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Little to re-consider Labour's plan to establish new State-owned insurer 'KiwiAssure'

Little to re-consider Labour's plan to establish new State-owned insurer 'KiwiAssure'

The future of Labour’s proposed State-owned insurer is up in the air.

In November 2013 the party announced it would establish KiwiAssure – a publicly-owned general insurance provider – if it was elected in 2014's election.

Now it’s saying neither yay nor nay to the ambitious idea.

“My general feeling is I don’t think that policy poses any problems”, Labour leader Andrew Little told interest.co.nz.

He says it was an important policy in last year’s election and the issues that arose through the Canterbury quakes remain.

While Little disagreed with key issues the party campaigned on, like lifting the retirement age and imposing a capital gains tax, he says, “My feelings towards KiwiAssure aren’t the same as my feelings towards capital gains”.

Little says KiwiAssure is up for review with the rest of Labour’s policies, so the party will spend the next couple of years deciding if it will take the plan into the 2017 election.

He says the party’s nowhere near firming up a decision.

Labour’s former leader, David Cunliffe, championed KiwiAssure based on Kiwibank’s success.

He said the bank brought a new level of competition to New Zealand in terms of lower fees and growth in service, and KiwiAssure would produce similar results.

He also said New Zealand should cash in on the billions of dollars of profit foreign-owned insurance companies take offshore every year.

As for the taxpayers' price tag for KiwiAssure, Cunliffe estimated the initial capital injection would be less than the $80 million it took to establish Kiwibank in 2001.

Yet the KiwiAssure concept wasn't universally embraced.

Insurance lawyer Andrew Hooker said, “The experience of many New Zealanders with the two state owned insurers – EQC and ACC – suggests that a state owned insurer is not the answer.”

The Insurance Council accused Labour of attempting to grab low-hanging political fruit, by ignoring the enormity of the Christchurch quakes, and blaming foreign-owned companies for the pace of recovery efforts.

Chief executive Tim Grafton said, “New Zealand already has a responsive, innovative and responsible private insurance industry and to suggest that further State ownership is the answer, begs me to ask what on earth is the question?”

Yet independent actuary, Johnathan Eriksen, said there was room for some diversification in a market heavily dominated by Australian-owned companies.

He pointed out the significant rise in the cost of insurance premiums due to the quakes and a tougher building code, which makes new homes more expensive.

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5 Comments

I'll paraphrase the insurance industry: "We're making loads of money, where is the problem?"

"That industry seems like it's making loads of money, let's sink taxpayer dollars into a competing company"

Have to agree with Mr Andrew Hooker.  

Why is the State entering into the private industry?
Experts made the wrong call re: Christchurch cover... what would that mean for a ACC style public insurer !?  What happens when it is financially-incompetantly managed as MPI or other service orientated deportments?  Is in going to be in touch with reality or is it going to be head-in-the-clouds like ACC & Courts (finance isn't allowed to be considered.,..well I don't know where they get there service work done [for free]....)
 

Um? is doesnt pose any problems? who under-writes it? tax payers? who runs it? more clueless labour supporters? oh bugger is all I can say.
 

The biggest issue with insurance is actually the lack of any real effective legislation on how/when a claim is settled in terms of the policy wording. The industry has sought to re interpret the meaning of some terms which to some extent after extended delay the Courts have ruled on but even the courts have failed to financially recognise the cost of delay which is now at 4 years + with many claims still unsettled.US states have legislation some quite draconian reflecting the similarly appaling way claims have been handled, the main thrust of their legislation is to set time limits for settlement of Clean claims - like natural disasters - and impose interest costs for delay. An Insurancce contract by its nature is one sided as insurers write it and determine the premium with no real opportunity by the insured to negotiate either so In my view the law should balance this with policyholder rights and determination of fair wording & interpretation and impose the the same kind of penalties imposed by IRD for delay or misleasding (Avoidance) and perhaps predetermined penalties for specific offences - a multiple of the amount being offered against the real value. I am probably dreaming given the lack of any words let alone action from our elected representatives - read Brownlee/Key.

Days to the General Election: 29
See Party Policies here. Party Lists here.