NZ5569/10 04/14

An industry magazine for the insurance sectorIssue 32 – April 2014

Bad's not going anywhere. Neither are we.

Backing more businesses than any other insurer.

Building strong foundations

Global gustsHeeding the weather warnings

Home truthsTracking the changes

Kiwifutures

NZI CONNECT 2

People matters

Cover photography: Scott McAulay

An eventful start to 2014

In this issue:2 New Corporate head aims high Michael Carswell in the hot seat; Jo Mason in the

barber’s chair.

3 Pacific pride in scholarship wins Why we extend a helping hand to students from

the First Foundation.

5 Perfect storm of rising risks Climate change impacts and the latest from the

world of science.

8 Driving economic growth In her 2013 report, the ICNZ’s Jacki Johnson gives

an overview of insurance issues.

9 Renewing the challenge Catching up on progress after the first year of home

insurance changes.

11 Why the Kiwi is flying high We look at what’s behind the rising fortunes of our

national currency.

13 Step away from the vending machine In our health and wellness feature, netball star

Jess Moulds talks work-day nutrition.

15 Statutory Liability and the RMA Jane Marsick outlines the support available to rural

clients in the regulatory eye.

17 New player in news game Q & A with the editor of New Zealand’s new online

channel for insurance news.

1 NZI CONNECT

Leadership

Welcome to our first issue of Connect for the year. We're awaiting with interest the outcome of the Commerce Commission’s response to IAG’s application seeking clearance to purchase Lumley General Insurance. After IAG consented to a request for an extension of the deadline, we now expect the Commerce Commission’s decision on 30 April.

Last month the Australian Competition and Consumer Commission gave its approval for IAG's acquisition of the Wesfarmers' underwriting business in Australia. However, as we go to print, IAG still requires approval from two other Australian regulators.

There has been some discussion in the media recently around the introduction of price-comparison websites, which allow customers to easily shop around and compare insurance cover. NZI’s view is that these websites can lead to policies being stripped of benefits in order to rate more highly, potentially exposing customers to greater risk of loss, rather than focusing on the scope of cover, the claims experience and, importantly, service levels. All areas where you, our brokers, play a key role.

In this issue we talk to our most recent First Foundation scholarship recipients. These two driven young men are inspiring in their determination to create a brighter future for themselves, despite some challenging circumstances. We also take a look at what the future holds for climate change and how this could impact the industry going forward.

This time last year the focus was on changes to home insurance and the move from open-ended replacement cover to specified sum insured policies. As we head into our first round of renewals, underinsurance continues to be a big challenge. Communication and education still have vital roles to play in ensuring our customers understand the importance of their level of cover and I thank you for your ongoing efforts as we continue to support our mutual customers through this process.

Regards

Karl Armstrong Executive General Manager, NZI

Getting out of the office and meeting brokers and clients is a must for the new Head of NZI Corporate and his team. Michael Carswell is excited about his new role and the opportunity to grow the division.

One of the first changes under his watch has been to get himself and his team of 15 out of their offices in Auckland, Wellington and Christchurch and into those of brokers and clients.

New Corporate head aims highMichael Carswell has moved from his role as Head of Aon CPF to take up the reins of NZI’s Corporate division. Connect checks in with Michael, an NZI veteran of 18 years this July, to see what’s on the horizon.

We’re not... just a necessary cost. There’s value for corporate business in having a good relationship with their broker and underwriter.

“We’re focused on a three-way, collaborative partnership,” says Michael. “NZI, the broker and the client.

“Since I came into this role in September I’ve met with many of our clients and it’s given me a fresh perspective on who they are, what their business means to them and how they’d like to work with their insurer.

“We’re focused on developing long-term relationships with our corporate clients, which requires a level of insight into their business and ultimately a sharing of values.

“As the market changes, we want to move beyond price and demonstrate other ways we can add value – like providing clients with access to NZI’s business insurance experts,” he adds.

Most of us have a cause we’re passionate about, but few would go to the extent that Jo Mason has to support that cause.

Last month NZI’s General Manager of Corporate, Niche and Facilities took the bold step of shaving her head to raise money for Leukaemia & Blood Cancer New Zealand’s annual Shave for a Cure appeal. The campaign aims to raise awareness and funding for patients and families of those living with blood cancer and related conditions.

Jo raised a massive $18,045 (third in NZ). Of her efforts she says, “I’m so thankful for all the support I’ve received for this fantastic cause." And how does she feel about her new ‘do’? “I’m now enjoying an extra 15 minutes sleep each morning!”

To find out more or to donate, visit www.shaveforacure.co.nz.

Jo shaves for a cure

The corporate team’s emphasis is on clients with more than $100,000 GWP (a level that’s currently under review) and the book has doubled since the division was set up in 2010. However, the market is changing and Michael believes the traditional NZI corporate view needs to evolve.

His strategy is to establish relationships with the client in partnership with the broker and build a value proposition that’s fit for the client (underwriting,

claims management and risk surveying to name a few).

Getting on his soapbox for just a minute, Michael says one of his biggest bugbears is the view of the insurance industry.

