Kiwis in poorer areas charged 40% more for insurance – study

A study revealed that Kiwis in poorer areas in Auckland were charged as much as 40% more for contents insurance than their least expensive counterparts. Tackling the issue of “poverty premium,” the new research collected data from 16 local board areas in Auckland and found that contents insurance prices in low-prosperity areas were generally more expensive, especially compared to good and high-prosperity areas.

Conducted by Banked NZ, the study also found that all Auckland local board areas that were classified as low-prosperity ranked among the most expensive for contents cover. With insurers using location to determine the cost of insurance, all 21 local areas were grouped in five distinct categories using Auckland Tourism, Events and Economic Development’s (ATEED) 2020 Auckland Prosperity Index: high, good, moderate, poor, and outlying.

Except for five areas found in outlying boards that cannot be classified into the four main categories, hundreds of quotes for contents insurance from the remaining 16 local board areas were collected for the study, all of which used three different insurers: AA Insurance, AMI, and Tower Insurance. With 240 quotes in total, Banked NZ then ranked the most expensive areas for contents insurance in Auckland. They are ranked below, as well as their property classification:

1. Manurewa (low)
2. Papakura (low)
3. Ōtara-Papatoetoe (low)
4. Puketāpapa (good)
5. Ōrākei (high)
6. Maungakiekie-Tāmaki (low)
7. Māngere-Ōtāhuhu (low)
8. Albert Eden (high)
9. Howick (good)
10. Waitemata (high)
11. Henderson-Massey (moderate)
12. Whau (moderate)
13. Upper Harbour (high)
14. Devonport-Takapuna (high)
15. Kaipātiki (good)
16. Hibiscus and Bays (good)

The three highest average quoted prices were in areas of low prosperity. All five low-prosperity areas were ranked in the top seven most expensive contents cover.

Banked NZ postulates that a factor that goes into more expensive insurance for poorer areas is the lack of discounts available. An annual payment discount, which is around 7% on average, cannot be availed by those with less disposable income as they would not likely pay for a full year of insurance in one go. Multi-policy discounts, which can range from around 10% to as much as 20% for three or more policies, fall under the same conundrum.

Elsewhere in Aotearoa, a geneticist has called to ban insurers from using genetic tests as it could lead to genetic discrimination through higher premiums or non-coverage.

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