Forward Focus - June 2012
Insurance and wealth management
Welcome to the second edition of the Forward Focus for 2012.
Last month we saw the Government's fourth budget released. It was a budget with significant belt tightening measures but there were no surprises like the 2010 budget. Once again we see the lingering effects of the Christchurch earthquakes and the toll that this has had on the Government's books. The Government's core expenditure in the year ended 30 June 2011 increased by over $6 billion with a third of that increase being due to the Christchurch earthquakes.
The Budget was written with the goal of achieving fiscal surplus by 2014/15 and this, as most of NZ will agree, is the right approach. This is a right step in helping us stay on the right track and be prepared for any overflows of the global economies.
Other points in the Budget worth mentioning are the mixed ownership model and developments in the public sector. These changes are certainly a big step in the right direction and it has taken the Government a long time to action the changes suggested in the 2011 budget. This is certainly not a new idea, the Capital Markets Development Taskforce presented this as one of their key recommendations at the end of 2009. This was presented then as a way to improve New Zealand's capital markets, by potentially increasing the size of our stock market by more than 20 percent, attracting more investors domestically and overseas to stimulate growth in our economy. As one can expect, these changes will take some time to improve our market efficiencies. It is a welcome change for our funds and wealth management sector. We will endeavour to keep you updated on the changes in this area.
Also in this issue we continue to look at the Christchurch earthquakes, this time in relation to the insurance fraud in the claims process and the risks that you should be aware of. We also take a deeper look into operational risk analytics and how this can be used in the claims loss reserving process and what can be discovered using the analytic techniques.
We hope you enjoy the read and welcome any feedback and suggestions.