“We’re not the ‘add on’ or just a necessary cost. There’s value for corporate business in having a good relationship with their broker and underwriter. I see NZI as an important financial partner in our clients’ businesses – they choose to invest in us and likewise us in them.”

If you have a client you think would benefit from the attention of Michael and his team, don’t hesitate to get in touch. Email michael.carswell@nzi.co.nz or phone 029 969 3843. NZI

Jo with hairdresser Kirsty Chand

NZI CONNECT 43 NZI CONNECT

Saumani Matatia is Tangaroa College’s Head Boy and is proud of his Pacific heritage. He says it means the world to him to receive the scholarship and when he received the news, it was an emotional experience.

Two year-13 students from Tangaroa College in Otara, Auckland are the latest recipients of the NZI Austin Hemmings Memorial Scholarship in partnership with First Foundation.

“To win the Austin Hemmings Memorial Scholarship brought me to tears,” says Saumani. “I’m the eldest child and grandchild and will be the first to go to university. It’s a big deal and very humbling.”

Jo Mason, NZI’s General Manager of Corporate, Niche and Facilities, says Saumani is a fantastic role model to the younger people around him and always thinks about the impression he’s giving. “He has a passion for rugby and we believe it’s his passion that will take him far in life.”

He plans to study law and the scholarship has helped him to focus on his studies.

“I used to focus only on rugby, but in year 11 I took history, which wasn’t my first choice, but I fell in love with the subject and after talking with my Dad and the Dean, decided to look into law.”

Giving back

Pacific pride

Saumani cites the programme’s mentoring aspect and the work experience provided by NZI as a bonus.

“I’ve already spent some time in claims and really enjoyed it. While at NZI I got to speak with some of the in-house lawyers and it’s boosted my confidence to pursue a career in law,” he says. “The scholarship has opened so many doors.”

Not only did Saumani win the First Foundation/NZI scholarship, he was also selected for the Auckland Rugby Union Academy. This young man is one to watch.

Peni Matua is a fellow student at Tangaroa College and was thrilled to receive the scholarship. He says it makes it easier for his family, knowing they don’t have to pay tuition fees for university.

The former Christchurch resident has long wanted to study commerce, from when he was a boy watching men in suits heading to work, and plans to apply to The University of Auckland.

Peni says winning the scholarship has made meeting his objectives much easier.

“The scholarship provides financial and moral support. Some programmes just provide money, but with the First Foundation and NZI we get a mentor and work experience. Knowing you have a mentor to turn to for support is helpful – someone to motivate and inspire you."

Peni, who has been working in NZI’s Professional Risks and Marine teams, says the work experience is invaluable.

“Four years of work experience at NZI will improve my CV and help open doors for me following my studies.”

Jo Mason says Peni’s integrity, his respectfulness and amazing drive to succeed stood out during his interview. “We’re very proud to have him as one of our Austin Hemmings Memorial Scholarship recipients.”

Visit www.firstfoundation.org.nz to learn more about how the First Foundation and NZI are transforming young lives.

First Foundation has a strong belief in the simplicity of a helping hand to make an amazing difference to someone’s impact on their family, their community and wider society.

NZI and First Foundation's partnershipEstablished in 1998, the First Foundation believes all young people in New Zealand should have the opportunity to achieve their dreams regardless of their socio-economic situation.

In partnership with businesses from across the country, it seeks to build a better future for our most talented but financially disadvantaged youth and has transformed the lives of nearly 400 so far.

One of NZI’s own, Austin Hemmings was killed in 2008 after stepping in to save a complete stranger from being attacked at knifepoint. The First Foundation stood out as an organisation that shared the same values as NZI and those that Austin chose to live by. It was from here that the Austin Hemmings Memorial Scholarship was born.

NZI’s sponsorship covers tertiary fees over three years and also involves part-time work, the support of a mentor and a structured development programme. NZI

About the First Foundation

385the number of scholarships offered in the foundation’s

15-year history

124the number of Scholarship

Partners the foundation has worked with

61the number of low-to-mid

decile schools the foundation works with nationwide

in scholarship wins

Giving back

Photography: Scott McAulay

Saumani Matatia, left, and Peni Matua.

NZI CONNECT 65 NZI CONNECT

Perfect storm of rising risksIt’s the weather, Jim (Hickey), but not as we know it. The Intergovernmental Panel on Climate Change has a long name but short, sharp messages about our warming planet. Connect looks at worldwide weather, impacts on insured losses and scientific forecasts.

The images tumble onto our phones and out of our TV screens with alarming and, it seems, increasing regularity.

Tennis photographers frying eggs centre court in Melbourne, Princes William and Harry sandbagging properties against prolonged flooding in England, life literally freezing over in parts of the United States.

The prevailing perception is the world’s wicked weather is worsening and Earth’s inhabitants are buffeted not only by the elements but a perfect storm of rising insurance costs.

Scientific examinations of the connection between climate change and weather extremes always pose uncertainties and debate, but recent high-profile pronouncements have pierced the discourse.

