It wasn’t that long ago that we were all reviewing our insurance policies after the Christchurch earthquakes. Many of us were blindsided by the scale of the event and you don’t have ask many Cantabrians today to learn how the effects for some around insurance are still impacting livelihoods. Even those who have had insurance pay-outs are still in dispute about the shortfalls in payments in relation to actual repair costs and quality of the repair work.

Two months on from the weather events that severely impacted the North Island, the impacts in the affected regions are being felt far and wide. We spoke to Kim Matthews of Rothbury Insurance and based in the Hawkes Bay to understand what she is experiencing with her clients on the ground in and around the North Island.

What is the biggest challenge around the insurance response to the latest events?

It’s hard to put the scale of this event into perspective. The sheer scale of the event and the number of areas affected in such a short time has seen resources stretched. From Northland down through Auckland and Coromandel, the area is huge. Resources are a challenge and getting assessors and other professionals to gather information for claims is a challenge. Assessors have been brought in from overseas to help process claims as promptly as possible.

What is the time frame for getting claims settled?

Settlement times are very much on a case-by-case basis. Claims are being assessed and settled as promptly as they can. It’s a difficult time for property owners that have land damage. Additional reports may be required for EQC-related land claims, like geotech reports, and owners are in a holding pattern waiting for Local and Central Government to consider what happens with the affected areas. For example, if an owner spends $50,000 on cleaning mud and silt from their property but a report comes back saying that the land is unable to be built on again, then the money for cleaning up may not form part of the final settlement. In regard to vehicle and contents claims, most of those have been settled already.

Have you seen many cases where people are under-insured?

With so many increases in costs in the last two years, it would be fair to say that I haven’t seen anyone that has been over-insured. Most people have adequate cover; however, establishing nominated values in a market that is ever changing certainly reveals the need for assessing your policy regularly and making sure your insured assets reflect the true market value. We have found that post-Covid, many items are in short supply and the market value of many vehicles, plant and machinery has increased, which has led to a shortfall in the amount paid out and the replacement value of new assets. Getting the right advice and working with an insurance adviser is paramount to ensuring you have the right cover for your personal or business needs.

Have premiums increased?

Yes, we already have seen some increases and there are more are on the way. We were already seeing increased insurance costs prior to this event and these have now been exacerbated. Insurance is going to get harder and more expensive to obtain across all types of insurance. The insurance industry has seen increased reinsurance costs (basically insurance for the insurance companies) and these increased costs will be passed on. We may also see some changes in valuation methods of properties. We will see more targeted house insurance increases and significant increases for house insurance.

What effect will higher premiums have on businesses?

Some businesses have been significantly impacted by the loss income and property as well as land or stock damage. During the state of emergency, businesses still had to pay wages during a period of lost trading and some with no income. They have also had to deal with external increased costs like wage increases and new government regulatory compliance. Whilst difficult, some businesses can absorb the increases in costs and inevitably some of the increases will be passed on to the consumer. For some businesses, this may become unsustainable. Like the Christchurch event, there are also businesses that have received a significant benefit from this event. Businesses involved in the clean-up, rebuilding and repairs are all seeing higher turnover. In the short-term while cashflow is strong, absorbing these higher costs may not have a direct impact; however, in the long-term, it’s hard to say.

What effect will higher premiums have on home and contents insurance?

Such big increases in premiums pose significant issues for those on fixed incomes. We’re seeing household living costs across the board increase, which for some will mean that full insurance or any insurance at all may be out of reach. We have seen people taking out larger excesses to achieve lower premium costs.

What is your advice to others around future insurance?

Make sure you work with an insurance adviser who understands your unique personal and business needs. Make sure you understand what you are insured for and the ins and outs of your policy, and make sure you ask questions if you’re not sure.