Boston, MA -- (SBWIRE) -- 07/17/2012 -- The operating environment for New Zealand's non-life insurance segment continues to evolve in the wake of the enormous natural disasters of 2011. A year ago, in the aftermath of the main Christchurch earthquake of February 22, 2011, a key challenge for the non-life insurers was access to reinsurance and processing claims. As of April 2012, the newsflow indicates that the processing of claims by the insurers, and the Earthquake Commission (EQC) has been going well. Meanwhile, it appears that the non-life insurers are - at worst - securing reinsurance cover on a year-to-year basis. Three months ago, we observed that the main problem appeared to be 'a lack of confidence on the part of households and businesses which will likely hamper the growth of premiums over the next year or so'.
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Now, a new challenge has emerged. The major non-life companies have been able to achieve a substantial increase in their rates in the wake of the various Christchurch earthquakes (the latest occurring on December 23 2011). Retention rates appear to have held up fairly well. However, it is not clear how fast the segment will grow given that the EQC has trebled its levies with effect from February 1 2012. It remains to be seen how businesses and households respond to a very substantial increase in insurance costs. Meanwhile, IAG has reinforced its dominant position in the New Zealand non-life market through its purchase of AMI. This transaction, which closed in early April 2012, will lift IAG's market share to around 45%. Particular companies are growing through an expansion of their health insurance businesses.
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