Just after Typhoon Haiyan struck the Philippines in November 2013, British Prime Minister David Cameron spoke of the need to tackle global warming at the Commonwealth summit, saying evidence was growing that climate change is causing more extreme weather disasters.

As reported in The Telegraph online on 16 November, he added: “...Even if you're less certain than the scientists, it makes sense to act both in terms of trying to prevent and mitigate.”

Hot on his heels in January came an assessment report from the Intergovernmental Panel on Climate Change (IPCC) – one of a series due out in 2014 – laying the blame at the human population’s feet more squarely than ever before. It said warming of the

climate system was unequivocal and limiting climate change would require substantial and sustained reductions of greenhouse gas emissions.

The warning theme continued on 31 March, with the latest report from the IPCC’s Working Group II finding “the effects of climate change are already occurring on all continents and across the oceans. The world, in many cases, is ill-prepared for risks from a changing climate.”

However, the report also concludes there are opportunities to respond to such risks, although they’ll be difficult to manage with high levels of warming.

Industry impactPutting predictions aside, how have the latest major weather events impacted the insurance industry?

Leading reinsurer Munich Re says the 890 loss events worldwide last year resulted in overall direct losses of US$135 billion, of which $US35 billion were insured losses.1 The five costliest natural catastrophes were:

`` hailstorms in Germany, July 2013, US$3.7 billion in insured losses

`` flooding in central Europe, June, $3.1 billion

`` severe storms and tornadoes in the United States, March and May, $1.6 billion and $1.8 billion

`` flooding in Canada, June, $1.6 billion.

Typhoon Haiyan was the deadliest, accounting for more than 6200 of the 20,500 deaths worldwide. Its record-breaking wind speeds also destroyed about 600,000 homes.

“The effects of climate change are already occurring on all continents and across the oceans.” – IPCC

Compared with the 10-year average (2003-2012), last year was below average in both loss of life and loss of assets, but above average in the number of loss events.

Here, the Insurance Council of New Zealand (ICNZ) says 2013 will prove to be one of the most expensive years for weather-related damage, with more than NZ$174 million of insured costs arising from such events.

“Last year was one of the most costly for weather losses since the Insurance Council started tracking these losses on a regular basis back in 1968, the year of the Wahine disaster,” says Tim Grafton, ICNZ Chief Executive. “This further reinforces the value of insurance in safeguarding New Zealand by being able to meet costs of this scale.”

The 11-12 September storm unleashed the most havoc, with $74.5 million of insured losses and considerable damage to irrigators in Canterbury.

This year hasn’t started much better, with flooding in Christchurch after a once-in-a-century storm early last month. University of Canterbury researchers say the city is experiencing more frequent and severe flooding due to the earthquakes’ impact.

Those quakes and other natural disasters around the world contributed to a spike

year globally in 2011, when insured catastrophe losses topped US$105 billion. Since our earth moved, the cost of New Zealand’s reinsurance risk has more than doubled, with reinsurers adjusting their view of Asia-Pacific as a region offering diversification benefit.

While 2012/13 ‘normalised’ in terms of losses and most reinsurance markets remain open to Australian and New Zealand risks, local risk is still being re-rated as Canterbury loss revisions impact the market.

Climate change Climate change

Geophysical events (earthquake, tsunami, volcanic activity)

Meteorological events (storm)

Climatological events (extreme temperature, drought, wildfire)

Extraterrestrial event (meteorite impact)

Hydrological events (flood, mass movements)

Floods Canada,

19-24 Jun

Floods USA, 9-16 Sep

Severe storms, tornadoes

USA, 28-31 May

Severe storms, tornadoes USA, 18-22 May

Flash floods Canada, 8-9 Jul

Hurricanes Ingrid and Manuel Mexico, 12-19 Sep

Winter Storm Christian (St Jude) Europe, 27-30 Oct

Hailstorms Germany, 27-28 Jul

Floods Europe, 30 May-19 Jun

Earthquake (series) Pakistan, 24-28 Sep

Meteorite impact Russian Federation, 15 Feb

Earthquake China, 20 Apr

Typhoon Fitow China, Japan 5-9 Oct

Typhoon Haiyan Philippines, 8-12 Nov

Floods Australia, 21-31 Jan

Floods India, 14-30 Jun

Heatwave India, Apr-Jun

1 Munich Re, Topics Geo 2013

A selection of significant loss events worldwide 2013 Geographical overview

© 2014 Münchener Rückversicherungs, Geo Risks Research, NatCatSERVICE

NZI CONNECT 87 NZI CONNECT

Climatic futureBack to the future, what can we expect from Mother Nature as this century unfolds?

The IPCC projections paint a global increase in extreme weather events, such as heavy rainfall and heatwaves, and more intense storms. In our neck of the planet, rising sea levels and more heavy rainfall are expected to increase erosion and flooding, with damage to low-lying ecosystems, infrastructure and housing.

James Renwick, Associate Professor of Geography, Environment and Earth Sciences at Victoria University, believes sea level rise and its associated hazards is one of the biggest issues we face.

“New Zealand has a great deal of valuable property and infrastructure close to the coast that will be increasingly at risk as time goes on.”

