12 months on from Gabrielle – the impact on claims and insurance premiums

It is hard to believe that a year has already passed since Cyclone Gabrielle devastated our region. What has happened a year on regarding insurance claims, and how will it affect your premiums moving forward? As at 13 December 2023, insurers had settled 99,798 of 115,353 claims (about 87%) from the Cyclone Gabrielle and Auckland Anniversary events, according to the latest Insurance Council of New Zealand report.

75% of business claims have been paid at a cost of $814,857,610.  This was said to be tracking as expected with business interruption claims being spread over time. The total amount to be paid out is expected to be $1.4 billion. All of these claims account for about 75% of the total value of damage, which is estimated to be $3.6b. This total however does not include the uninsured losses to the economy.

Impact on insurance premiums

It is no surprise with the cost of these payments that it will have a massive impact on insurance premiums, not just for Hawke’s Bay but for the entire country. Reinsurance premiums, paid by our local insurers to protect themselves from catastrophic events, have been increasing for several years. The cost of reinsurance, to cover catastrophic events, is one of the largest expenses for an insurance company. More unpredictable weather events mean a rise in reinsurance costs, which then of course get passed on by insurers to the consumer. Premiums for most policy types are therefore expected to increase over the next year.

In addition to reinsurance costs, another reason for the premium increases is the inflationary environment. This is caused by the increasing cost of materials to repair or replace property and cars. Legal fees and settlements paid for liability claims and any other fees that need to be paid to assess an insurance claim are also increasing.

Availability of insurance

It is not just the cost of premiums that will be a challenge for many this year. It is also around the availability or capacity of the insurance available. Insurers may reduce the amount of cover they are willing to provide in certain areas due to the increased risk. As insurers update flood models with the change in weather patterns for example, we are already starting to see them decline cover in some areas.

 

Brokers shown to have greater insurance outcomes

A recent survey by Vero showed that clients who used an insurance broker were more likely to have improved outcomes along with having greater confidence in their level of cover. Rising premiums and reduced insurance capacity are not new to any seasoned insurance broker, so if you haven’t engaged a broker to manage your personal or business insurances perhaps now is the time to think about it. A good broker will focus on positive alternatives and potential solutions to address the challenges the current market is providing, including how we can further mitigate any of your current risks. Our team is also of course willing to talk to anyone who is not happy with the outcomes provided by their current broker and to help ensure that you feel secure in your risk and insurance programme.

You can do this Hawke’s Bay

We have come a long way in the last 12 months to recover and rebuild. Whilst there is still much to do, we have come through a large array of natural disasters before over the last 150 years. The people of our region are resilient, and we will bloom back into full life again in time.

We can do this! icib.co.nz

Acquisition of Bostock Brothers Limited in New Zealand

Inghams Group Limited (ASX: ING) (Inghams, Company) today announces its intention to acquire 100% of the Bostock Brothers organic chicken business in New Zealand for NZ$35.3 million (approximately A$33.0 million).

Key points

  • Acquisition of New Zealand’s only organic poultry producer with premium market position is strongly aligned with Inghams strategy
  • Acquiring 100% of the shares in Bostock Brothers Limited (BBL), including the brand with respect to poultry products, three freehold farming properties and the primary processing plant
  • Completion expected by end September 2024

Inghams CEO and Managing Director, Andrew Reeves, said: “With the strong recovery in operational and financial performance of our New Zealand business, this acquisition represents a unique opportunity to further enhance our capabilities, extend our range and advance our plans for the business.”

Commenting on the acquisition, Inghams Chief Executive, New Zealand, Edward Alexander, said: “The addition of the highly regarded premium Bostock brand and team strongly aligns with our objective to establish Inghams as the leading premium operator in the market.”

BBL overview

Established in 2014, BBL is the only certified organic producer of poultry in New Zealand. BBL’s operations are located in Hastings, on the central east coast of the North Island, approximately four hours from Inghams Waitoa operations.

BBL is expected to deliver FY24 EBITDA of between NZ$3.5 – 4.0 million1.

The acquisition is forecast to be immediately EPS accretive to FY25 earnings and, including identified synergies, is expected to generate a Return on Invested Capital meaningfully in excess of Inghams hurdle rate.

