Huang owns an adventure tourism business. Huang has insurance for his business arranged through his insurance broker. In February 2023, the broker told Huang that his policies were due for renewal in March 2023. The broker sent Huang a policy renewal declaration form to complete. Huang returned the renewal declaration form ten days later. On the form, Huang declared that his business had started operating helicopter tours. Huang also added two cars to his commercial motor vehicle insurance policy.
The insurance broker began to ask insurers for aviation insurance quotes for Huang. Huang and the broker had a meeting about Huang’s policy renewal on 6 March 2023. The broker emailed Huang’s insurer on 9 March 2023 to check whether Huang’s policy renewal terms were ready. The insurer said they needed more time to prepare Huang’s policy renewal terms, so they agreed to extend Huang’s policy renewal deadline. On 15 March 2023, the insurer told Huang’s insurance broker that they had reissued Huang’s policy renewal terms with higher premiums in response to a 14 March District Court ruling. The insurer thought that the District Court’s ruling would lead to higher legal defence costs for adventure tourism businesses generally, which prompted them to increase Huang’s premiums.
The broker challenged the insurer’s increased premiums. The insurer agreed to reduce Huang’s premiums in response to the broker’s request.
Three of the four other insurers that Huang’s broker had approached for insurance quotes were not interested in insuring adventure tourism insurance businesses. Huang declined the fourth insurer’s offer because he did not want aviation insurance, despite declaring on his renewal declaration form that his business was operating helicopter tours.
On 27 March, the broker confirmed that Huang’s insurance policies had renewed. The broker also told Huang that his premiums were going to increase. Huang was unhappy. Huang felt that he did not have an opportunity to make other arrangements.
Huang complained to FSCL on 7 May 2023.
Dispute
Huang said that he had lost the opportunity to arrange insurance elsewhere because of his broker’s late renewal notification. Huang complained that his broker did not tell him that his premiums were going to increase before his policies renewed, and that his broker should not have tried to sell him aviation insurance, which he had not asked for. Huang wanted the broker to provide their services free of charge until March 2024, which would have saved him a considerable amount of money.
Huang’s broker apologised for their late policy renewal notification. They offered forego commission on Huang’s insurance until June 2023 to give Huang time to find a new broker.
Review
We thought that the broker had done their best for Huang in all the circumstances.
The insurance industry was under a lot of pressure because of the Auckland floods and Cyclone Gabrielle in early 2023. The stress of these events had caused communication delays between insurers, brokers, and consumers, and contributed to Huang’s late policy renewal.
The broker did not expect Huang’s insurer to reissue Huang’s policy renewal terms with higher premiums. The broker expected to receive Huang’s policy renewal terms from the insurer by 10 March 2023, but the insurer did not provide them until 15 March. This delay was extended because the broker argued about the premium increase on Huang’s behalf and got the insurer to agree to reduce them, which was in Huang’s best interests.
The increases in Huang’s premiums were in line with industry trends following the extreme weather events in early 2023.
Huang declined the only quote the broker was able to obtain from another insurer because he did not want aviation insurance.
We thought that the broker confirmed Huang’s premiums were going to increase within a reasonable timeframe. The broker was not aware that Huang’s premiums were going to increase significantly until 15 March, when Huang’s insurer reissued their policy renewal terms. The broker told Huang that the insurer had reissued their renewal terms with significantly higher premiums on 17 March, and then tried to find other insurers who were offering lower premiums.
Resolution
We recommended that Huang should discontinue his complaint. Huang disagreed with our decision but did not provide any new information to make us reconsider, so we closed our file.
Insights for consumers
It is important to keep in mind that your insurance broker may not always be able to get you the outcome you want from the insurer. You should consider your broker’s process, as well as the outcome, when trying to determine whether they have acted in your best interests.
