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30 July 2025

Insurance companies have improved their processes but more to do in extreme events

Media Release  
MR No. 2025 – 29

Insurance companies have improved their processes since the Canterbury earthquakes, but a new report into the insurance sector’s response to the Auckland Anniversary Weekend flooding and Cyclone Gabrielle has found more improvements are needed.

The Financial Markets Authority - Te Mana Tātai Hokohoko (FMA) - today released its report following a review of insurers’ claims processes, which are crucial to good consumer experience.

Based on feedback from insurers, brokers, and dispute resolution schemes, the FMA recommended six areas for improvement; communications, project management and oversight, identifying and treatment of customers in vulnerable circumstances, resourcing, complaints handling and business continuity.

FMA Head of Insurance Jane Brown acknowledged the comprehensive and immediate response to the events by insurers and brokers, and commended them on their huge efforts to assist their customers in unprecedented circumstances.  

“The Auckland Anniversary Weekend Floods and Cyclone Gabrielle were the largest weather events to impact the country since Cyclone Giselle in 1968, resulting in 118,000 insurance claims and close to $4 billion in damage to insured property.

“It is clear that the sector rose to meet an overwhelming challenge using learnings from the earthquakes, and has done further work to improve. Following the events, however, we also became aware of consumer concerns relating to delays, complaints, and the experience of the insurance claims process generally.  

“The next significant insurance event is a matter of ‘when’, rather than ‘if’. It is important that insurers take the time to review and tailor their claims processes to ensure that consumers’ expectations and needs are being met.

“With New Zealanders facing increasing risks around extreme weather events, maintaining confidence in the insurance sector is more important now than ever.”

“While we acknowledge all the work done by insurers to improve the consumer experience since the Canterbury earthquakes, and again since the North Island weather events (NIWE), we still see areas where improvements can be made. We look forward to working collaboratively with the fire and general insurance sector to support further conduct improvement.”

“This is an important report because these findings and insights will assist insurers with future development of their claims process under the new Conduct of Financial Institutions (CoFI) regime introduced in March. CoFI is designed to protect consumers by putting the consumer at the forefront of insurers’ decisions and actions.

“We have signalled that as part of our initial supervision of insurers under CoFI, we will focus on the product and service reviews in financial institutions’ Fair Conduct Programmes (FCPs). 

“We now have broader tools and mechanisms to respond to, and address, conduct gaps and issues in this sector. We will continue to use our full range of regulatory interventions to address poor conduct (such as feedback, public warnings, enforceable undertakings and litigation where warranted), as well as continuing to utilise the fair dealing provisions to respond to misleading, deceptive or unsubstantiated representations.” 

 

Media contact: 
Ellie Martel
FMA Senior Adviser, Media Relations
[email protected]
021 241 7868

Summary of recommendations:

  1. Insurers should provide claimants with a clear understanding of the claim lifecycle and outline the roles and responsibilities of third-party providers involved in their claim. 

  2. Insurers should have adequate oversight of all third parties involved in a claim. Insurers should continue to provide delegated claims authorities to intermediaries within managed parameters. 

  3. Insurers should continue to improve processes for the identification and treatment of consumers in vulnerable circumstances so they are not disadvantaged during severe events. 

  4. Insurers should prioritise use of technology to reduce administrative burden and facilitate the allocation of trained staff into both event and business as usual claims 

  5. Insurers should continue to develop their processes for dealing with dissatisfaction and complaints. There should be clear pathways for consumers to raise concerns and ask questions during severe events. 

  6. Insurers should prioritise tailoring their business continuity plans to manage major events and incorporate annual scenario testing. 

Background:

In early 2023, Aotearoa New Zealand was hit by two severe weather events, with the Auckland Anniversary Weekend Floods and Cyclone Gabrielle occurring within a period of 16 days. The impact of these events on both people and property was significant, with 15 lives lost as well as mass evacuations, communications outages, displacement, and widespread damage.

This report was prompted by feedback the FMA received from not only industry but wider consumer data on overall satisfaction with the insurer response after the North Island Weather Events (NIWE). We know and acknowledge that there were difficulties with claims following the NIWE and our recommendations will ideally lead to better experiences for consumers after similar types of weather events.

This piece of work falls under our recently-released Financial Conduct Report that outlines the upcoming year’s priorities – in this case ensuring licensed Financial Institutions deliver products and services that meet consumers’ needs and expectations.

These findings and insights will assist insurers with future development of their claims process under the Financial Institutions (CoFI) regime introduced in March. CoFI is designed to protect consumers by putting the consumer at the forefront of insurers’ decisions and actions.

Related

Report: Weather Events Claims Insights