According to the ICNZ’s Tim Grafton, climate change scenarios point to higher levels of rain in parts of the country already prone to flooding, and stronger winds from the west. “This underlines the need for New Zealand to focus on pre-disaster mitigation and adaptation strategies to minimise economic losses and social disruption.”

Stephen Everett, NZI’s General Manager Commercial Underwriting and Risk Management, says taking a risk leadership position is high on NZI's current and future agendas.

“We can enhance this position by not only providing better-designed solutions to protect customers but also partnering in education, prevention and mitigation initiatives.”

IAG is working with central and local government to strengthen New Zealand’s approach to managing natural hazards, particularly improving land-use planning. And in Australia, the IAG-led Australian Business Roundtable has been influencing in federal and state government circles, and the United Nations, through its White Paper calling for a more sustainable approach to managing natural disasters.

“New Zealand has a great deal of valuable property and infrastructure close to the coast that will be increasingly at risk...”

– James Renwick, Victoria University

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200

180

160

140

120

100

80

60

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01968 1975 1976 1978 1980 1981 1983 1984 1985 1986 1988 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

12

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Count

Count and cost of New Zealand disasters since 1968

(Source: Insurance Council of New Zealand statistics; note 1968 excludes loss of Wahine)

The IPCC’s Working Group II report finds

that risk from a changing climate comes

from vulnerability (lack of preparedness)

and exposure (people or assets in

harm’s way) overlapping with hazards

(triggering climate events or trends).

Working group co-chair Chris Field

says adaptation to reduce those risks

is starting to occur, but with a stronger

focus on reacting to past events than

on preparing for a changing future.

“Climate change adaptation is not

an exotic agenda that has never

been tried. Governments, firms and

communities around the world are

building experience with adaptation.

This experience forms a starting point

for bolder, more ambitious adaptations

that will be important as climate and

society continue to change.” NZI

The critical role insurance plays in underpinning New Zealand’s economic success is evident from its contribution to the Canterbury recovery, according to the ICNZ.

This role in growing the country’s economy and supporting our communities is ongoing, but will be most evident over the next two years as the residential rebuild reaches its peak. This period will account for most of those rebuild costs, says Jacki Johnson in her President’s Report for the annual review.

Milestones in earthquake claim resolutions were achieved in a challenging year where issues beyond insurers’ control continued to impact the recovery, such as the complexity of settling multi-unit dwellings.

Looking ahead, Jacki Johnson says New Zealand will need continued capital investment from insurance shareholders and reinsurers if the country is to maintain the security of knowing adequate insurance is in place for the risk the country faces.

“To achieve this we will require demonstration of a reasonable return on capital. Yet over the last 10 years New Zealand underwriters have only experienced two years where returns were seen as adequate,” she says.

“This tells us that New Zealand premiums have been significantly under-priced for the risk the country has faced for many years.”

Additionally, Jacki Johnson says, the Reserve Bank is requiring underwriters to be backed by more reinsurance capital than any other jurisdiction. This will continue to impact premiums, particularly for regions more prone to earthquake risk.

Driving economic growthInsurance and reinsurance are now significant drivers of New Zealand’s economic growth. That’s the takeaway message from the Insurance Council of New Zealand (ICNZ) in its Annual Review 2013, presented to the council's AGM last month.

“While insurers support a well-regulated market that provides protection for policy holders, this needs to be balanced against adding significantly to the cost of insurance,” she says.

Earning public trustJacki Johnson believes high levels of insurance in the future cannot be taken for granted and insurers must work hard at earning the public’s confidence.

“We must demonstrate that we are providing good value for the underwriting risk the country faces and that high levels of insurance penetration reflect an efficient, competitive market.

“Equally, there is a shared responsibility across the community to ensure New

2013 in brief`` More than $10 billion of Canterbury earthquake claims settled by the end of 2013. More than 70% of commercial claims resolved and almost half of residential claims.

`` Insurance loss from weather-related events was the most expensive of the past decade (see our story, page 5). Insurers welcomed more Government research funding into building resilience to natural disasters.

`` The transition to full licensing by the Reserve Bank was completed in September. Insurers are keen to see better communication of the strategic objectives for regulation.

`` The Fire Service Levy was still a sore point with insurers. “New Zealand is out of step with jurisdictions elsewhere, which have transitioned to more equitable and efficient means of funding fire services.” NZI

There is a shared responsibility across the community to ensure New Zealand improves the way it manages the risks it faces.

Zealand improves the way it manages the risks it faces. Some sectors of the economy, for instance wholesale and manufacturing...appear to be inadequately insured, so the high levels of residential insurance penetration can disguise other vulnerabilities.”

Boards, insurance brokers and broader industry groups need to work together to help businesses understand their vulnerability to unexpected events, assess their appetite for risk and seek the appropriate cover.

“This will provide the necessary ongoing protection for New Zealand’s economy and communities.”

