Cost Inflation,
Supply chain issues,
Increased frequency & severity of loss,
Increase in replacement time for building & general property
These factors are creating a perfect storm for potentially major impacts to business.
Coping with the Impact of Changes in the Insurance Market
The best thing you can do is to plan now.
1. Get an updated valuation for insurance purposes for both Commercial and Residential property
2. Make sure you have a suitable indemnity period to cover you for the total rebuild phase
3. Make sure you have enough cover for lost rent, or alternative accommodation should your rebuilding process takes longer than originally anticipated
4. Make sure your insurance portfolio closely matches and works together with your business continuity plan to ensure as many gaps as possible are closed
These are some of the key factors that will allow your business to continue to operate with as little disruption as possible in a claimable event
Some of the things you should be looking into are:
The Covid-19 pandemic and subsequent decisions made in its wake have significantly impacted the Insurance market, both directly and indirectly. Initial estimates in the neighbourhood of $70bn worth of direct impact globally make it one of the largest loss events of all time.
While lockdowns were a major initial source of headache for NZ business owners, business interruption policies have always contained some sort of pandemic exclusion, which meant the pandemic had very little direct impact on the New Zealand market.
In Australia the situation has not been so straightforward and litigation continues around policy coverage and exclusions. As several of our largest insurers are Australian headquartered, this has a flow on effect to the NZ insurance market as well.
Covid-influenced inflation increases claims costs
Where the pandemic has impacted us here in New Zealand Insurance, is in relation to the economic spin-offs we are now experiencing such as inflation and supply chain issues.
Inflation is driving up the costs of claims. According to industry insiders, residential building costs have risen by at least 6% to 7% this year alone, with some pundits expecting another 10% increase.
The time it takes to reinstate damaged property is also taking longer due to supply chain disruption & skilled worker shortages. This is having a significant impact on both building materials and replacement equipment, whether it be machinery or consumable goods.
Why is this happening
Contact your Prop'd Up Adviser today for personalised, expert advice.