New Zealanders are increasingly concerned with the rising cost of house and contents insurance, with a survey by Consumer NZ revealing that half of respondents were worried about the cost of insuring their homes.
The survey also found that 7% of people without house insurance either cancelled or didn’t renew their policy due to cost-related reasons. For those without contents cover, 17% didn’t renew their policy for that same reason.
Consumer Price Index data showed that the cost of house and contents insurance has increased by 150% over the past 10 years.
“Insurance provides a crucial safety net,” said Rebecca Styles, investigative team leader at Consumer NZ. “With the cost of living squeezing many households, some New Zealanders have effectively been priced out of insurance protection.”
The survey indicated that insurance premium hikes were the strongest for standard-sized houses in the Hamilton area. Over the past year, the cost of insuring a standard house in Hamilton has increased by 17%. This cost has increased by 15% in Auckland, and by 14% in Dunedin over the same period.
“Last year’s survey found Wellington was the most expensive region to insure a standard and large home,” Styles said. “However, this year, price hikes for insuring Wellington’s homes are relatively modest compared to other regions – up 5% for a standard house and 9% for a large house.”
One of the causes that drove up home insurance rates is the increase in the Earthquake Commission (EQC) levy, which rose from $345 to a maximum of $552. Since Oct. 1, the increased EQC cap covers the first $300,000 worth of damage caused by earthquakes, tsunamis, volcanic eruptions, hydrothermal activity and natural landslips, up from $150,000 previously.
David Clark, minister for EQC, said the increased cap should result in lower premiums for many New Zealanders. However, Consumer NZ found that median prices increased across the regions.
“We found the median costs increased between 5 and 17% since this time last year,” Styles said.
Aside from rapid increase in prices, the survey found that public trust in insurance providers was generally low, with a few exceptions.
On the other hand, three banks had below-average performance in the house and contents insurance area – ASB, BNZ and Westpac.
“A review of the insurance industry to ensure it is competitive and working for households is well overdue,” Styles said.
