Press Release – Consumer NZ
A price survey of home and contents insurance by Consumer NZ found that if you don’t shop around, you could be paying hundreds of dollars more on policies. The price comparison found a difference of more than $2000 between the cheapest and most expensive policies for a standard-sized house. Quotes for a large dwelling differed by more than $3000 across the five cities surveyed, Auckland, Hamilton, Wellington, Christchurch, and Dunedin.
The cost of house and contents has risen by 5.6% on average in the 12 months to September. Over the past 10 years, home and contents insurance has had significant price increases, up 150%.
“Home and content insurance premiums are more expensive than ever before and are likely to continue to rise. We’d recommend New Zealanders don’t ‘set and forget’ because there are large savings to be made if you shop around,” Consumer NZ head of communications and campaigns Gemma Rasmussen said.
“Wellington and Christchurch faced the biggest price hikes in the past year. Wellington median prices increased 16 percent for our standard house and 18 percent for our large dwelling. In Christchurch, median prices increased 8.5 percent for our standard house and 17 percent for our large house.”
Price hikes can be attributed to the rising value of housing, but the biggest factor is the shift by insurers to full risk-based pricing for natural disasters. This means if you live somewhere with a higher chance of earthquakes – such as Wellington or Christchurch – you’ll be charged more for insurance.
Insurers are also now factoring climate risks, such as flooding and coastal erosion, into their calculations for premiums. The Earthquake Commission (EQC) levy, which is paid with an insurance premium, can also contribute to price increases. The levy covers the EQC’s residential building pay-out, which is what the commission contributes to claims when a natural disaster strikes.
From October next year, the EQC cap on pay-outs will be doubled from $150,000 to $300,000 (plus GST) which will add an extra $207 a year on to homeowners’ premiums. The levy amount paid by each homeowner will depend on their sum insured but will be a maximum of $552. The current levy amount is $345.
EQC Minister David Clark expects insurers to lower their premiums as the government is taking on more risk.
Consumer NZ believes a review of the insurance industry to ensure it is competitive and working for homeowners is well overdue.
FMG, MASand NZ Police Association were awarded the winners of Consumer NZ’s 2021 People’s Choice award for home and contents insurance. The People’s Choice award is given to providers that rate above average for customer satisfaction and meet our other performance criteria. You can read more here.