The fast-evolving situation of insurance premium increases is what triggered Wellington mayor’s to call for a forum with stakeholders and the EQC minister.
Photo: RNZ / Aaron Smale
Insurer IAG, which covers home and contents insurance for about 46 percent of New Zealanders, is set to switch its premiums pricing to a risk-based system from July.
Earlier this year, the company also announced it would no longer take on any new customers in Wellington.
At the time Wellington mayor Justin Lester said there was enough competition in the market to give residents good insurance options, and that IAG was overexposed to the capital’s market.
However, he’s now told Morning Report he’s been prompted to take action after seeing power moves by insurance providers in premium hikes.
“We’ve had Tower do this and now IAG, and it’s quite a significant shift from what they were saying even just a month ago.
“We have premium increases across the board in Wellington that sucks millions of dollars out of our local economy, but also has flow-on effects to anywhere in the country with a higher risk of hazard.”
Premium increases of more than 100 percent for homes in risk areas was one of the things that triggered him to act, he said.
“That’s something we can’t accept across the entire city and that is a risk for us if all providers move to this model … I’m worried about the future if all providers move to a new model.”
Photo: RNZ / Richard Tindiller
He said the situation was also concerning because it was evolving quickly and has now called for a forumto provide some solutions.
“I want to make sure we get ahead of this and we bring all the stakeholders together and make sure we’re not having to pay more for premium than we need to.”
The forum will gather the EQC Minister, the Insurance Council, IAG and large providers, concerned stakeholders, large landlords, and household representatives.
Mr Lester said the forum would pose questions about the appropriateness of regulation for the national market and consistency.
“For example we have ACC, which is quite a different insurance model in New Zealand compared to other places – a person liability for accidents – what does that look like in the private insurance market?”
Asked whether he was advocating for a state-run insurance system via the forum, Mr Lester said it would be a costly decision that would require thought.
“When we have this forum … this issue [state-run insurance model] will come up and that’s something for us to consider.
“I’m advocating for options that make sure we have high-functioning insurance markets, for me particularly here in Wellington, but to make sure that any coastal community, any area of risk … can get access to insurance for their business or for their home.”