Canterbury’s residential insurance market is in a state of unprecedented transformation. Agreed-value cover is consigning replacement cover to history. Equally significant is the imposition of hefty excesses on non-dwelling structures, like swimming pools and fences. A $5000 excess appears to be the ‘new normal’ for these structures, although VERO’s $10,000 excess is particularly puckish, if not downright obnoxious. I was intrigued to read in The Press recently that in the wake of the quake and tsunami disaster of 2011, Japanese insurance premiums are set to rise by 15%. Yes, you read right. A puny, inconsequential 15%. Can we swap places? Apparently it’s their first quake-related increase since 1980. How much has your premium billowed by? In the space of two years, mine has progressively doubled, which the Insurance Council confirms is the norm. However, they are quick to point out that 40% of your premium is non-insurer generated. The EQC levy ( which has tripled), the fire service levy and GST clock up 40% of your insurance bill. But what is the forecast trajectory for residential insurance premiums? At what point do these inexorable increases become dangerously unaffordable? I know this sounds implausible, but if your quake-related insurance claims are settled, shop around. Seriously. I put my existing cover to the test and received two favourable quotes from rival insurers, willing to take me on as a customer, trimming $150 from my existing premium. There is definitely more fluidity in our insurance market now, than 12 months ago. And the most sizeable hikes appear to be behind us. But one fly in the ointment is the Reserve Bank, the industry’s regulator. They’re insisting on higher solvency standards whereby insurers must be able to meet a 1 in 1000 year catastrophic event, within three years. Currently, like Australia, our solvency provision is 1 in 250 years. The Reserve Bank’s ridiculously stringent requirement will keep unnecessary upward pressure on premiums.
Courting, schmoozing and glad-handing the Chinese is right up the Christchurch Mayor’s cul-de-sac. For all his foibles, Bob Parker the salesman, is an exemplary ambassador and cheer-leader for the city. His trip to China, strategically timed to dove-tail with the Prime Minister’s trade mission, will hopefully bear some tangible fruit. Parker has already telegraphed that a major Chinese company is negotiating to do a joint-venture on a significant city project. Wouldn’t it be fabulous if we could palm-off some of the cost of the Convention Centre, or the stadium, to the People’s Republic? Christchurch International Airport boss, Jim Boult has been part of the delegation. 12 months ago, Boult claimed to me that this year would see new direct air links with Adelaide, North America and Asia. To date, nothing has transpired. But given the surging love-affair the booming Chinese middle-class has with this country, sealing a deal with China Southern Airlines is surely in reach.
Mike’s local current affairs column, every Tuesday in The Press.