Competitive landscape a worry for Kiwi insurers – PwC Report


4 August 2017

PwC’s Reinventing insurance, one step at a time Report, ranks competition as the third greatest risk in NZ (up from number five in 2015) while change management and technology are listed as the biggest risks for insurers.

While change management and technology are the top risks globally as well, competition ranks unusually high in NZ.

“It’s no surprise that local insurers are feeling the effects of an increasingly competitive market. InsurTech start-ups are bringing in new technologies to the market and they aren’t held back by legacy systems or outdated business models,” says Karl Deutschle, PwC Partner and Insurance Sector Leader.

“Insurers are well aware that they need to build solutions and products that are focused on the customer. However, their biggest challenge is to convert that awareness into reality. The smaller disruptors are able to focus on a specific customer solution and deliver this quickly and seamlessly. The bigger incumbents still need to master this speed to market.”

Another stand out in this year’s report is the increasing concern over regulatory risk. This is no surprise since the high-risk initiatives affecting the industry include the implementation of IFRS 17 - Insurance Contracts, the review of the Financial Advisers Act, and the proposed changes to the EQC Act.

On top of these, we have increases to EQC and Fire Service levies (and changes to the way emergency services are funded), a Privacy Act review in development and a review of the Insurance (Prudential Supervision) Act 2010.

“The insurance sector has been in a state of disruption since the Christchurch earthquakes in 2010 and many of the changes mentioned above have been as a result of an increase in natural catastrophes in NZ. However, thanks to our stable political system, the risk of political interference is perceived as being quite low (ranked 16 but up by three places since 2015). The same can’t be said for Australia though, where political interference in the sector has jumped nine places and is now the second-highest risk overall,” says Mr Deutschle.

Clearly, change management is driving most markets but we also asked respondents how prepared they think the industry is to manage these risks.

“The results showed that NZ ranks in the bottom quartile of all countries surveyed in terms of preparedness. We’re below the global average and behind many of our Asia-Pac neighbours but this might be that Kiwi respondents were just more realistic about the challenges ahead than their global counterparts,” concludes Mr Deutschle. 

 

-Ends-

 

 

 

Budget 2017 has brought something for everyone, with wide-ranging spending for families and infrastructure two areas that are seeing the most investment.
“Minister of Finance Steven Joyce’s first budget finally reaps the rewards of the Government’s fiscal patience. Strong economic performance with good growth, modest inflation and shrinking unemployment, gives the Government options that it did not have before. And the response has been to provide something for almost everyone,” said PwC Partner and Budget Leader Richard Forgan.

There are welcome shifts to tax thresholds, long held at their current levels. Together with Working for Families, these will give the typical earning household between $1,000 and $2,000 more per year in disposable income. And those benefits will be most felt by low earners.

Infrastructure and house-building get a huge boost, most of it in Auckland; the innovation system gets more funding; the health sector is given some $4 billion more; defence, law and order, prisons, school building and vulnerable children all benefit.

Underneath the headlines, the general thrust is the more of the same from previous years – economic growth supported by investment in trade relationships, infrastructure building and innovation funding; more social services targeted at the most vulnerable parts of society; investment in core public functions such as the health, education, the tax system, ACC, defence and the justice system.

So who gets left out?

“Small businesses and the regions are mentioned in passing (particularly for tourism), but pale into insignificance against the investment in Auckland’s powerhouse,” explains Mr Forgan.

“But the underlying themes show a high degree of continuity, with the Government investing in recovering from the Kaikoura earthquake and replenishing EQC’s funding model to prepare for any future shocks.”

 

Budget 2017 has brought something for everyone, with wide-ranging spending for families and infrastructure two areas that are seeing the most investment.
“Minister of Finance Steven Joyce’s first budget finally reaps the rewards of the Government’s fiscal patience. Strong economic performance with good growth, modest inflation and shrinking unemployment, gives the Government options that it did not have before. And the response has been to provide something for almost everyone,” said PwC Partner and Budget Leader Richard Forgan.

