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

In July 2023, it was reported in the media that many patients were waiting up to a year for basic medical procedures at Hawke’s Bay Hospital when the target wait is six weeks. These procedures included ultrasound and CT scans, MRI’s and steroid injections.

The wait to get a routine examination for these patients was one of the factors (along with workforce shortages, unsuitable spaces and ageing equipment) that led to the hospital’s radiology department having its accreditation suspended.

On top of this are the wait times for surgery. In January 2022 there were 2,487 people across the country left hanging on a surgical wait list for more than a year. By January 2023, that number increased to 6,361 people.

The impact of unwell staff on productivity If you have staff needing medical care, it can have a major impact on their ability to work effectively, especially if they are in pain or incapacitated. Ultimately this can roll on to your workplace productivity. One of the things that you can do to support your people’s wellbeing and get them back to work quicker is to provide them with private medical insurance.

Not only does medical insurance encourage your employees to seek medical treatment earlier, it means that because they can be seen privately they are likely to be diagnosed and treated much quicker. This is not only good for their physical health but their mental wellbeing.

Research shows that employers with workplace health programmes that improve employee health by reducing, preventing or controlling diseases can realise potential cost savings. This can be measured against factors such as –

■ Absenteeism among employees due to illness or injury.

■ Reduced overtime to cover absent employees.

■ Costs to train replacement employees.

Healthier employees contribute to a safer work environment

Staff who are in general good health also contribute to a safer workplace as they are more likely to have improved physical, mental, and emotional health which enhances stamina, concentration, and focus. Mental wellbeing in particular is a concern when it comes to a safe working environment, with many reports showing a decline in Kiwi’s mental health. Employers not only have an ethical responsibility when it comes to mental health, they also have obligations to look after the physical and mental health and wellbeing of their staff under the 2015 Health and Safety at Work Act. This of course requires workplaces to protect against physical harm (including fatigue) as well as psychological harm. Many medical insurers offer benefits to support mental wellbeing under their policies which help employers to ensure that their people have access to the right support.

Keep your existing people healthy and attract new staff

It is no surprise that organisations that offer medical insurance are more highly regarded by prospective employees
– especially if medical benefits can be extended to their spouse or family members. Recruitment company Madison recently highlighted health and wellbeing support as the number two benefit that ‘people actually care about.’ Health insurance was specifically mentioned as ‘one of the best things you can offer.’ This helps explain why the growth in membership at New Zealand’s largest health insurer, Southern Cross, is the highest it has been in 30-years – with 20,000 new members joining in the last year alone. The organisation has said that some of this growth was coming from businesses and organisations wanting to attract and retain people. There is no better time to consider a medical insurance plan for your people than now. The ICIB Brokerweb team is highly experienced in finding the right plan for your organisation. You can drop our Life and Health team a line on insurance@icib.co.nz, call us on 06 870 6567 or visit icib.co.nz to find out more.

As this July marks 150 years since the founding of Hastings, we thought it would be interesting to take a journey through some of significant events in the region during this time and see how insurance played a part in them. Has much changed since 1873 and what have we learnt?

Fire

Hastings first major fire occurred in Heretaunga Street in 1893 when two blocks of business premises were destroyed. Whilst it was reported at the time that many of the buildings had insurance, many were ‘shy of large insurances on stock’, according to the Daily Telegraph, and ‘in a few cases there is no insurance at all, and the sufferers are now bitterly repenting their inattention to this precaution.’

What is fascinating at this time is that the amount of insurance each company had was listed in the newspaper – not something that most business would be so keen to do now!

Floods

In 1897 the Ngaruroro River burst its banks and flooded a large part of the Heretaunga Plains with eight people losing their lives. As a result, houses in that area now have foundations that sit four or five feet above the ground. The total damage was estimated at £150,000, or $34,309,472 in today’s money.

A similar flood occurred in 1938 with hundreds of acres of farmland being coated in silt for up to four years afterwards, following three days of heavy rain. Similar to recent events, one of the hardest hit areas was Esk Valley.

Earthquake

The biggest disaster however was the earthquake on 3 February in 1931, which killed 256 people. Within a few minutes nearly the whole business district was destroyed, with fires breaking out only minutes afterwards. Only a few buildings in Central Napier survived. Back then, hardly any of the building owners had proper earthquake insurance. Those that did soon found out that the small print in their policy stated that fire caused by an earthquake was not included in their policy. Subsequent to this, the Government created the 1931 Hawke’s Bay Earthquake Act.

