'Priced out': rising premiums add to affordability woes

More New Zealand property owners may be forced to go without home insurance as premiums continue to escalate, according to Consumer NZ.

The consumer advocate raised concerns after a survey it conducted found half of respondents were worried about the cost of insuring their homes.

The survey also found 7% with no house insurance either cancelled or didn’t renew their policy because of cost; for those without contents insurance, 17% didn’t renew for the same reason.

“Insurance provides a crucial safety net,” Consumer NZ Investigative Team Leader Rebecca Styles said.

“With the cost of living squeezing many households, some New Zealanders have effectively been priced out of insurance protection.”

Consumer NZ says CPI data shows the cost of house and contents insurance has increased by 150% over the past 10 years.

It says property owners in Hamilton have been affected most, with premiums for standard-sized houses up 17% from last year. In Auckland premiums rose 15% and Dunedin 15% over the past year.

The Insurance Council of New Zealand says inflation is a challenge that everyone is trying to manage at the moment, including the industry.

“While it is up to each individual insurer to set their premiums, the sector does understand the cost pressures everybody is facing,” a spokesman told insuranceNEWS.com.au.

“Indeed, all insurers are seeing exactly the same cost pressures as they are the ones insuring the very things that are going up in price.”

Other headwinds confronting the industry and customers include ongoing supply chain issues, leading to people being out of their homes for longer when they require repair and this in turn has resulted in higher temporary accommodation costs for insurers, the spokesman said.

The hardening reinsurance market and rising trend of extreme weather-related claims costs are also adding to the cost pressures.

The spokesman points out the Earthquake Commission (EQC) levy – which insurers are required by law to collect – has gone up since October 1, to a maximum $NZ552 ($519) from $NZ345 ($324) previously.

Consumer NZ says the increased levy has not led to reduced premiums, contrary to earlier Government comments that insurance costs would go down since the state was taking on more risk. The levy was raised to pay for a higher building cap of $NZ300,000 ($282,564) from $NZ150,000 ($141,282).

“We found the median costs increased between 5% and 17% since this time last year,” Ms Styles said.