Disaster pay-outs $60M since 1968

Press, 27 June 1983, Page 25

Disaster pay-outs $60M since 1968

Fire and general insurance companies have paid out more than S6OM on what they classify as “disaster and catastrophe” claims in New Zealand since the Wahine storm of 1968. Mr J. S. Lowcay, general manager of the Commercial Union General Insurance Company, Ltd, gave this figure to a news seminar held in Wellington by the Insurance Council. He gave this summary of pay-outs: 1968: Wahine storm, $3.5M, loss of Wahine, $10M; 1975: Canterbury storms, S7M; 1976: Wellington-Lower Hutt floods, $6.2M; 1978: Otago floods, $10.3M; 1980: South Island summer floods, $2.3M, Taieri-Otago-New Plymouth floods, SBM, Onehunga tornado, Auckland, $500,000; 1981: Thames-Coromandel-Paeroa floods, S7M, Keri Keri floods, S2M. The Halswell tornadoi would bring the pay-outs to more than S6OM, he said. The figure does not include pay-outs by the Earthquake and War Damage Commission. Mr Tom McGuiness, president of the Insurance Council, said that changes coming up to the Earthquake and War Damage Regulations could mean that the fund would not cover storm and flood damage in future. The fund had about S6SOM in it, and there were provisions for more money to be supplied from the Consolidated Revenue Account. What had previously been thought of as “100-year disasters” were now occurring at a rate that was eroding the fund. Mr J. S. Marsh, general manager of the New Zea-

land Insurance Company, Ltd, told the seminar that the industry should be building a “catastrophe reserve” for the inevitable need. “Who would have thought that an Australian bush fire or series of them could cost over $200,000,000 in insured claims?” he said. He believed that such a reserve would be developed, all customers paying a few dollars more a year. Fewer jobs The fire and general insurance industry in New Zealand employs about 10,400 people. This compares with a peak of about 11,500 in 1975. Giving this figure at an Insurance Council news seminar in Wellington, Mr Marsh, general manager of the New Zealand Insurance Company, said he expected the gradual fall in numbers to continue, slowly, by attrition. National on-line computer networks are one of the new measures which will allow the staff reductions. On the other hand, he expects the skill level in the industry to rise. CER provision A new type of insurance coverage should be considered by those beginning exports to Australia for the first time because of CER, the seminar was told. This is to take account of the Australian practice of a free-into-store contract; under this the purchaser might reject goods on arrival at the warehouse door. Frozen meat The storage of unsold frozen meat is providing a

major coverage problem for the insurance industry, Mr J. R. Grant, marine manager of the Commerical Union Insurance Company, Ltd, told the seminar. “In the last 18 months there have been a number of fires, one of which appears to be arson,” he said. The fires had cost insurers a good deal of money. The intervention of the Meat Board in the trade had meant, however, that some insurance companies had lost accounts. Car insurance The price freeze was now adversely affecting car insurers, Mr E. B. McKessar, general manager of the 5.1.M.U., told the seminar. At first the freeze had held expenses and claim costs equally, but now the rising price of Japanese car parts was hitting the companies. Imported parts are exempt from the freeze, and 80 per cent of new cars are Japanese. Mr McKessar gave an example of the effect of the changing value of the yen against the New Zealand dollar: the total price of 18 specific parts had increased 9.2 per cent between June 22, 1982, and June 1, 1983. “There is no doubt whatsoever that today’s premium rates, which in many cases have been in force since 1981, are already inadequate,” he said. “There is no way that these premium rates can fund claim payments in 1984 when chargeout rates for labour will inevitably have increased, while changing currency relativities will have further increased parts costs.”