For more from the annual review, visit www.icnz.org.nz/about/year-in-review

Climate change ICNZ update

NZI CONNECT 109 NZI CONNECT

Renewing the challengeIf location, location, location is the mantra for buying houses, then communication, communication, communication is the catchcry as we head into a second year of insuring homes under specified sum insured. NZI's Garry Taylor gives Connect an update on progress.

Last year’s move from open-ended actual replacement cover to specified sum insured policies represented one of the biggest changes in New Zealand home insurance in more than 25 years.

Garry Taylor, NZI’s General Manager Broker Personal Sales, says the massive transition was always going to require a high level of broker engagement to educate clients and the general public, and achieve a smooth transition.

Recognising this, NZI took a leadership role throughout the change process and carried out a comprehensive communications campaign, including practical tools for homeowners.

“Overall, the transition is progressing relatively smoothly,” says Garry. “It has provided the perfect opportunity for brokers to demonstrate added value by guiding clients to help them arrive at levels of cover they're comfortable with.”

However, he warns that client apathy and underinsurance continue to be the big challenges ahead for underwriters and brokers – and clients themselves.

“We see this playing through in our stats, as 60 per cent of clients are basically accepting the indicative default sum insured when they renew their home insurance.”

Garry believes ongoing, effective communication with homeowners has a big part to play in addressing the challenges posed by client apathy and underinsurance.

“We need to ask ourselves what else we can do to ensure our clients are comfortable with their level of cover

and are not reducing their sum insured to manage the rising costs of insurance. And how do we continue to engage with clients about the importance of having enough protection?”

The gap in people’s understanding of their home insurance and what the move to sum insured policies would require of them was identified in IAG research before the transition.

The research showed that only a third of homeowners surveyed were aware of the upcoming changes and just over a fifth considered themselves very well aware of what their cover provided. Yet the transition was about to catapult

them into taking more responsibility and understanding the likely cost of rebuilding their house when deciding on their sum insured.

Moving to help plug the information gap, IAG devised an award-winning education campaign, spearheaded by the Need2know website (www.need2know.org.nz/nzi) and its online calculator that helps estimate a home’s likely rebuilding cost.

“Need2know has been key to helping clients understand the rationale for the changes and educate them about what they need, either at renewal or insuring their home for the first time,” says Garry.

Need2know numbers`` Since launch in March 2013, the Need2know website has received just over 1.3 million visits; 852,009 were unique visitors. (External figures, excluding IAG staff).

`` The NZI sub-site, need2know.org.nz/nzi, has received 8717 unique visits.

`` Just over 13,300 people have downloaded the Home Insurance Changes guide, and 16,705 viewed one or more video.

`` In the peak month of June 2013, the online calculator was started 30,711 times, resulting in 21,000 completed calculations.

Sum statistics`` 60% of clients are renewing with their default sum insured.

`` Of the 40% changing their sum insured, the average increase is 30%.

`` The main centres – Auckland, Wellington and Christchurch – are recording the largest changes in the sum insured.

`` The average renewal cost per square metre is $2200, and $2400 for new business. NZI

“The calculator and supporting renewal material were well received and offered options to help people determine their level of home insurance protection.”

Brokers have responded to the home insurance change with various degrees of engagement, such as:

`` holding client community forums to explain the rationale and outline options to help manage the changes

`` contacting all of their clients and arranging full reviews of their Personal Lines covers

`` distributing the NZI communication materials and then following up with review phone calls

`` employing more staff to help with client enquiries.

“It’s all good stuff, but we need to keep thinking of different ways to engage and educate our clients,” says Garry.

Home insuranceHome insurance

1

Your guide to the need2know.org.nz

calculator

The real opportunity is for brokers to demonstrate added value by guiding clients about the various options available to help them.

“It’s an opportunity not restricted to changes to sum insured – it also extends to advising clients on various ways to manage affordability through policy and voluntary excess options.”

In preparing for the second round of renewals, brokers can help their clients by:

`` checking with the client that they’re comfortable with their sum insured amount and all policy details are correct

`` if clients are still carrying their renewal default sum insured, which was provided when they first renewed their policy following the transition to sum insured, then this sum insured could be inaccurate if the property is on a slope or includes above-average or high-value fittings and features

`` considering what you can do differently with those of your clients who have renewed on the default sum insured.

Adds Garry: “We’re always keen to hear your ideas about what else NZI can do to support you and your clients to ensure they have the level of protection that they believe is adequate for one of their biggest assets.”

NZI CONNECT 1211 NZI CONNECT

The New Zealand dollar is at historically high levels against nearly all of its trading partners and doesn’t look to be moving from its perch any time soon. Today the Kiwi is around 84 cents to the US dollar, much higher than its average of 58 cents for the first 20 years following the currency’s float in 1984.

So what’s causing the lift in the dollar? According to ASB’s Chief Economist, Nick Tuffley, it’s the commodity boom, particularly China and its demand for dairy and meat.

“When you look at the terms of trade (what we sell our exports for versus what we pay for our imports) there’s been a huge lift in the value of exports. Dairy has been the most consistent, but there have been pretty strong prices for meat and forestry also,” he says.

“We used to average below 60 cents against the US, but we’ve averaged 72 since the end of 2005 when the boom really started.”

