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Big changes coming in insurance?

  • March 20th, 2013

Today I went to an interesting lunch address hosted by the Property Council (Wellington Branch – the most organised civil society force for an active Wellington). Seismic engineering specialist Dr Kit Miyamoto referred to New Zealand's extraordinary expectations of insurance by way of side comment..

He described us as the most insured country in the world. Our insurance had been comprehensive, astonishingly universal, and very cheap. He contrasted that with California and Japan. Though his address focussed on commercial building, he mentioned in passing that in those places households are not effectively insured for earthquake risk. It is too expensive and the deductibles (broadly the excess) make it not worth the cost.

He urged us to focus on spending our money on making ourselves more resilient, making buildings less susceptible to damage, instead of just trying to shift our loss risks to others with insurance. The premium cash flowing overseas should instead be spent here on strengthening, where ever it was economically rational to invest in such improvement.

That is some way from how most public discussion of insurance is trending. People are demanding that the government step in where private insurers are stepping out.

He was also sceptical about the usefulness of government attempts to regulate for optimum resilience and safety. It appeared that he agreed with some of the questioners, that the demands of informed tenants were driving toward the right balance, and property owners should not wait for, or expect stable regulatory standards. The sentiment of the meeting was that officials will always be more focussed on arse covering. Instead landlords should strengthen now, to keep tenants. Where there is not the income from tenants, just do what is ecnomically feasible.

The constructive energy of the property people is heartening. It contrasts with the usual media and political bleating on earthquake risk issues.

How New Zealanders still think they are nature's sturdy and practical (number 8 wire) people I do not know.

The popular and political obsession with avoiding meeting the cost of looking after ourselves, and instead demanding that life's exigencies be socialised, show what cradle to grave swaddling government actually does. Whining dependency is much more characteristic of the modern kiwi, than stoic self-reliance.

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After a long time, I am hearing of others like me who just resigned ourselves to the fact, EQC is a dog, Insurance is a dog, that we just had to do it for ourselves . I can’t imagine when if ever Fletcher challenge would arrive at my property , but I do know that I will have already done the work myself when they do arrive. I am insured with Medical Assurance.It will be a long time, if ever they said . Last year when I went to Thailand for 6 months they told me my property would revert to indemnity Insurance. ” Indemnity” is a euphemistic goggledygook for we will pay you about half the replacement value you thought you insured for in the worst event
I did not take this lying down. I gave
them evidence that we had a home manager and neighbours who would shoot intruders.
They eventually understood, we have the replacement value we insist on.
But even at the level of the best Insurance they are looking for ways out it is not good,

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