ODT on KiwiAssure

November 8th, 2013 at 7:00 am by David Farrar

The editorial:

The suggestion will be run by Kiwibank is not sensible.

The success of Kiwibank will be put at risk by tacking on an insurance company with a domestic focus.

Voters only have to look at the downfall of AMI, a Christchurch-based insurance company which substantially undervalued its reinsurance obligations and ended up with the Government – and taxpayers – having to step in to bail it out.

Of course, a government bail-out is exactly what will happen to KiwiAssure if it does not spread its reassurance risks widely.

Reinsurance for a totally-owned government-controlled insurance company will be expensive.

There can be no discounted policies on offer; it does not make sense. …

Kiwibank appeals to loyal New Zealanders who like the idea of investing their money where it will be used for the benefit of fellow Kiwis in obtaining mortgages, extending businesses and generally contributing to economic growth.

There is no such incentive for taxpayers in owning an insurance company.

Political parties do not have a good history of being in business.

New Zealand Post is the latest state-owned entity to run into problems, even though it is propped up by Kiwibank.

Appointing Kiwibank to prop up an insurance company is the wrong option.

Forcing Kiwibank to set up a full insurance company is daft and damn risky. We already have 92 insurance companies in New Zealand.

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15 Responses to “ODT on KiwiAssure”

  1. duggledog (1,554 comments) says:

    Kiwiassure, Kiwibank, Kiwibuild, Kiwirail, just stick the word Kiwi in front of it and the words ‘It’s Ours’ in the advertising campaign and she’ll be awesome mate.

    The whole thing gives me the shits so I’m off for a Kiwidump

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  2. alex Masterley (1,517 comments) says:

    Kiwibank already provides it’s customers insurance thru an association with Tower Insurance and Kiwi Insurance.
    Why a slogan based insurance company is needed is beyond me.

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  3. KiwiGreg (3,255 comments) says:

    Boy does the ODT not understand the relationship between Kiwibank and NZ Post? No surprises but the notion that Kiwibank is a “success” shows a woeful misapprehension of business. (Cost of capital, risk, cross-subsidisation, implicit taxpayer guarantee….)

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  4. Nookin (3,341 comments) says:

    One point to consider is that if KiwiAssure is controlled by Kiwibank, then Kiwibank will be both insured (as mortgagee) and insurer. In the event of, say, earthquake disaster the reinsurers will no doubt be concerned as to whose interests and in what capacity Kiwibank is acting when fielding claims.

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  5. alex Masterley (1,517 comments) says:

    Nookin,

    Good point.

    That’s why there should be separation.

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  6. Positan (390 comments) says:

    Surely the far, far bigger question is :

    If this is the sum total of Labour’s economic appreciation and such a clear display of the depth and actuality of Labour’s financial and political understanding … why on earth would any reasoning voter ever want to see it elected and governing this country ?

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  7. Harriet (4,967 comments) says:

    The word Kiwi is being hi-jacked by the Labour party. And some people are too dumb to see it.

    The term ‘kiwi’ is usually used when reffering to the people of New Zealand, or the birds – not government owned businesses. And it is Labour who has done all the ‘kiwi’ branding while in government.

    Since when did Kiwis ever vote to have Labour sell us products and services under the ‘kiwi’ logo. They never have, at any election, yet every election that comes along – up pops Labour with another ‘kiwi’ product – this time Kiwiassure!

    The Conservatives should ask John Key publicly if he supports the use of EACH AND EVERY TIME that the word ‘kiwi’ is being used by Labour – and if he does – then he is also admitting that he backs those products and services of Labour’s! :cool:

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  8. redqueen (562 comments) says:

    Reasonableness is not a condition for being eligible to vote, alas.

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  9. kiwi in america (2,439 comments) says:

    All the “Kiwi” announcements are populist attempts by who ever heads Labour at the time to try and break through in the polls. All are poorly thought out, improperly costed, have the barest of partisan oriented third party expert support and eventually are dissected negatively by an increasing number of experts as to lose their electoral potency.

    These attempts at further state control have excited the harder left Labour activist base and may have slightly reversed the slide of Labour voters to the Greens and Mana but they are doing little to take away the centre ground from National. And that’s before the Nats really start to get stuck in on the campaign trail.

    Cunliffe’s pathetic attempt at scoring points in the House regarding KiwiAssure and banks and insurance companies was easily swotted down by Key – with tactical help from Brownlee who found a masterful way of flanking the poor ruling of inexperienced assistant Speaker Eric Roy.

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  10. OneTrack (3,088 comments) says:

    Is there any truth in the suggestion that this was announced, out of nowhere, during Cunliffe’s Christchurch visit because someone suggested to him in passing that morning, that some people were having insurance problems, so a quick trip to the airport bar to get a beer coaster and nek minnit, new policy?

    Because that’s what it looks like.

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  11. burt (8,269 comments) says:

    We already have 92 insurance companies in New Zealand.

    Well – that could easily change…. We could have just 1 and it will be a monopoly … just like that perfect ACC model that serves the people the government.

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  12. OneTrack (3,088 comments) says:

    “The word Kiwi is being hi-jacked by the Labour party. And some people are too dumb to see it. ”

    Is “kiwi” now newspeak for “Comrade” or “Citizen”?

    I missed the memo.

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  13. SPC (5,619 comments) says:

    And the media editorial’s track record on such start-ups as Kiwi Bank gives them credibility?

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  14. SPC (5,619 comments) says:

    Nookin’s point is the one that will have to be looked at seriously.

    Property insurance and banking have usually been at arms length and since the GFC, there has been a move to make the sector more transparent and to identify risk more clearly.

    Yet a state owned insurance company is a good idea. Despite the necessity of reinsuring offshore to spread risk it should make the market more competitive. A constraint on the process of constant premium increases and moves to require the insured to meet the cost of correctly identifying their insurance needs.

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  15. bhudson (4,740 comments) says:

    Such a good idea the Labour Party sold off State Insurance before the change of govt in 1990.

    Of course they also sold off Telecom just a bit before, so we can expect KiwiComms from Labour to address that wee issue also. (As opposed to KiwiCommie, which is, of course, the overarching framework…)

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