Nick says that when considering factors linked to the exchange rate, the China story is all important.

“In the space of a decade we’ve seen China move from being relatively self sufficient to being a huge importer of commodities, which has had a considerable influence on global prices. It’s consuming a significant share of global resources, and for New Zealand it’s mostly about food.”

So what about the future? Will China’s demand continue? Nick predicts there’s likely to be strong demand from China for dairy and meat for a number of years yet.

“Demand is fuelled by strong economic growth and strong income growth, and is a pattern seen in other Asian economies that developed before China. But what’s different about China is the scale.”

Recent data from Statistics New Zealand places some context around the scale to which Nick refers. In January this year a record 30 per cent of our total exports

CurrencyCurrency

Why

headed to China; more than double

the value that went to Australia

(total exports $4.1 billion, including

$1.2 billion to China and $556 million

to Australia).

And in the six years from 2008 to 2013,

exports to China almost quadrupled,

growing from about $2.5 billion to

$9.9 billion, while exports to other

countries fell by around 5.5 per cent

(or about $2.2 billion) in total.

Source: Statistics New Zealand, Price Index News: October 2013, Dairy exports in 2012 compared with 1992

China’s growth doesn’t look likely to slow down, given continued economic expansion and its burgeoning middle class, which will no doubt continue to demand Kiwi dairy products. This is reflected by the fact that in 2012 the United Kingdom moved from being our number one destination for dairy products to number 45, while China moved from 31st to first.

One thing is certain, the China story has many chapters yet to be written. NZI

“When you look at the terms of trade... there’s been a huge lift in the value of exports. Dairy has been the most consistent, but there have been pretty strong prices for meat and forestry also.”

– Nick Tuffley, ASB

1992 2012

UK

JAPAN

CHINASAUDI ARABIA

UNITED ARAB

EMIRATES

MALAYSIA

PHILIPPINES

USA

MEXICO

VENEZUELA

Share of New Zealand dairy exports to selected countries in 2012 compared with 1992 by $ value

Country (1992)United Kingdom 14.5%

Malaysia 9.1%

Japan 7.1%

Mexico 6.0%

Philippines 5.4%

United States of America 3.7%

Saudi Arabia 2.7%

Venezuela 2.7%

United Arab Emirates 0.7%

People's Republic of China 0.5%

Country (2012)People's Republic of China 22.4%

United States of America 4.5%

Saudi Arabia 4.1%

United Arab Emirates 4.1%

Venezuela 4.0%

Malaysia 3.9%

Philippines 3.8%

Japan 3.3%

Mexico 1.4%

United Kingdom 0.3%

is flying highThe New Zealand dollar, or the Kiwi as it’s affectionately known, is sitting at record highs against its main trading partners. Connect investigates what’s fuelling the high.

the

NZI CONNECT 1413 NZI CONNECT

Health and wellnessHealth and wellness

We’ve all been there, feeding the vending machine at 3pm in search of something to eat, only to feel hungry again all too soon. Or perhaps you’re someone who survives on coffee when you’re in back-to-back meetings, skipping lunch and ignoring that growling stomach.

Jess Moulds is a dietitian with Mission Nutrition and also a netballer with the Canterbury Tactix, so she knows first-hand how important it is to have healthy snacks on hand for those super-busy days or when you’re travelling.

“Healthy eating comes down to organisation and planning. You need to

Step away from the vending machineIt can be hard to make good food choices when you’re busy at work, running from meeting to meeting. Connect canvassed dietitian Jess Moulds for her top tips on easy snacks and lunch for the office, and smart choices when eating out.

have healthy snacks on hand all the time – in your glove box, handbag, gym bag, desk drawer. It’s critical, otherwise you’ll get caught short and end up reaching for the vending machine,” she says.

Jess recommends keeping these snacks close at hand, so you can turn to them for morning or afternoon tea, or when meetings run over and you find yourself without time for lunch.

When it comes to lunch, Jess says it’s important to squeeze in as many vegetables as possible.

“In our practice we find that Kiwis don’t eat enough vegetables in their lunch meal. Vegetables are important

for a balanced diet and they’re not just reserved for dinner.

“The key to a good lunch is a combination of vegetables, whole grains, a dose of healthy fats (like those found in avocado) and protein as this will make you feel fuller for longer.”

Being prepared is the key to healthy office eating, but what about when you’re eating out? Jess says it’s possible to make healthy choices at cafes.

“Grainy bread sandwiches are good choices, as are salads. Most cafes will have a frittata loaded with vegetables, which is another good option.

“Essentially, you want to avoid heavy, creamy things and the ubiquitous ‘giant’ cakes and muffins, as they are made with refined flour and give you a quick fix followed by a blood sugar crash later.

“Look for options with lots of vegetables, meat or another form of protein. Sushi is a good choice, particularly the brown rice variety. Brown rice has the grain left intact, so there’s more fibre and you feel fuller for longer.”

Loading up on coffee between back-to-back meetings and skipping lunch is not recommended. Jess says one cup a day is about right, as having too much coffee can have a negative effect on sleep.

