Kiwiassure

Written By: - Date published: 8:45 am, November 3rd, 2013 - 86 comments
Categories: david cunliffe, Economy, labour - Tags:

And from David’s speech …

Just as KiwiBank gave us a customer-focused, low cost Kiwi-owned bank, KiwiAssure will give everyone a choice for better service, competititive premiums and local ownership that keeps profits here.

KiwiAssure will be a sister company to KiwiBank, within the NZ Post Group.

And like KiwiBank, it will offer customers an alternative and raise the bar across the insurance industry.

The proposal is bound to be popular.  After the problems with AMI insurance and the need to bail this company out the thought of a local Insurance Company which is able through competition to keep premiums down is something that should appeal.

We used to own an insurance company, State Insurance, which functioned perfectly well for decades.  As part of the big sell offs that happened in the 1990s it was sold to IAG.

It is not as if privately owned insurance companies are managed better.  AMI Insurance which had a dominant share in the Christchurch Market before the earthquakes failed essentially because it was carrying too little reinsurance.    After costing the Crown $254 million it is now owned, as is State Insurance, by Australian company IAG.

This is one further policy proposal that neatly differentiates Labour from National and shows that Labour intends to be an active rather than a passive manager of markets.  And the suggested announcement today about affordable housing will be interesting.

86 comments on “Kiwiassure”

  1. BM 1

    With multiple imminent disasters on the horizon due to climate change, why would you want to start an insurance company?

    Seems like madness to me.

    • Lanthanide 1.1

      Yip, much better to leave NZers to the mercy of the foreign insurers, because we’ve seen that that approach hasn’t caused any problems in trying to recover from the CHCH quakes.

    • mickysavage 1.2

      We will pay for it anyway. If and when the insurance companies start going broke the State will have to step up. So why not let the state share in the profits int he meantime?

      • BM 1.2.1

        By profits, you mean tax?

        • Paul 1.2.1.1

          As Sir Edmund Thomas said in the Bruce Jesson lecture, taxes are the price we pay for a civilized society.
          You must be a barbarian.
          You should go and live in Somalia.
          They don’t pay tax there.

          • BM 1.2.1.1.1

            One has to pay tax, I agree with that, country can’t run other wise.
            On how much, that’s where you’ll probably find our opinions differ.

            • Descendant Of Sssmith 1.2.1.1.1.1

              Whether it’s tax to government or tax to the private sector by way of profit – I still pay.

              Both are a tax on my labour and income.

              One’s simply open and for public good the other is partially hidden and for someones private good.

              • felix

                You have highlighted a fundamental question the right do never dare address.

              • Draco T Bastard

                Exactly. Private profit through business is a tax on the rest of us – one that we have no control over.

            • QoT 1.2.1.1.1.2

              Let me guess, your ideal is “so little it’s basically meaningless BUT just enough that you get to whinge I PAID FOR THIS I’M A TAXPAYER whenever it’s spent on something you don’t like”?

          • David H 1.2.1.1.2

            But they do have the law of the gun, and they do have a healthy disrespect for foreigners, it’s way better here like the song says We don’t know how lucky we are.

            Yeah go live in Somalia.

        • ghostwhowalksnz 1.2.1.2

          At least a government owned insurer will pay taxes to NZ government.

          Overseas companies structure their affairs do that zero tax is paid on their healthy profits, reinsurance is not only used for disaster coverage but to transfer profits to low tax overseas jurisdictions

    • Paul 1.3

      “With multiple imminent disasters on the horizon due to climate change, why would you….”
      sell your energy companies to foreign owners?
      sell your land to foreign owners?

      I’m guessing your world view supported those acts..

    • Foreign Waka 1.4

      BM- Whatever insurances tell you its a scam. No matter which one it is – really. Unless one has some inside knowledge, no need to really insure anything. Better to save the money by better investments for yourself, be it in deposits, property or shares. Insurance is basically a legitimatized pyramid scam. You pay them and they pay someone else (reinsurance as they call it) and whilst that is going on it can only survive when you obtain new members. The exec is getting multimillion salaries and bonuses (for not paying anything) and our commerce laws are so weak that the average person is getting fleeced and skinned whilst still alive. Insurance stands for reassurance in case of… and as it looks like its in case off the bonus is not high enough.

  2. TightyRighty 2

    Hahahahahahhahaha.

    Thank god you can promise whatever you like in opposition. Short of offering free insurance for all, this is a massive Hail Mary.

