Financial summit needs to cover life risks too

Monday, July 18th 2011, 5:00AM

by Darrin Franks

Whether it be devastation on a grand scale like Canterbury’s earthquakes, or localised events like the tornadoes that have hit Albany, Northland, South Auckland and the Kapiti Coast in recent weeks, the costs of cleaning up and replacement have been widely discussed. The reluctance by international reinsurers to cover further risk in New Zealand and the need for central government to insure Christchurch City and Waimakariri District councils is understandable. What has been less exposed is the parallel lessons to be learnt about the risks people face. Life risks are very different from material risks, but statistically it seems that we place more emphasis on possessions than ourselves. Parents are quick to teach their teenagers about the merits of insuring their cars, but less agile to explain to their children that once they are responsible for more than themselves, they need to measure and mitigate those risks too. A family needs protection just as much as the car and the household contents. A business owner, especially those employing staff, needs protection as well. Many life risks companies have worked hard in support of the real family treasure and paid where they didn't need to in the interests of doing the right thing in the face of an extraordinary series of events. But what is needed is more risk management education. The Government’s financial summit on August 11, chaired by Sir John Anderson, is looking at responsible lending, debt management, credit advertising, financial literacy and dispute resolution. We need to ensure that risk management when it comes to the lives of New Zealand’s most valuable resource – people – is included in the mix.

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