The media’s reporting record profits in the insurance sector – we wonder how that can be when every other industry is suffering ever decreasing margins, particularly car insurance repair?
Insurance sector magazine CoverNote reports that Australian giant corporate SunCorp, owners of Vero Insurance and majority shareholder of AA Insurance, recorded a profit boost of 81% for its New Zealand business where it pulled in over $67 million! Perhaps this was helped by Vero’s latest venture into owning their own car insurance repair collision repair facilities in NZ, we’re told this is much to the detriment of the already struggling panelbeating sector here.
CoverNote also reported on the other Australia mega brand IAG which includes NZI, State, Lumley and AMI. They say that IAG’s NZ earnings rose to $119 million for the SIX MONTHS to 31st December 2017, up from $36 million for the same period ending 2016. They advise that the result was mostly due to a 15% drop in claims expenses – again we’re told that car insurance repair rates paid to IAG contracted panelshops is so low that many of them are simply closing the doors and walking away. We’re covered the subject before at https://crashmanagement.co.nz/collision-repair-sector-crisis/. IAG’s obviously in growth mode though with a reported increase in NZ premiums of 9.5% to $1.3 billion. The wider Australian group has just posted a 24% gain in net profit to $551 million!
Meanwhile IAG are looking at moving more NZ jobs off-shore to reduce their costs even further. In 2016 IAG announced it had engaged Philippines and India based companies and outsourced car insurance repair claims and other functions off-shore. See more at https://crashmanagement.co.nz/nzi-car-accident-claims-affected-mass-redundancies/
Outsourcing to cheap labour countries seems to be popular in insurance, QBE tried it a few years ago but then rapidly unwound the deal when it discovered that Manilla didn’t understand New Zealand geography or New Zealanders. They’ve now moved back to an NZ based model and taken up residence in a premium 30 level central Auckland Queen St address. Claims and car insurance repair processes times have improved significantly since.
Let’s not forget YOUi and how could we. This South African based multi-national was fined $320,000 in December 2016 for misleading sales practices after the Commerce Commission took them to court. YOUi appears to be undergoing its own transformation, at the time of the court case they employed over 400 staff in New Zealand, but that’s now dropped to around 250.
Tower Insurance has had its ups and downs recently and were hoping for a marriage made in heaven with Vero, but the dream was shattered in July 2017 when the Commerce Commission declined Vero’s application to acquire 100% of the shares in Tower Limited. See the full story at https://crashmanagement.co.nz/vero-insurance-loses-tower-insurance-bid/. CoverNote has now reported that Tower’s Christchurch office will be closed with the loss of about 20 employees.
Now it appears Winston Peters wants the last word – doesn’t he always? This time he’s got an opinion on the insurance sector despite never having worked anywhere near it, or anywhere else for that matter. For the record, Winston wants a state-owned insurance company. Apparently his comments were sparked by the news that IAG is planning to move jobs from Christchurch to the Philippines, a move he said was “chasing third-world wages”. Sorry Winston, you may have a point (or two) but everyone knows that claims and car insurance repair service levels would NOT be best managed by government employees.
Perhaps he’d settle for a NZ owned insurance company rather than a tax-payer funded one? And we already have one of those – Protecta Insurance, independently owned and operated by kiwis for kiwis. With the best policy terms & conditions, and car insurance repair service in the market, any profits are also retained right here in New Zealand. Get the best from the best at https://www.protecta.co.nz/.