Increases in home insurance premiums are affecting all New Zealand homeowners.
Here’s 3 reasons why.
Increased extreme weather events
What does this mean?Increased extreme weather events
Climate change is having a very real impact on the lives of New Zealanders
It's clear that as the frequency and severity of extreme weather events intensifies, climate change is becoming one of the biggest challenges facing the insurance industry.
The Auckland Anniversary floods and Cyclone Gabrielle in early 2023 are two of the largest insurance weather events in New Zealand’s history and are expected to cost the insurance industry NZ$3.8 billion to date, as reported by the Insurance Council of New Zealand.(1)
The price you pay for your insurance needs to accurately reflect what it costs the insurers to provide cover. As the total cost of claims continues to increase, this means insurance premiums increase too.
1Insurance Council of New Zealand
Image data source: Insurance Council of New Zealand
Increasing extreme weather events is changing the face of insurance in NZ
The changing approach from insurance providers include:
- Higher flood excesses and insurance premiums
- Greater use of risk-based pricing, where insurance premiums paid by owners of flood-prone homes are typically higher compared to people with homes in lower risk flood areas.
- Limiting the availability of flood cover in some areas.
Affordability and availability of cover
We recognise affordability and availability of cover can be challenging. Our brokers are here to recommend insurance solutions to best protect your assets while also securing the right combination of cost, risk, and coverage.
Snapshot of recent claim costs
Changes to Natural Hazard Insurance
What's changed?Changes to Natural Hazard Insurance
Natural Hazards Cover (NHCover) provides natural hazard* insurance for residential homes and some of your land. You automatically have NHCover if you have a current private insurance policy for your home (including fire insurance).
The NHCover provides cover up to $300,000 for damage to your home caused by natural hazards. *
*Natural Hazards covered under NHCover: an earthquake, a natural landslip, a volcanic eruption, hydrothermal activity, a tsunami, storm or flood (land cover only), and fire caused by any of these natural hazards.
Supply Chain & Economic Factors
What’s happening?Supply Chain & Economic Factors
Factors affecting the wider New Zealand economy are impacting the insurance market too. These supply chain and economic factors are contributing to the increasing cost of insurance premiums.
Supply chain
While shipping, freight and logistical disruption have largely subsided following COVID-19, the costs for these services remain high. Shipping prices have increased more than six-fold according to the Ministry of Foreign Affairs and Trade.1
This has an inflationary impact on the cost of building materials and replacement equipment.
Significant increases in construction costs
Increasing costs for residential construction and equipment are being seen across the industry.
Despite the lowest figures reported since 2020, construction costs still rose by 0.5% nationally in the September 2023 quarter and the annual cost growth rate was 3.4%, according to Cordell Construction Cost Index. 2
Inflationary pressures
Annual inflation in New Zealand remained high at 4.7% in the 12 months to the December 2023 quarter with housing being the largest contributor, according to Stats New Zealand. 3
1TMX Global
2 CoreLogic, New Zealand’s Cordell Construction Cost Index
3 Statistics New Zealand
Increased extreme weather events
Climate change is having a very real impact on the lives of New Zealanders
It's clear that as the frequency and severity of extreme weather events intensifies, climate change is becoming one of the biggest challenges facing the insurance industry.
The Auckland Anniversary floods and Cyclone Gabrielle in early 2023 are two of the largest insurance weather events in New Zealand’s history and are expected to cost the insurance industry NZ$3.8 billion to date, as reported by the Insurance Council of New Zealand.(1)
The price you pay for your insurance needs to accurately reflect what it costs the insurers to provide cover. As the total cost of claims continues to increase, this means insurance premiums increase too.
1Insurance Council of New Zealand
Image data source: Insurance Council of New Zealand
Increasing extreme weather events is changing the face of insurance in NZ
The changing approach from insurance providers include:
- Higher flood excesses and insurance premiums
- Greater use of risk-based pricing, where insurance premiums paid by owners of flood-prone homes are typically higher compared to people with homes in lower risk flood areas.
- Limiting the availability of flood cover in some areas.
Affordability and availability of cover
We recognise affordability and availability of cover can be challenging. Our brokers are here to recommend insurance solutions to best protect your assets while also securing the right combination of cost, risk, and coverage.
Snapshot of recent claim costs
Rothbury are here to help in any way we can to protect your home and most valuable assets.
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