    It’s staggering that the Labour Party thinks they know more than the insurance industry. Is the government going to provide its own re-insurance? Thereby assuming 100% of the risk? Wonder how cheap the cover will be? And how much “profit” will “not” flow off shore?

    • Lanthanide 2.1

      I think the idea, TR, is that the level of service will be better. Cantabrians know just how much buck-passing this current crop of insurers have been getting away with and the government hasn’t tried to make any substantive steps in improving the situation.

      Labour are NOT promising that premiums will be lower, but that they will be competitive.

    • Descendant Of Sssmith 2.2

      Funnily enough I would much much rather be paying right now the 80% increase in premiums money I am currently paying since the Chch earthquake to EQC than to the private insurance companies who post disaster are making record profits.

      http://www.stuff.co.nz/business/8999552/Earthquakes-boost-insurers-profits

      Apparently the state did know better than the private insurance companies cause the state did have enough to cover it’s claims – it’s the private sector that didn’t.

      If after the earthquakes the govt put a Chch levy on me to help pay any shortfall if it had existed I would have willingly paid this.

      I’m paying increased costs anyway and have far less surety now of cover with the private sector. It’s not just the increased cost it the change in policy to determine a re-build value. If the chch experience is anything to look at the rebuild costs go up. It’s like you now need two insurance policies one for a normal loss such as fire the other for a citywide event such as earthquake.

      Private insurance is a collective combining of premiums in order to provide cover when it’s needed paying EQC is exactly the same.

      The fundamental difference is the private sector takes money out of my payments to shareholders and themselves.

      I cannot for the life of me see how anyone can say private insurance is any different from government insurance – the principles are exactly the same.

      • Paul 2.2.1

        And private insurers have to build in a profit for their shareholders.

      • Lanthanide 2.2.2

        IMO the new sum-insured policies should work like this.

        You see a value, say $700k, and you pay premiums on that. Then a disaster strikes and it amounts to a rebuild of the property (fire, flood, slip, whatever). Turns out it only costs $550k to rebuild when all is said of done. At that point, the premiums you’ve paid for the past 5 years should be retrospectively re-calculated at the $550k level and you get paid back a refund.

        As it is, you end up paying for premiums for cover that you may not need nor ever claim on. Under this scheme, at least those who make claims would see some recompense if they erred too much on the side of caution.

        • MrSmith 2.2.2.1

          Dead right Lanth and now most people are over insured I would guess by about 20/30% so now they are creaming it at both ends.

          The picture of a rat with it’s head caught in a trap with another rat holding it’s tail in the air comes to mind.

  3. bad12 3

    Sorry i cannot get ‘popular’ into any thinking around the State setting up and owning an ‘insurance company’, the announcement is more yawn inducing than the cause of unbridled applause,

    Of course people are going to flock to such an insurance company just as they prefer the Z garages over the competition because the retirement fund owns part of the chain,

    Why not toss in another 100 million and set up a competing supermarket chain to take on the other two with the profits going into the super-fund,

    The first piece of neo-liberal bullshit that rightly must be tossed into the dustbin of history as bad ideas long past their used by date is the ”Government has no place in business” one,

    David Cunliffe is right in pointing out the gross waste of production that goes into shipping mass amounts of raw product off to a foreign economy for that economy to add value to it through further manufacturing,

    It should be tho glaringly apparent that the best placed organization to build the infrastructure necessary to further process such mass tonnage is the New Zealand Government which in my opinion should build and own such infrastructure with the profits accruing to the Super-fund…

    • Tat Loo (CV) 3.1

      What NZ needs the return of is a Department of Public Works. It’s the only way of getting this done.

  4. Ray 4

    Great idea, why don’t we call it State Insurance, sounds so much better than another kiwi

  5. TightyRighty 5

    @lanth, do you know what cantabrians think of the current government insurance agency there, EQC? I do.

    Labour is actually promising cheaper insurance premiums too. If they pull it off like kiwi bank has worked, good on them. If it’s more like kiwi rail, then this is just pork barrel politics

    • Rogue Trooper 5.1

      Cunliffe has not committed to “cheaper premiums”. Carry on tying self in knots.

    • ghostwhowalksnz 5.2

      Pork barrel Kiwi rail ?

      I suppose using regulation plus subsidies to prop up Chorus isnt ?

      I suppose $30 mill for Rio Tinto ( the first installment !) wasnt pork barrell ?