“Some people say they can have a coffee right before bed and still go to sleep. However, what’s important is the quality of your sleep. Caffeine builds up and so while you might be able to

Fail-safe snacks`` the humble banana, particularly as an after-workout snack – surely the best fast food ever!

`` unsalted nuts and dried fruit

`` a handful (6-8) Mini-Wheats or Weet-Bix Bites

`` plain popcorn

`` a mini tin of low-fat creamed rice – a sweet pick-me-up

`` fresh fruit

`` raw vegetables and hummus

`` crackers (Vita-Weat is a good choice) with cheese

`` a piece of toast with peanut butter and banana

`` a small pot of yoghurt.

Lip-smacking lunches

`` Two-minute brown rice with a can of tuna, frozen vegetables or leftover vegetables from home. Change out tuna for chicken, chickpeas or an egg, and add some baby spinach leaves.

`` Turn your ‘desk drawer’ crackers into a nutritious lunch by adding some protein, tomato, cheese and avocado – hey presto!

`` Don’t look past the good old-fashioned sandwich and make sure it has protein and vegetables. Substitute wholegrain bread for a wholegrain pita or wrap for a change.

`` Salads don’t have to be boring – add cashews, almonds, sun dried tomatoes, leftover meat, chopped roast veges, feta...the list is endless.

`` A handy and healthy idea is to cook extra at night and put it into a plastic food container for lunch.

Jess’s go-to smoothies

`` Blend together a good handful of frozen berries, a banana, 2 tbsp of rolled oats, 3 tbsp of yoghurt, milk and a handful of baby spinach leaves.

`` Blend together 1 tbsp of peanut butter, 1 banana, 3-4 tbsp of rolled oats and milk. Add a pinch of cinnamon or a dash of vanilla essence.

Healthy eating comes down to organisation and planning. You need to have healthy snacks on hand all the time... otherwise you’ll get caught short and end up reaching for the vending machine.

nod off, you may not be having the restorative sleep your body needs.”

Good alternatives are water, soda water, herbal tea, green tea, or even juice as it’s caffeine-free.

Smoothies (see recipes below) are a nutritious option for a morning snack, but Jess suggests making a half-size version in the afternoon.

Eating healthily at work really comes down to what the Girl Guides knew all along – be prepared. Take time to set yourself up with good snack and lunch options; your body will thank you for it.

Mission Nutrition is a team of qualified and experienced dietitians and nutritionists that can help you look and feel your best. Check out www.missionnutrition.co.nz for more information on its programmes, services and free monthly challenges. NZI

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NZI CONNECT 1615 NZI CONNECT

‘Dirty dairying’ has been much in the news of late, with dairy farmers being villain du jour for many townies. To make not too prosaic a point, the issue is effluent and how it has the potential to pollute New Zealand’s water sources.

The Resource Management Act (RMA) protects these water sources. The Act has a fairly simple purpose: “...to promote the sustainable management of natural and physical resources”. For farmers and similar occupations it means that how they act in relation to the environment in which they work can be subject to regulatory scrutiny.

NZI provides cover for prosecutions under the RMA through our Statutory Liability policies.

Recent court cases in the dairy heartlands of Waikato and Southland have seen a harder stance taken by authorities in enforcing the RMA and stiffer penalties for breaches. A well-publicised Waikato case involved a fine of $140,000. Coupled with defence costs, a penalty like this can be a large financial burden for any enterprise to bear without the support of Statutory Liability cover.

It’s important not only for rural clients to consider Statutory Liability cover, but to also be aware they have some responsibilities under this cover. NZI wants its policy holders to understand these responsibilities so that they don’t inadvertently compromise their cover in any way.

One area in which policy holders might not fully understand the importance of their actions is in their duty to disclose to the underwriter all situations likely to give rise to a prosecution or proceeding under any Act. This duty exists when

cover is first sought, on renewal, and at any time during the period of insurance.

Informing underwriter It’s a good idea to involve the underwriter early on when a notice or directions under the RMA (or indeed any Act) are received. Claims are considered on their own merits, but early notification assists in meeting two important duties.

Firstly, it makes certain the underwriter has been informed of a material fact, which is a duty under all insurance policies. For occupations interacting with the environment every day, such as farmers, foresters or agricultural contractors, a notice under the Act governing the environment is material.

Secondly, and more importantly, notifying the underwriter also fulfils the duty under all Statutory Liability policies to inform the underwriter of any event that may lead to a claim. We need to be aware of circumstances that lead to charges being laid against our policy holders. This allows NZI to assist the insured as soon as possible.

Increasing publicity is being given to prosecutions of farmers under the auspices of the RMA. Jane Marsick, NZI’s Rural Underwriting Manager, outlines the protection provided by our Statutory Liability policies and how it can support your rural clients.

It’s a good idea to involve the underwriter early on when a notice or directions under the RMA (or indeed any Act) are received.

However, we’re finding that because some policy holders aren’t informing us of investigations being carried out, they’re not receiving all the assistance we may be able to offer them.

