Innovations and trends shaping the insurance sector. Lucie Douma, Head of Client Strategy & Advice
In 2019, FMG conducted two significant pieces of research: The Future of Insurance and The Future of Farming and Growing to explore the evolving landscape of both the insurance and farming sectors in New Zealand Aotearoa. Many of the predictions made in this work are now coming to fruition.
The New Zealand Aotearoa insurance industry is currently navigating a landscape marked by significant challenges and changes. One of the most pressing issues is the increase in the frequency and severity of major weather events. Like other sectors, insurance companies are expected to concentrate on increasing financial resilience as they also deal with the increasing cost of reinsurance, and rising costs in building and construction.
One of the key trends in the insurance industry is the shift towards risk-based pricing - adjusting premiums based on individual risk factors, such as the likelihood of earthquakes or floods. FMG manages risk-based pricing by using its mutual model and geographic diversity to strike a balance between community-based approaches and more individual risk assessment whenever possible. Also, through an organisation-wide programme of work designed to improve efficiency, FMG is lowering its cost to serve Members and clients by promoting an owner’s mind-set across all employees.
Another emerging trend is the adoption of parametric insurance. Unlike traditional insurance, which pays out based on assessed losses, parametric insurance provides quick payouts based on predefined parameters, such as the amount of rainfall or wind. FMG is exploring the use of parametric insurance as one of many new options that could help farmers and growers better manage their risks.
Digital transformation will also play a crucial role in the evolution of the insurance industry. Technologies like artificial intelligence (AI) and data analytics will improve underwriting processes and operational efficiency. FMG has made significant investment in technology and cyber security. The growth and success of FMG Connect is a great example with 79,221 users of this service.
FMG's mutual model provides a unique advantage in this evolving landscape. As a mutual insurer, profits are reinvested into the business rather than paying dividends to shareholders, allowing us to focus more on building long term sustainability and on building strong relationships. The ongoing support of initiatives like the wellbeing programme Farmstrong and partnerships with Melanoma New Zealand highlights FMG’s support for mental and physical health in building resilience in our rural communities.
FMG is also proud to be the first and only B Corp Certified general insurer in New Zealand Aotearoa adhering to some of the highest standards of verified social and environmental performance, transparency, and accountability in the world.
As the insurance landscape changes, FMG is committed to evolving with it, embracing technology, and exploring new insurance options like parametric insurance. Our goal is to remain at the forefront of insurance, offering the best protection and advice to our Members and clients. We are proud to be a 100% Kiwi-owned and operated mutual insurer, supporting strong and prosperous rural communities. You can read our 2019 Future of Insurance and Future of Farming and Growing research at fmg.co.nz/futureof