      I suppose keeping rural delivery at 6 days a week, while city dwellers get 3 days isnt pork barrel ?

    • Lanthanide 5.3

      @ TR: Yes, I do. I’m waiting on EQC to pay out my claim, hopefully should happen in the next week or two.

      A lot of people have problems with the private insurance companies getting into arguments with EQC as to who is supposed to pay.

      If the insurer was a state-owned company, the arguments might still happen, but ultimately would only end up being money coming from this bank account or that bank account. A pragmatic approach could be taken to “just pay the money and sort out the paperwork later”, thus saving huge amounts of stress for the poor claimant stuck in the middle.

      Also as RT says, Cunliffe is NOT promising cheaper premiums, merely that the market will be competitive. Funnily enough, KiwiBank made the banking sector more competitive as well, which did result in lower fees, but that’s not the same thing as promising lower fees.

      If you want to persist in saying that Labour are promising lower fees, please find the exact quote.

      • RedBaronCV 5.3.1

        Agree Lanth
        And I assume that EQC’s response is being managed by the government of the day – with some one size fits all decisions. Another govt may well have made very different decisions with much better outcomes for the insured. and yes I agree for many people pay out the money sort out the paperwork decisions later.

        And it might be a good idea if the coy stayed out of the commercial high rise market and kept it’s risks down

    • Francis 5.4

      Of course the roles of KiwiBank and KiwiRail are completely different…

      KiwiBank is designed to compete with the existing banks in order to provide a state-run alternative and to bring prices/rates/etc to more socially desirable levels.

      KiwiRail is a state-owned monopoly, which has assets horribly run down from 20 years of private ownership. It shouldn’t really be run as a business, rather as a government department.

      Keep in mind that during the setup years of KiwiBank, there was a Labour government. However, KiwiRail has been mostly run under National Ltd™

  6. RedBaronCV 6

    I think this one has real potential. I’ve added up how much insurers are taking off home premiums and it’s huge. It could also be the conduit for holding the sort of funds but even larger, that EQC held for the big quake. It can buy reinsurance just like all the others are supposed to, and if it’s wise it will leave the tag ends of the market for the private coys. And sort out the ownership so that it can’t be sold or raided at the whim of a future government.

    Insurance profits

  7. QoT 7

    Ah, the political amnesia of the right is adorable. Back in 2001 it was exactly the same thing about Kiwibank – it’s a dog, it’s not commercially viable, the government has no right to meddle in the affairs of bankers, Kiwis shouldn’t risk putting their money into a shaky venture … and here we are in 2013 and it’s consistently winning awards for value, customer service, and trust.

    The doubters may like to ponder that sage advice, “those who cannot remember the past are condemned to repeat it”.

  8. RedBaronCV 8

    Somebody is worried. See the Scoop sidebar. Insurance council press release at 9.57a.m. on a Sunday morning….. Unpaid overtime for Ceo’s…

    • Lanthanide 8.1

      Got a link to the article? I find Scoops layout to be incredibly cluttered and hard to follow.

  9. tricledrown 10

    Tighty Righty we are one of the few countries that have EQC cover for earthquakes it was the lack of action by the National govt to get EQC delivering the payouts that has caused problems looking at the private sector insurance companies they are as bad if not worse while raking up massive profits while deliberately denying delaying claims to increase profits something private insurance co’s all do all deny.
    Tighty if we didn’t have a long sighted govt who set up EQC The ChCh rebuild would be like hurricane katrina or sandy in the US where hundreds of thousands of people have lost everything and are now homeless.
    How many of these private sector insurance companies were bailed out in the GFC tighty!

  10. IrishBill 11

    And right on cue the insurance industry goes all atlas shrugged:

    “Given its size, New Zealand is one of the most vulnerable countries in the world to natural disasters, so maintaining an appealing, competitive insurance market is essential.”

    http://www.scoop.co.nz/stories/PO1311/S00015/kiwi-insurance-ill-conceived-back-to-the-future-policy.htm

    Rough translation – everything is just fine and you should all be grateful we’re here to take your money overseas.

  11. MrSmith 12

    We need insurance ombudsman as well.

  12. Three things I want to hear from Cunliffe before I would even consider to start voting again (And I was of the “people died for my right to vote so I will vote as if my life depends on it” persuasion once)

    * We will nationalize the privatized assets.

    * We will start to print our own money again and ditch the banking monopoly owned reserve bank.

