Rising insurance costs concern New Zealand homeowners

A survey by non-profit organisation Consumer NZ has unveiled a growing concern among homeowners regarding the escalating costs of house insurance.

The survey found a significant portion, over two-thirds, troubled by the financial burden. Alarmingly, 8% have opted out of renewing their policies due to affordability issues.

Consumer NZ investigative team leader Rebecca Styles emphasised the necessity for New Zealanders to reassess their insurance coverage and consider the market for more economical options.

“This continues a pattern we started to see last year. We urge New Zealanders to review their current level of cover, and shop around,” she said. “It's likely you'll find a better deal and can maintain some level of protection – which is better than no cover at all.”

Rising house insurance premiums

Consumer NZ noted a steep rise in insurance prices over the last decade, with house insurance premiums up by 97% and contents insurance by 48%.

Particularly hard-hit regions include Wellington, with a 29% increase in standard house insurance premiums over the previous year, and Auckland, experiencing a 26% rise. The survey also highlighted significant premium hikes for larger homes, with Auckland leading at a 28% increase.

Factors impacting premiums

The surge in premiums is attributed to several factors:

• the rising cost of reinsurance
• the impact of severe weather events
• the adoption of risk-based pricing for individual properties

“Given the more frequent and extreme weather events Aotearoa is experiencing, and their related claims, the cost of insuring properties has gone up, and these costs are being passed onto consumers,” Styles said.

How to address rising premiums

Consumer NZ's survey revealed a reluctance among policyholders to switch insurers, with only 20% considering a change in the next 12 months. The challenge of comparing different insurers and the necessity for a property risk assessment for online quotes complicate efforts to find more competitive rates.

To combat rising premiums, Styles recommends several strategies:

• increasing the excess to reduce premiums while ensuring the amount is manageable in the event of a claim
• evaluating coverage needs to potentially opt for more limited policies like fire-only or fire and burglary coverage, which, while more affordable, still offer essential protection including EQCover in the case of natural disasters
• exploring discounts for bundling house and contents policies, maintaining a claim-free history, installing security systems, and possibly paying premiums annually to receive discounts, although this may not be practical for all