Strong alignment with strategy

The acquisition strongly aligns with Inghams strategy to establish the Company as the leading premium operator in the New Zealand market in the following ways:

  • Exclusive Market Positioning and Brand Equity: BBL is uniquely positioned in the New Zealand poultry sector, boasting strong brand recognition and a premium product range.
  • Vertically Integrated Supply Chain with Capacity for Future Growth: BBL’s vertically integrated supply chain enhances our operational resilience, provides contingency, and additional capacity to support future growth initiatives.
  • Access to new markets: Opportunity to leverage established high-value export channels to expand Inghams reach into new geographic markets and customer segments.

Funding & completion The acquisition will be fully funded from existing debt facilities, and is contingent upon the satisfaction of conditions, including with respect to the Commerce Commission and Overseas Investment Office. Completion is expected by end September 2024.

Flood protection work in Hawke’s Bay a step closer

Cabinet has agreed to engage on a proposal for a temporary change to legislation under the Severe Weather Emergency Recovery Legislation Act 2023 (SWERLA), which would speed up the delivery of flood protection work across Hawke’s Bay.

On the back of Cyclone Gabrielle, Hawke’s Bay Regional Council has earmarked seven areas where new flood infrastructure would see category 2A and 2C properties reclassified to Category 1 and one area where new flood infrastructure would protect an industrial area as well as Napier’s wastewater treatment plant. These areas are Wairoa, Whirinaki, Waiohiki, Ohiti Road/Omāhu, Pākōwhai, Havelock North, Pōrangahau and Awatoto.

Since the cyclone and other severe weather events in early 2023, laws have been changed on a range of issues to help recovery efforts across affected regions. The mechanism being used to do this, which is what is being proposed in this instance, is a piece of secondary legislation called an Order in Council (OiC).

Hawke’s Bay Regional Council Chair, Hinewai Ormsby welcomed the decision by cabinet, saying the order would provide a streamlined process for the multiple resource consent applications that would inevitably be required before construction of any planned flood infrastructure could begin.

“This will play an important role in enabling work to start sooner and progress to be kept on track, whilst ensuring the usual protective measures of cultural and environmental impact assessments will not be compromised.

“Ultimately we want to be able to provide certainty for our Category 2 property owners that they have a pathway to Category 1 and this is reliant on consent for new flood infrastructure works in these areas.”

She said whilst Council acknowledges each Category 2 community is at a different stage in the process, the reality is that regardless of the preferred solution there will be resource consents required to undertake the work.

“In Wairoa and Pōrangahau, we are still working through options with those communities at this point, but it is reassuring to know when we get to the consent stage we will be able to move through this process efficiently.”

The Ministry for the Environment (MfE), on behalf of central Government, is running a public engagement on the proposal which finishes on 18 March. Details of this engagement are available on the Ministry for the Environment website.

Large scale development gets fast track consent approval

Wairatahi, a large scale residential development in Hastings owned by Heretaunga Tamatea Pou Tahua – the commercial arm of Tamatea Pōkai Whenua, (formerly Heretaunga Tamatea Settlement Trust) – has secured approval to go ahead via the Government’s fast track consent process.

Tamatea Pōkai Whenua (TPW) chair Pōhatu Paku said the Covid-19 Recovery Fast-Track Consent decision was a significant outcome for the Trust; a major boost for the region’s economy and affordable housing supply.

“This is a major milestone for our hapū settlement entity and we are ecstatic that consent has been approved by the government’s fast track process which will create many jobs during construction and increase housing supply by up to 450 warm homes.

“This is one of the largest Māori led residential development on the East Coast and a lot of mahi has been put into the design which will realise the full potential of our whenua,” Mr Paku said.

Heretaunga Tamatea Pou Tahua, the commercial subsidiary of TPW,  chairperson Renata Hakiwai said site works for stage 1 could commence towards the end of this year, following discussions with potential development partners.

Wairatahi, is a 28ha property in Stock Road and will offer a range of housing options, including townhouses, detached dwellings, multi-generational homes, and standalone houses.

Tamatea Pōkai Whenua Chief Executive Dr Darryn Russell explains the community impact the Trust and its commercial arm are advancing for greater Hastings.