    * We will rescind any agreement which interferes with our sovereignty including financial, trade and military ones as made under duress and onerous conditions.

    Anything else is just window dressing while were are being held hostage to the International Mafia Fund and the Banking Cartel!

    • Francis 13.1

      From what I understand, your last point has passed into their policy platform, at least. I know they certainly have changes in line for the Reserve Bank, but I’m guessing we’ll might have to wait for their election manifest.

      As for your first point, that’s something that I too would like to see. Maybe (just maybe) they’ll wait till they’re in government before doing anything down that line. None the less, a chance is better than we’d have under 3 more years of National Ltd™

    • BM 14.1

      Does make you wonder if this isn’t just about Labour trying to get NZ first on side.
      It’s fairly obvious that NZ first, unfortunately may again hold the balance of power at the next election.

      With the Greens and Labour joined at the hip NZ First probably will have to side with National if they’re going to get any say in the next government.

      Is Kiwi Insurance just a bribe to buy Peters First?, I’d be surprised if this wasn’t the case.

      • Whadda ya mean “unfortunately”! Better us than Dunne! Besides which, apart from the fact that most polling has Labour/Greens relying on NZF to make the numbers … the awesome thing about being a party unaligned with either of the big power blocks is that we can pragmatically make policy in the best intersets of New Zealand.

        And it’s a funny kind of “bribe” when you take somebody else’s policy and airtime…

        • BM 14.1.1.1

          And it’s a funny kind of “bribe” when you take somebody else’s policy and airtime…

          Not really, Labour can create another cabinet position for Peters- Minister of Public Insurance or something along those sort of lines.

          Peters gets his cabinet position and assorted perks thus guaranteeing NZ First support.

      • Populuxe1 14.1.2

        The Greens and Labour are most certainly NOT joined at the hip – David Parker’s 2IC role in Labour is ample proof of that. And NZF and Labour were able to work perfectly well together in 2005. Nor is Green policy incompatible with NZF’s environmental policies. And be nice, Labour may very well need NZF as well as the Greens.

    • Now to be fair, NZ First doesn’t mind giving Labour a few pointers on how to be a proper left-wing statist political party with the country’s best interests at heart.

      It’d just be nice to have some acknowledgement.

      • Lanthanide 14.2.1

        So NZFirst is ruling out a coalition with National? Because no “proper left-wing statist political party” would ever go into coalition with the Nats…

        • Curwen Rolinson 14.2.1.1

          We ruled out coalition with any party that wasn’t down with renationalizing assets.

          National is not down with renationalizing assets so …

          …it’s just rather unfortuante Labour isn’t either 🙂

          • Lanthanide 14.2.1.1.1

            Pretty sure Winston Peter’s current bottom line was creating a state-owned Kiwisaver fund that would somehow charge lower fees than the current private crop; not anything to do with renationalizing assets.

        • QoT 14.2.1.2

          So NZFirst is again ruling out a coalition with National and will keep their word this time?

          FIFY.

  13. Pete 15

    Given how he forced through the unbundling of the local loop, DC knows a thing or two when it comes to bringing state pressure to bear on breaking monopoly/oligopoly power. He could be a latter-day Teddy Roosevelt.

  14. insider 16

    It’s hilarious you can’t see the irony of quoting AMI as good reason for this new policy.

    • Lanthanide 16.1

      AMI was a private company that the government had to bail out.

      • insider 16.1.1

        Why were they bailed when none of the other majors were? Because they were Following a very similar model to that proposed for this new state insurer – low cost, focused on a single market. When the call came on them, they were not able to cope. EQC similarly under resourced. Ansvar have pulled out now for similar reasons.

        How are you going to guarantee this won’t in effect be a deferred subsidy through falsely low premiums, and a call not made on taxpayers in future? There is no meat on this policy, just the same old whine that a politician thinks something is too expensive and that they have the ability to magic the costs (and presumably risks) away by putting the word kiwi in front of a name.

        • Lanthanide 16.1.1.1

          Labour has said the premiums will be competitive, not cheaper. They also haven’t said anything about it being focused on a single market.

          Maybe if you actually paid attention to what was being said, instead of imaging things or making it up, you’d have a better grasp on what is going on around you.

          • insider 16.1.1.1.1

            TV 3 and nz herald reporters at the conference are both reporting Cunliffe saying it would cut premiums, but maybe they are imagining things too

            The single market is nz in comparison to those evil international insurers ( which strangely will be insuring Cunliffe’s insurance company)

            [lprent: I think you are just outright lying. There were the usual reporters making a story about his not saying that.

