 1: actually didn't know what it meant. The u R, the
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  Speaker 1: underlying insurance trading ratio. It seems to me like that's
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  Speaker 1: a measure of your margin kind of like how there's
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  Speaker 1: an interest margin for a bank. Yours are sitting at
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  Speaker 1: around eleven percent, which is midpoint of the range that
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  Speaker 1: you wanted at between ten and twelve. Can you explain
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  Speaker 1: to me what that measure is, why it is at
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  Speaker 1: eleven percent, and if you're happy with that for.
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  Speaker 2: Again, yeah, it's one of the anachronisms of insurance. In
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  Speaker 2: other words, you know, we create all these underlying metrics
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  Speaker 2: which are to normalize our business back to a set
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  Speaker 2: of principles.
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  Speaker 3: So effectively, what it does.
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  Speaker 2: Is it normalizes, for you know, when weather exceeds or
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  Speaker 2: underperforms relative to our allowances. Investment markets are a big
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  Speaker 2: part of an insurance company, so it normalizes back to
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  Speaker 2: what a normal set of investment market criteria might look like,
• 12:50
  Speaker 2: and we often get releases or strengthening from prior year reserves.
• 12:54
  Speaker 2: It takes all of that noise out and comes up
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  Speaker 2: with a sort of margin outcome which then translate to
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  Speaker 2: the sort of a turns on capital that we expect
• 13:01
  Speaker 2: to deliver so that we can sustain a private insurance
• 13:05
  Speaker 2: company in the public market. So that's what the measure is.
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  Speaker 2: It again sort of normalizes all the noise and gets
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  Speaker 2: it back to a metric that people sort of understand
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  Speaker 2: and can consistently measure over time. So we have a
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  Speaker 2: target of between ten and twelve percent. We're at the
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  Speaker 2: midpoint of that range at the moment. Period's gone past.
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  Speaker 2: We've been below that as we've sort of started to
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  Speaker 2: recover from the reinsurance costs that have gone through. Our
• 13:29
  Speaker 2: target is within that range, and we think it's an
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  Speaker 2: appropriate return to keep our investors focused on what we
• 13:35
  Speaker 2: need to do to create a useful public market traded
• 13:39
  Speaker 2: insurance company. But it also provides us with some certainty
• 13:42
  Speaker 2: around how we're going to roll out premium and policies
• 13:45
  Speaker 2: for the future.
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  Speaker 1: The reason I ask is because looking at that given
• 13:48
  Speaker 1: it is kind of within your comfort range, within your
• 13:51
  Speaker 1: target range. Right, even though insurance companies like some call
• 13:55
  Speaker 1: we're talking about higher reinsurance costs, higher expenses, your profitability
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  Speaker 1: measure is actually looking pretty good.
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  Speaker 3: Well at the moment it is.
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  Speaker 2: But I mean, i'd make the point and I'm going
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  Speaker 2: to go back to an Australian example now around and
• 14:05
  Speaker 2: there'd be similar examples in New Zealand. Our home insurance
• 14:09
  Speaker 2: portfolio in Australia over the past five years that average
• 14:12
  Speaker 2: the return on capital of five percent. Now that's not
• 14:15
  Speaker 2: a fantastic response when you can actually get a term
• 14:18
  Speaker 2: deposit in Australia that gives you five percent and if
• 14:20
  Speaker 2: it's under two hundred and fifty thousand dollars is guaranteed
• 14:23
  Speaker 2: by the government. So my question to an investor would be,
• 14:28
  Speaker 2: you know, why would you invest in an insurance company
• 14:30
  Speaker 2: if you can get that appropriate level of return in
• 14:32
  Speaker 2: a term deposit. So we need to get returns greater
• 14:35
  Speaker 2: than that to make it viable viable private insurance company.
• 14:39
  Speaker 2: So you know, there's wings in roundabouts, there's ups and downs,
• 14:43
  Speaker 2: there's long dated cycles, short dated cycles, and insurance is
• 14:46
  Speaker 2: very complex. But we think that sort of return is
• 14:49
  Speaker 2: appropriate for what we need to deliver for our shareholders
• 14:52
  Speaker 2: and ultimately that allows us to deliver good products for
• 14:54
  Speaker 2: our customers.