RMA complexityRMA prosecutions can be complex, with many parties involved – the insured, employees, contractors, sub-contractors and so on.

When notified of a potential claim, our most common action is to appoint a solicitor experienced in RMA prosecutions to represent the insured. They can give the insured advice on how to respond to the situation and how to act when the insured’s interests may not match those of other parties. The defendant’s responsiveness is a factor that mitigates the seriousness of any potential prosecution. The actions taken to mitigate loss and respond to environmental breaches can potentially lessen the legal consequences of any action.

This information is not solely relevant to farmers, it applies to other occupations too. Agricultural contractors and those working in forestry and similar occupations have an increased exposure to this statutory risk because of the degree to which their work revolves around the land.

The RMA is a wide-ranging and extensive piece of legislation, and it’s beneficial for all clients to be aware of their obligations and liabilities under it. If they have insurance cover, it’s particularly important for them to understand and act in accordance with the requirements of their cover so that it’s there to support them when needed most. NZI

RuralRural

Statutory Liabilityand the RMA

NZI CONNECT 1817 NZI CONNECT

From the editor’s deskIn our take on his website’s feature, ‘Five minutes with...’, Adrian Gallagher takes on a bit of Q & A with Connect.

Is insurance more newsworthy than ever?

Since the Canterbury earthquakes, domestic and commercial insurance has been thrust into the spotlight as it's become such an intrinsic part of many people's lives. The industry is a changing playing field and, with more focus on natural disasters and regulatory reform, we can safely assume there are more changes coming for brokers.

What are the burning industry issues you want to cover this year?

A few hot topics right now, such as the IAG and Lumley merger, and D&O policies, but we’ll also look at insurance issues and developments from the Canterbury quakes, the Fair Insurance reforms in July, and cyber risks and risk management and changes in technology and distribution.

What's the biggest public misconception our industry should address?

There’s definitely an issue of trust from the negative mainstream press regarding insurers’ response to the quakes, but probably more important is public education. Making the industry more transparent so its aims and goals are seen and understood by everyone is key, along with the importance of a broker’s role in the insurance process.

Why should brokers spend internet time with you?

Insurance Business is written specifically for brokers. We’ll deliver breaking news, opinion and analysis that directly affect New Zealand’s insurance broking community. We hope brokers will visit IB for a few minutes every day to keep abreast of the latest news, watch our multimedia pieces and engage with other brokers in the forum. NZI

Media

New Zealand’s news landscape has become home to a new online channel, www.insurancebusinessonline.co.nz, specifically for insurance news and analysis, and believed to be a first in our media market.

Editor Adrian Gallagher, who is based in Auckland with dedicated journalist Maryvonne Gray, says setting up the new website and daily e-newsletter 'over here' in February was a natural expansion at a time when the New Zealand insurance business is changing so much.

Insurance Business online is from the same Key Media stable as insurancebusinessonline.com.au, its Australian counterpart.

Craig Dowling, IAG’s Head of Corporate Affairs, says Insurance Business online has the potential to be a useful channel for insurance professionals, helping them to keep up with industry developments and hopefully raising the level of insurance reporting and discussion.

He also welcomes the launch of an annual media award by the Insurance Council of New Zealand and the New Zealand Journalists Training Organisation to improve insurance-related literacy.

New player in news gameFrom the magnitude of natural disasters to the evolution of the industry itself, insurance is perhaps more of a headline act than ever before. Which is why Australia’s Insurance Business has jumped the ditch to set up a news channel here.

We’ll deliver breaking news, opinion and analysis that directly affect New Zealand’s insurance broking community.

NZI’s ‘Bad’s not going anywhere’ TV commercial cleans up at CAANZ Axis awards

NZI ad campaign extended to radioAfter the success of the TV commercial, NZI has now added a radio campaign to the mix. There are two versions of the radio ad, based on the same concept as the television commercials – where everyday inanimate objects found in the workplace, such as an office chair or a water cooler, cause havoc to unsuspecting businesses.

The radio ads use the same soundtrack as the TV commercial, which is now becoming more recognisable and synonymous with NZI, and the same tagline: Bad’s not going anywhere. Neither are we.

NZI’s ‘Bad’s not going anywhere’ TV commercial was recently awarded top honours at the CAANZ Axis Awards in Auckland.

A supreme Grand Prix award was presented to Assembly (the agency which produced the animation for the ad) for the Craft of Animation, Design, and Visual Effects.

Assembly also picked up two Gold awards for Animation and Direction, and FCB, the agency behind the ad's concept, earned a Gold for Screen Content in the TV Single Commercial Above 30 seconds category. Sound engineers Liquid Studios picked up a Silver Axis for Original Arrangement of Existing Music in recognition of the ad’s distinctive soundtrack.

The judging panel felt that NZI’s ad was “a faultless example of its craft”.

Only two Grand Prix awards were given out for the year – NZI’s and the ‘Blazed’ ad, directed by Taika Waititi for the New Zealand Transport Agency.

About the CAANZ Axis awardsThe Axis awards are the most important and high-profile advertising competition in New Zealand, and are the benchmark for creative standards both in New Zealand and overseas.