            Retract, link, or be banned. I really don’t like ‘insiders’ trying to meme spread lies without linking to sources. ]

            • BM 16.1.1.1.1.1

              I agree with what you’re saying.
              It really is all your eggs in one basket stuff.

            • Lanthanide 16.1.1.1.1.2

              “TV 3 and nz herald reporters at the conference are both reporting Cunliffe saying it would cut premiums, but maybe they are imagining things too”

              Please provide exact quotes and evidence.

  15. vto 17

    Brownlee is acting like the typical lying National MP….. in saying that taxpayers will end up having to pay more……

    He deceptively neglects to mention that the taxpayer bailed out privately owned insurance company AMI.

    He is also deceptive in not mentioning that taxpayers were also required to bail out the finance industry durng the GFC – South Canterbury Finance being the biggie.

    Brownlee is deceiving people.

    Rather than having the taxpayers pick up the losses for private enterprise, as Brownlee’s government has done during its term, we should most definitely also be picking up the profits.

    How on earth can Brownlee seriously suggest that the taxpayer be responsible for private enterprises losses and not share in the profits???? Is he a moron?

    • rod 17.1

      He has been a moron for many many years. I’m surprised you have only just questioned it.

    • Will@Welly 17.2

      National were forced to bail out AMI. Bill English was told that the rates that EQC paid out on needed adjusting but did nothing, and AMI had enough re-insurance to cover the September earthquakes, but never foresaw the February ones. That was the main reason for them going belly-up. They just didn’t have the deep pockets that the other insurance companies had.
      One question arises though, given how long it is taking for the insurance companies to settle all their claims, was it necessary for AMI to go into liquidation.

  16. Nick 18

    “We used to own an insurance company, State Insurance, which functioned perfectly well for decades.”

    Do you have any evidence on this? I’ve been trying to research the history of state insurance office before it was privitised but found very little.

    • RedBaronCV 18.1

      I have seen a book written on State Insurance but title escapes me. Written for an anniversary so perhaps local library can help. A comment in the early chapters struck a chord.
      One GM said “there is no better customer service than a cheque in the mail”

    • Anne 18.2

      You must be very young and uninformed Nick.

      State Insurance was an SOE for a couple of decades and in the preceding decades was an insurance company wholly owned and operated by the NZ Govt. Did it never occur to you that was how it got its name “State”?

      http://en.wikipedia.org/wiki/State_Insurance

      • insider 18.2.1

        I think he was asking about the evidence for working relatively well bit…

        • Tat Loo 18.2.1.1

          This explains perfectly why the neolibs wanted the role of the original State Fire and Accident offices smashed.

          Frak the privateers.

          …The State offices function as competitive trading Departments and pay taxation. For the calendar year 1960 the Fire Office earned a net surplus of almost £206,000 and the Accident Branch a net surplus of over £126,000. In the field of general insurance in New Zealand, the State Insurance Office has the largest premium income, the greatest number of policyholders, and the widest branch representation. Total assets of the Office at the end of 1960 in respect of both accident and fire business were over £75 million. Total assets of the Government Life Office as at the same date were in excess of £475 million. Loans to local authorities and New Zealand Government securities accounted for nearly £18 million of this sum. At the end of 1960, 292,173 life policies were in force with a total sum assured of more than £230 million. In the seven years ended 1960, the accumulated funds of the Office have more than doubled.

          http://www.teara.govt.nz/en/1966/insurance/page-5

  17. greywarbler 19

    Uh oh. Let’s not go all superior and all-knowing when someone asks a question. Even people who think they know everything can be wrong, are likely to be wrong, about something they have perceived incorrectly. People who don’t know and want to fill that gap should be assisted when they aren’t just doing it to be annoying, as some RW here might.

    • Anne 19.1

      There’s a right winger called ‘Nick’ who comes here every now and then to sling arrows…

  18. newsense 20

    dudes…no bs that NZ First guy who posted before has a NZ first YOUTH blog. I shudder to ask how old NZ first youth is…but staggered that there is a youth wing of the party…

    • Tat Loo 20.1

      Curwen Rollinson and others have done a pretty good job of building up the youth side of NZF…

  19. aotearoean 21

    Has anyone heard of Whaleoil lately?

  20. aotearoean 22

    Has anyone heard of Whaleoil lately?

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