ODT on KiwiAssure

The ODT editorial:

The suggestion KiwiAssure 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.