General Insurance Update 2015

General Insurance Update 2015

To prosper and fuel New Zealand’s economy, insurers must continue to adapt their business strategy to respond to changing customer needs, technology advances and regulatory demands. This view is supported by research from a recent KPMG International survey which reveals insurance industry executives are acutely aware of the need to innovate – 83% of respondents agreed their future success was tied to their ability to innovate. Almost half (48%) said their own business models were already being disrupted by more nimble competitors.

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KPMG’s General Insurance Update 2015, discusses this innovation imperative.

One thing is clear, there is no ‘silver bullet’ to create a more innovative organisation; no ‘off the shelf’ package that drives new ideas. Instead, insurers and intermediaries will need to navigate their own path through this new world of opportunity, developing new business and operating models and new partnerships in order to out-compete and out-innovate their peers and bold new entrants.

Key findings from the General Insurance Update 2015:

  • KPMG examine the results of the Lloyds City Risk Index 2015 to 2025, and look at the key trends and risks from an Auckland and Wellington perspective – The analysis highlights that natural catastrophes such as earthquake and floods are outweighed by man-made threats - such as market crash and oil price shocks, human pandemics and cyber-threats.
  • Both KPMG and the Insurance Council of New Zealand (ICNZ) agree that the Canterbury earthquakes have demonstrated the value of having a Natural Disaster Scheme, however both note the time is right to revisit the role of the Earthquake Commission (EQC) and make sure that any Natural Disaster Scheme going forward is fit for purpose.
  • KPMG analyse the merits, and indeed, the need for insurers to adapt their business models to be customer-centric, and the importance of such an approach in unlocking future value. Those organisations that put the customer first, will, in KPMG’s opinion, gain that competitive advantage.
  • From a regulatory perspective, the publication focuses on the importance of conduct risk, and examines what happens when conduct risk goes wrong, and on the self-regulation front, considers the Fair Insurance Code 2016, specifically how this will be monitored and enforced.
  • With the growing trend across Asian insurers to increase their investment allocation to alternative investments such as real estate, KPMG consider the attractiveness of real estate assets from a New Zealand perspective.
  • On the tax front, KPMG discuss the recently announced proposals to impose GST on services provided by non-resident insurers to customers who are tax resident in New Zealand.
  • And, with Cyber Risk gaining increased momentum around boardroom tables, KPMG revisit what organisations can do to get it right, emphasising the importance of a strong risk governance process.

© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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