There are welcome shifts to tax thresholds, long held at their current levels. Together with Working for Families, these will give the typical earning household between $1,000 and $2,000 more per year in disposable income. And those benefits will be most felt by low earners.

Infrastructure and house-building get a huge boost, most of it in Auckland; the innovation system gets more funding; the health sector is given some $4 billion more; defence, law and order, prisons, school building and vulnerable children all benefit.

Underneath the headlines, the general thrust is the more of the same from previous years – economic growth supported by investment in trade relationships, infrastructure building and innovation funding; more social services targeted at the most vulnerable parts of society; investment in core public functions such as the health, education, the tax system, ACC, defence and the justice system.

So who gets left out?

“Small businesses and the regions are mentioned in passing (particularly for tourism), but pale into insignificance against the investment in Auckland’s powerhouse,” explains Mr Forgan.

“But the underlying themes show a high degree of continuity, with the Government investing in recovering from the Kaikoura earthquake and replenishing EQC’s funding model to prepare for any future shocks.”

 

Budget 2017 has brought something for everyone, with wide-ranging spending for families and infrastructure two areas that are seeing the most investment.
“Minister of Finance Steven Joyce’s first budget finally reaps the rewards of the Government’s fiscal patience. Strong economic performance with good growth, modest inflation and shrinking unemployment, gives the Government options that it did not have before. And the response has been to provide something for almost everyone,” said PwC Partner and Budget Leader Richard Forgan.

There are welcome shifts to tax thresholds, long held at their current levels. Together with Working for Families, these will give the typical earning household between $1,000 and $2,000 more per year in disposable income. And those benefits will be most felt by low earners.

Infrastructure and house-building get a huge boost, most of it in Auckland; the innovation system gets more funding; the health sector is given some $4 billion more; defence, law and order, prisons, school building and vulnerable children all benefit.

Underneath the headlines, the general thrust is the more of the same from previous years – economic growth supported by investment in trade relationships, infrastructure building and innovation funding; more social services targeted at the most vulnerable parts of society; investment in core public functions such as the health, education, the tax system, ACC, defence and the justice system.

So who gets left out?

“Small businesses and the regions are mentioned in passing (particularly for tourism), but pale into insignificance against the investment in Auckland’s powerhouse,” explains Mr Forgan.

“But the underlying themes show a high degree of continuity, with the Government investing in recovering from the Kaikoura earthquake and replenishing EQC’s funding model to prepare for any future shocks.”

 

Budget 2017 has brought something for everyone, with wide-ranging spending for families and infrastructure two areas that are seeing the most investment.
“Minister of Finance Steven Joyce’s first budget finally reaps the rewards of the Government’s fiscal patience. Strong economic performance with good growth, modest inflation and shrinking unemployment, gives the Government options that it did not have before. And the response has been to provide something for almost everyone,” said PwC Partner and Budget Leader Richard Forgan.

There are welcome shifts to tax thresholds, long held at their current levels. Together with Working for Families, these will give the typical earning household between $1,000 and $2,000 more per year in disposable income. And those benefits will be most felt by low earners.

Infrastructure and house-building get a huge boost, most of it in Auckland; the innovation system gets more funding; the health sector is given some $4 billion more; defence, law and order, prisons, school building and vulnerable children all benefit.

Underneath the headlines, the general thrust is the more of the same from previous years – economic growth supported by investment in trade relationships, infrastructure building and innovation funding; more social services targeted at the most vulnerable parts of society; investment in core public functions such as the health, education, the tax system, ACC, defence and the justice system.

So who gets left out?

“Small businesses and the regions are mentioned in passing (particularly for tourism), but pale into insignificance against the investment in Auckland’s powerhouse,” explains Mr Forgan.

“But the underlying themes show a high degree of continuity, with the Government investing in recovering from the Kaikoura earthquake and replenishing EQC’s funding model to prepare for any future shocks.”

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