This provided statutory assistance for the Hawke’s Bay rebuild by allowing the ‘State Advances Superintendent’ to lend money to local authorities to repair damage caused by the quake. The Act was repealed in 2015 as it was no longer relevant.

Now of course those of us who have private insurance policies for our property and land automatically have earthquake cover under EQC. A thorough review of New Zealand building codes was also completed as a result of the quake, resulting in many buildings being built during that era being heavily reinforced. It is also why you will now only see four buildings in Hawke’s Bay taller than five storeys.

The earthquake risk has meant that it has been hard and expensive to secure cover for older buildings.

Cyclones

In more recent years we have been hit by severe weather events. Many will remember Cyclone Bola in March 1988 which struck Hawke’s Bay and the eastern cape of Gisborne.

Losses back then amounted to $90 million (equivalent to about $210 million today). Insurance payouts for the whole event totalled $37 million at the time excluding Earthquake Commission claims. Sadly, Cyclone Gabrielle has surpassed the losses of Bola with claims numbers as of 4th April 2023 totalling 14,707.

Claims made in Hawke’s Bay alone are worth $593m – more than half the total for the entire country at $1.155 billion. Unfortunately, both numbers are still climbing, and it will be sometime before we have final numbers and total losses accurately recorded. 6,819 claims out of 44,650 (15.3%) have been settled with pay-outs totalling just over $147 million out of an estimated
$1.155 billion (12.7%). Hawke’s Bay now accounts for 14,707 out of 44,650 Gabrielle claims (32.9%), but nearly $593 million out of an estimated $1.155 billion (51.3%) of claims by value.

What have we learnt?

Whilst 150 years is a long time it is interesting to see a couple of common themes across this period.

Back in 1893 even those who had policies were underinsured and, in 1931 following the earthquake, people with insurance discovered they weren’t covered under their policy when it came to a claim. These are two issues that are very common today and that can be avoided by regularly reviewing your insurance policies and using a broker who can help check the detail for you. Congratulations on your anniversary Hastings. ICIB Brokerweb is proud to be part of community and looks forward to serving you well into the future.

It’s been a tough couple of months for many with Cyclone Gabrielle having wreaked havoc across our beautiful region.

Over 40,000 insurance claims have been lodged. The cost attached to these claims is around $890 million of which around $70m has been paid, according to The Insurance Council of New Zealand at 20th March. This only covers insurers who are members, and the industry consensus is that the final bill will be in the billions. What became apparent immediately after the cyclone was –

• How unprepared some people were from a business continuity perspective.
• The level of under insurance in some areas when people were making claims, including having insufficient business interruption cover.

Hindsight is of course wonderful thing but, given the nature of these severe weather events which are likely to continue with climate change, planning for any future events is critical. As you start moving forward and rebuilding, here are some things to consider –

Business Continuity Plan (BCP)

Developing a sound BCP is crucial to preventing even a minor disruption from turning into a catastrophe.

A BCP should not just cover natural disasters it should also focus on risks such as supplier failure, economic crisis, cyber-attacks, and pandemics. Should any of these risks occur, unprepared organisations don’t just stand to lose profits but their reputation, and possibly even their whole business.

BCP’s help organisations protect their employees and assets and resume operations in an expedient and more controlled way. They are not just designed to cover ‘in-the-moment’ procedures in a crisis, such as escaping your building safely from a fire, a BCP covers how you’ll get core parts of your business up and running again after the event. It includes things such as –

• Accessible recovery locations and emergency operations centres.
• A process for automatically switching telephone and data lines.
• Manual processes for continuing operations until technology is repaired.
• Processes to deal with the loss of information that is not available from backup data.
• A BCP awareness programme.
• A review process to keep the BCP up to date.
• Testing of the BCP on an end-to-end basis.

Once the plan is developed it is important to test it with a group of different people from the across the business. For example, what are the practical realities of switching over phone systems from an IT perspective or how do you get communications out if no one has power?

Risks are changing all the time, so the plan needs to be pulled out regularly and reviewed.