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  Speaker 1: And it seems like the only real way to make
• 14:57
  Speaker 1: a return to make money in this industry is too
• 15:00
  Speaker 1: continually hype premiums to recover increase costs or is there
• 15:04
  Speaker 1: also a little.
• 15:04
  Speaker 2: Good day Look, I think we have to continue to
• 15:07
  Speaker 2: improve the efficiency of our business, so it can't be
• 15:09
  Speaker 2: all just pull a price lever and you know, because
• 15:13
  Speaker 2: we're I mean, we will just lose the confidence of
• 15:15
  Speaker 2: our customers if we do that.
• 15:16
  Speaker 3: So it's all about us.
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  Speaker 2: We can be more efficient in the way we manage claims,
• 15:21
  Speaker 2: you know, reducing the duration of claims reduces the cost
• 15:24
  Speaker 2: of claims.
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  Speaker 3: We can be.
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  Speaker 2: More innovative around the way we offer policies and the
• 15:28
  Speaker 2: products that we offer to our customers. And we've got
• 15:31
  Speaker 2: to make use of things like AI and digital to
• 15:33
  Speaker 2: bring down the costs of serving policies within our business
• 15:36
  Speaker 2: so that we're more efficient and that we can contribute
• 15:39
  Speaker 2: to the returns as opposed to just have price as
• 15:41
  Speaker 2: the only lever available to.
• 15:43
  Speaker 1: Us insurance policy availability. You've mentioned climate change. How are
• 15:48
  Speaker 1: you thinking about ensuring homes that are in low lying
• 15:51
  Speaker 1: areas or on the edge of cliffs in this country
• 15:54
  Speaker 1: because we have built in all of those areas. We've
• 15:57
  Speaker 1: heard from the likes of Tower Insurance to bring up
• 15:58
  Speaker 1: your competitor publicly said they're moving to risk based pricing
• 16:02
  Speaker 1: and they're out there talking about managed retreat. Are you
• 16:04
  Speaker 1: in the same mind.
• 16:05
  Speaker 2: Yeah, Look, I think we're all moving to risk bace
• 16:07
  Speaker 2: pricing now, so when we talk about averages, that doesn't
• 16:10
  Speaker 2: reflect the fact that some of the people who've been
• 16:13
  Speaker 2: built or bought a home in an area that should
• 16:16
  Speaker 2: never have been allowed to be built in are getting
• 16:18
  Speaker 2: increases well above those averages. And there's an obligation, i think,
• 16:21
  Speaker 2: not only on the government, and we talk a lot
• 16:23
  Speaker 2: about what the government needs to do abound managed retreat
• 16:26
  Speaker 2: and sort of subsidizing and supporting people to move, subsidizing
• 16:30
  Speaker 2: and supporting people improve the resilience of their home, but
• 16:32
  Speaker 2: there's an obligation on.
• 16:33
  Speaker 3: The insurers as well. Our policies sort of.
• 16:36
  Speaker 2: In some cases are embedded twenty thirty forty years ago,
• 16:39
  Speaker 2: and we've got to contemporize insurance. We've got to make
• 16:42
  Speaker 2: it more of modern in that sense, we've got to
• 16:45
  Speaker 2: try and find ways of keeping people in the insurance market.
• 16:48
  Speaker 2: That means we've got to come up with new products
• 16:50
  Speaker 2: that meet people's needs and provide appropriate levels of cover,
• 16:53
  Speaker 2: even if it's just base cover, so that people don't
• 16:56
  Speaker 2: exit the market entirely and become either uninsured at high risk.
• 17:01
  Speaker 1: It feels like we're looking at that as our future though,
• 17:03
  Speaker 1: right that, given the places in which we have built historically,
• 17:07
  Speaker 1: as you mentioned, the pricing of policies for those areas
• 17:11
  Speaker 1: will become so high that people just won't be able
• 17:13
  Speaker 1: to afford it, so that insurance giants like some court
• 17:16
  Speaker 1: will say, well, we didn't pull out, but rather people
• 17:19
  Speaker 1: just couldn't afford it. Is that where we're hitting well.
• 17:21
  Speaker 2: I think there's the affordability issue as a challenge, particularly
• 17:24
  Speaker 2: in those environments. And what we've got talked about regularly
• 17:28
  Speaker 2: is a four point plan that's improving government infrastructure, stuff
• 17:32
  Speaker 2: that the government can build to make things more resilient.