“As well as a diverse mix of housing options, we are ultimately creating a new community and extensive planning has gone into how we protect and enhance the environment such as the restoration and protection of the Irongate Stream.

“The development is not just for our members and their whānau but for all people and the fast-track decision is timely based on what our region is facing since the cyclone destroyed many homes across our rohe,” Dr Russell said.

The development is likely to have a small neighbourhood centre, community gardens, playground, and central park connected to open space separating the development from the State Highway and a walkway network, including along the Irongate Stream, will also be provided, enhancing public amenity and connectivity.

Dr Russell said the consent application’s success was due to the strong leadership of the Trust’s commercial arm, and a highly capable project team that had worked tirelessly, along with support from Hastings District Council and Hawke’s Bay Regional Council.

“The Heretaunga Tamatea Pou Tahua Board are driving forward the vision to ensure we are developing sustainable communities and  much needed homes in Heretaunga Hastings.

“Hastings District Council and the regional council have been supportive and we look forward to the next steps of our partnership.”

The development is part of TPW’s investment related to a Treaty of Waitangi settlement.

In 2018, a settlement package worth $105 million was made with Heretaunga Tamatea (which represents 43 hapū and 23 marae around the Hastings and Central Hawke’s Bay area) as part of its Treaty of Waitangi claim.

The announcement comes amid a housing crisis in Hawke’s Bay compounded by Cyclone Gabrielle, which sadly destroyed or damaged many homes in the region.

Tātau Tātau Commercial make significant investment into iconic local landmark

One of New Zealand’s most iconic beach-side holiday parks will continue to welcome thousands of holiday makers while remaining in local ownership.

Tātau Tātau o Te Wairoa Trust’s commercial entity today announced its purchase of the Mahia Beach Motel & Holiday Park, securing an asset that is pivotal to the Wairoa and Mahia community and local economy. This beautiful piece of land is enjoyed by both national and international holiday-goers.

Tātau Tātau Commercial Limited Partnership Kaihautū (Chief Executive) Aayden Clarke said it was important to acknowledge that the 3ha of residentially-zoned beachfront property will continue to provide affordable accommodation for holidaymakers.

“This is a slice of paradise on the east coast has been incredibly popular for generations of whānau as well as national and international tourists.

He signalled future upgrades to the property, located at 43 Moana Drive which currently is an operating business consisting of a mixture of 24 accommodation units and 150 powered and non-powered camping sites.

“This is a mokopuna investment for us, meaning we have a long term outlook to the Motel & camp ground.

“We are committed to making improvements to the holiday park and adding additional value back to the community through upgrades which will enhance the quality of stay for customers.

“At the same time we see other opportunities that complement the existing use,” Mr Clarke says.

Tātau Tātau Commercial Limited Partnership was established to protect and grow the commercial assets on behalf of its shareholder Tātau Tātau o Te Wairoa Trust and the seven Kāhui (Beneficial entities).

Lewis Ratapu, Chief Executive of Tātau Tātau o Te Wairoa Trust commented, “Tātau Tātau are thrilled to be the new custodians of the iconic property.

“It is very important that our people and all visitors can access affordable holiday accommodation, something that is getting harder to achieve as coastal land increases in popularity.

“We are always looking to support further growth in our wider community and to secure a significant site like this is exciting. This asset benefits all of our seven Kāhui, and obviously is of significant importance to one of those Kāhui, Rongomaiwahine.”

Rongomaiwahine Iwi Trust CEO Terence Maru acknowledges the collaborative mahi that has been done with the Tātau Tātau commercial organisation.

“There is so much potential to partner and deliver outcomes to our people while growing capability within our organisation,” Mr Maru said.

Former owner operator Isobel Creswell says ““whilst it was very difficult to let go of this park, I’m very happy it has gone to good hands. This campground now stays in NZ ownership and continues to be a holiday park for generations of families for years to come”

Isobel has been a key stakeholder of the Mahia community for 3.5 years providing affordable accommodation for all walks of life and attracting tourists to the small East Coast settlement.

Mr Clarke said it was important to highlight that “a key part of our Tiriti settlement is the evolution of Mana Motuhake of our whānau, hapū and Iwi o Te Wairoa, and this acquisition is part of exactly that.”