Business interruption (BI)

When you are next reviewing your insurances, make sure you review your BI policy thoroughly and have the correct sum insured and indemnity period. The indemnity period is the timeframe which the turnover of the business could be affected by damage to your buildings, plant or contents.

It should be the period it would take to restore the income of your business to the same position as if the loss had not occurred. We saw through the Christchurch earthquakes how inadequate many indemnity periods were due to the underestimation of how long it would take to re-establish a devastated business.

For example, getting tradespeople before the cyclone was a challenge and now demand is even higher – meaning that wait times to get work done are even longer. You will still need to be paying for staff wages and may incur costs for temporary premises until yours are reinstated. We appreciate that this is a challenging and Hawke’s Bay are here to help.

There has been a lot of talk lately around employee health and wellbeing, especially with the struggle for employers to attract and retain staff and recent initiatives such as Mental Health Awareness Week. We all know that a healthy workforce leads to a healthy business but what is the right approach for employers to health and wellbeing and, if the goal is to ‘improve’ the health/wellbeing of the workforce, how can you measure this?

Defining what wellbeing is and why it matters to employees The term ‘wellbeing’ is multi-faceted. It includes everything from the physical health of a person to their mental and spiritual state, social interactions, cultural engagement, and financial situation. Gone are the days of the lifelong nine-to-five career with a gold watch at the end. Employees are now expecting their employers to value their wellbeing and offer flexible working arrangements – at a minimum.

The measure of success from an employee’s perspective has changed from merely financial rewards to aspiring for an overall package that affords an attractive lifestyle for them and their family.

1. Why should wellbeing matter to employers? An employee in good general health contributes to a safer workplace and is proven to be significantly more productive
2. Given the lower rates of absenteeism, increased output of quality work. In a tight labour market, it is crucial for employers to not only offer a competitive salary or wage but to go that step further and provide additional benefits that will impact their life and wellbeing in a tangible way. Many employers offer discounted gym subscriptions or social/competitive sporting events, weekly yoga sessions or onsite massage therapists. Some businesses are implementing a group life, disability, or critical illness insurance plan to provide peace of mind to an employee and their family. More commonly, in recent months, organisations have instigated health plans for all staff with universal acceptance to cover treatment in private health facilities or assist with day-to-day costs such as GP visits, dental check-ups and prescription lenses. This continues the trend of health insurance plans as the most desired employee benefit in New Zealand.
3. As well as looking after the health of the employee these plans help avoid the lengthy wait they might otherwise face in the public health system, and supports them to recover faster and thus return to work sooner. There are currently 200,000 New Zealanders on a health-related wait list and forty two percent have been waiting more than four months.
4. How do you measure wellbeing? To attract and retain a happy/healthy team, businesses would do well to use the approach of a medical check-up when it comes to measuring the health & wellbeing of their workforce. For example when visiting your GP there are the routine physical checks however there is often equal weight given to other external factors (think alcohol consumption, family or work-based stress). Likewise, in addition to focusing on the physical health of employees it would benefit a business to reflect on the wider aspects of their employees’ lives such as family commitments (ie. school or day-care routines) and other extra-curricular obligations or pursuits. A simple online or anonymous survey is a good way of gathering the wider picture of what is important and where new initiatives or benefits may deliver positive outcomes.

Although it is not easy to measure wellbeing here are some ideas once you have decided to get focused around your team’s wellbeing –

• Decide where you expect your business to sit in relation to your competitors (below/average or an ‘employer of choice’ for wellbeing?)
• Nominate a wellbeing champion or committee in a similar vein to what a social club committee might be. What would a happy/healthy team look like to your business?
• Attempt to define the current culture of health/wellbeing – in practical terms are sick days generally encouraged or avoided/discouraged?
• Next Steps

It is critical to appreciate the impact that wellbeing has on individual employees and the positive benefits this can have on a business. We recommend becoming intentional by implementing a wellbeing strategy that is tailored to your team and their working environment and that delivers a positive impact on their health and lifestyle. If you are undertaking salary/wage reviews it would be the perfect time to consider alternative benefits that go over and above a competitive pay packet. Show additional value and demonstrate that yours is a business that cares about your people and their wellbeing. Need help or have questions?

Your ICIB Life & Health team is here for a no obligation chat. Icib.co.nz/products/life