• 17:35
  Speaker 2: There's various examples of that in Australia, and levy banks
• 17:37
  Speaker 2: are particularly one where you can put a levy bank
• 17:39
  Speaker 2: around a community and reduce the cost of events and
• 17:43
  Speaker 2: bring the insurance premiums down. Subsidizing people to take action
• 17:47
  Speaker 2: in their own homes, for example, in Australia particularly, we
• 17:51
  Speaker 2: can subsidize people to put solar panels on the roof,
• 17:53
  Speaker 2: but we don't subsidize to allow that roof to be
• 17:55
  Speaker 2: battened down so that can handle a category for five
• 17:58
  Speaker 2: cyclone for example. So some of our subsidy arrangements are wrong.
• 18:03
  Speaker 2: We continue to build in areas that we shouldn't. You know,
• 18:05
  Speaker 2: there's this desire to get more housing in and we're
• 18:07
  Speaker 2: just compounding the problem that we've had in place for
• 18:10
  Speaker 2: the last hundred years. But the other one is taxes
• 18:13
  Speaker 2: and charges. In some areas of Australia, for example, it's
• 18:16
  Speaker 2: similar in New Zealand. Forty percent of a home insurance
• 18:19
  Speaker 2: premium goes in taxes and charges, whether it be service
• 18:22
  Speaker 2: emergency services, levees, stamp duties, goods and services, tax, earthquake
• 18:27
  Speaker 2: commission levies. This compounding effect of taxes and charges on
• 18:31
  Speaker 2: insurance premiums is contributing to the affordability challenge. We've got
• 18:35
  Speaker 2: to deal with all of these things, and insurers have
• 18:37
  Speaker 2: got to step in and start to think about how
• 18:39
  Speaker 2: we make our products more contemporary.
• 18:41
  Speaker 1: You're about to become the chairman of the Insurance Council
• 18:43
  Speaker 1: and Australia. Congratulations on that appointment, Steve. They talk about
• 18:47
  Speaker 1: in Australia this thing called the protection gap. It's effectively
• 18:50
  Speaker 1: the unensurable part of the market. Right Swiss re Arra
• 18:54
  Speaker 1: insure a price that at UIs twelve billion dollars and
• 18:57
  Speaker 1: the decade to twenty twenty four, do you have any
• 19:00
  Speaker 1: concern about that growing? And especially in New Zealand, given
• 19:04
  Speaker 1: that insurance affordability, or rather unaffordability is becoming a growing concern.
• 19:09
  Speaker 3: Yeah, I do. I do.
• 19:10
  Speaker 2: I certainly think that there's a subset of our population,
• 19:13
  Speaker 2: both in Australia and New Zealand, whether it's two or
• 19:14
  Speaker 2: three percent, or in some areas it can even be greater,
• 19:17
  Speaker 2: where that protection gap is just widening and it's getting
• 19:20
  Speaker 2: harder and harder for people to afford to get insurance
• 19:23
  Speaker 2: and therefore become either underinsured or non insured. And so
• 19:26
  Speaker 2: I think all of the things that we need to
• 19:28
  Speaker 2: do as an industry need to align with all of
• 19:30
  Speaker 2: the things that governments in both New zealand Australia need
• 19:32
  Speaker 2: to do to improve the resilience of our communities, to
• 19:36
  Speaker 2: mitigate the effects of whether to get the costs of
• 19:39
  Speaker 2: insurance down through taking taxes and charges off and us
• 19:43
  Speaker 2: innovating around new policies. So I think we can all
• 19:46
  Speaker 2: point the finger at someone else, but we've actually got
• 19:48
  Speaker 2: to work together, and that's one of the key things
• 19:51
  Speaker 2: that I'll be bringing into the Insurance Council. I know
• 19:54
  Speaker 2: the insurance industry in New Zealand is similar of similar
• 19:57
  Speaker 2: mind in terms of coordinating our resources better, making sure
• 20:00
  Speaker 2: that we're working collaboratively with government. We've got to step
• 20:03
  Speaker 2: in into the political domain and make sure that we're
• 20:06
  Speaker 2: giving the government solutions as opposed to just sitting back
• 20:09
  Speaker 2: and just letting them do what they need to do.
• 20:12
  Speaker 1: Look forward to seeing it. Thank you so much your time,
• 20:14
  Speaker 1: Steve appreciate it.
• 20:15
  Speaker 3: Thanks Medsen, thank you