As the tides of costs rise, which insurance sector is staying afloat?
As the tides of costs rise, which insurance sector is staying afloat? | Insurance Business New Zealand
Insurance News
As the tides of costs rise, which insurance sector is staying afloat?
“It’s maintained its affordability”
Insurance News
By
Daniel Wood
Rising costs continue to be a major challenge for New Zealand’s insurance brokers and their clients across a range of industries.
“In terms of our customer base we have seen the increased cost of money caused by inflation and other factors making things tighter,” said Mark Mallard, director of Crème Insurance.
Mallard’s Auckland-based brokerage focuses on insurance for high end motor vehicles but also offers other covers, including for property.
“We look at some of our commercial properties and customers who have bought them in the last couple of years are right now upside down on them,” said Mallard.
These properties, he said, were bought when interest rates were about 3%. Those rates, said Mallard, are now about 8%.
“So that’s causing some hurt among some of our property owners and that bleeds through to a lot of different industries,” said Mallard.
Boating’s resilience to economic pressures
However, some niche sectors within some industries are bearing these economic pressures better than others.
Paul Field (pictured) is a veteran marine loss adjuster and surveyor. He suggested to Insurance Business that boating is one of these niches that may have escaped the worst impacts of cost rises and affordability pressures.
“Boating – and to a smaller degree your trailer boats – is probably one of the recreational pastimes that has retained its affordability,” said Field. His Auckland-based firm, Field Assessors, focuses on insurance claims involving pleasurecraft.
“You can get yourself a little $12,000 or $15,000 little runabout and on a sunny afternoon, you can pop it on any one of the number of boat ramps, go out 500 metres off the shore, drop the anchor and be fishing,” said Field.
This suggests that brokers selling coverages for these smaller pleasurecraft could be more insulated from economic pressures than some colleagues in other industries.
“It’s maintained its affordability in that respect,” said Field. “For general accessibility it’s still a very affordable pastime.”
Expensive boats are still expensive
However, he emphasized that cost rises have hit much of the pleasurecraft space as hard as any other industry.
“Don’t get me wrong,” said Field. “You’ve got the opposite end of the spectrum.”
Particularly, he said, for higher end boats where the cost of parts and insurance covers has gone up as steeply as other industries.
“In terms of the ongoing maintenance costs [for more costly boats] the economy is having a huge impact across the board in a variety of industries, but maritime as well,” said Field. “The cost for the manufacture and transport and all the associated auxiliaries that go into that costing have gone up.”
According to NZ Fishing World, annual maintenance on boats usually costs about 10% of the new purchase price.
The cost of moorings and marina spots for boats can also be expensive. The same article said the cost to moor a 30-foot vessel at Auckland’s popular Viaduct Harbour is about $1,000 per month.
“There’s a lot of lake use as well, so it’s just coastline and waterways!” he said.
“Compared to many other countries, a higher level of New Zealanders’ recreational time is spent boating – which is fantastic and obviously important for us as a portfolio to manage,” said Lyndon Turner, CEO of NM Insurance in an interview with IB.
“I think if you measured it on a per capita basis, registration statistics have shown that there’s a very high percentage [of boat] ownership in New Zealand versus other markets around the world,” said Turner.
Are you an insurance professional in a niche industry that is riding out the economic pressures in reasonably good shape? Please tell us about it below
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