If the RBNZ has won the war on inflation, how is it that your insurance bill is still such a shocker?! You’re not alone – many property owners are seeing increases of up to 30% or more. Let’s break down what’s really going on.
Mother Nature at Her Finest
Recent floods and storms, both here and overseas, have hit insurers hard. “Large weather events, both locally – flooding and storm losses, and internationally,” says Rene Swindley, CEO and co-founder of Initio Insurance, “flood and cyclone losses, have significantly impacted premiums.”
Insurers Have Insurance Too
Insurers need insurance too. And that is what offshore reinsurance does for domestic providers. But here’s the catch: New Zealand is seen as a risky bet due to our natural disasters, but we have a small population paying premiums. Plus, our Reserve Bank requires extra protection. As Rene puts it, “Most insurers globally have to cover a 1:200 year catastrophe event. New Zealand insurers have to cover a 1:1000 year catastrophe event (such as the Christchurch earthquakes).”
Then There Is Your Actual Property
Some properties are getting hit harder than others. Swindley notes that bigger increases often come down to:
- Where your property sits (some areas are riskier for natural disasters)
- Age (houses built between 1970-1990 are seeing more plumbing issues)
- Being owner-occupied
- Higher property values
More overall detail on how premiums are calculated here: How are house insurance premiums calculated?
“In today’s changing insurance market, it’s crucial for property investors to shop around and use their membership benefits,” says Sarina Gibbon, APIA General Manager. “Our members can access special rates with Initio Insurance, which helps ease the burden.”
The good news? “We believe that our prices remain competitive in the current market,” says Swindley, noting that “many customers with the larger increases are checking alternative providers and coming back to us.”
The bottom line: While insurance costs are rising across the board, taking time to compare quotes and using association discounts like those offered through APIA can help keep your costs in check.
This article is for informational purposes only and does not constitute financial or legal advice. The information provided is general in nature and may not suit your specific circumstances. Always consult with qualified financial and legal professionals before making insurance or investment decisions.
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