The financial shocks of the Canterbury earthquakes are being felt by homeowners throughout New Zealand this month, with the arrival of insurance bills in the post showing average increases of up to 30 per cent.
Insurers battered by earthquake claims and multiplying fees from overseas reinsurers say they are balancing ballooning costs against keeping prices manageable.
But the latest insurance renewals, for terms beginning on or after February 1, also include rises of $120 plus GST a year to be collected for the Earthquake Commission.
Associations of property owners say there are shocks awaiting in letterboxes, while some in the industry say the pricing of insurance has become a matter of trying to keep premiums affordable.
The Herald surveyed the major insurers and owners of 30 properties around the country and found snowballing increases in house insurance bills, though there were significant variations and the rises were less substantial when considered on a weekly basis.
Many renewals, particularly those from the middle of last year or earlier, have been spared the big rises, at least for now.
Others, once the EQC levy is added, have been made hundreds of dollars dearer - at times more than 50 per cent.
Two five-bedroom houses, in Remuera and Hamilton, saw their annual premium rise by more than $300.
A Mt Eden two-bedroom house had a 56 per cent increase in its total insurance cost.
Canterbury Property Investors Association president Kim Willems said the costs could be devastating for property owners.
"It's going to be quite a shock for people seeing those renewals.
"The increased costs are adding to the stress for a lot of people. This year is going to be really tough. It's going to put them under huge financial pressure, ending up in forced sales and bank sales."
Waikato Property Investors Association president Nancy Caiger said the big increases began late last year and had been compounded by the extra EQC levies showing up this month. "The earlier ones weren't so bad, but as they're coming in they've been getting higher and higher."
Capital Property Investors Association president Alistair Gillespie said he had shopped around for insurance over several weeks and could see the market shift.
"On a week-by-week basis the quotes were changing. There was quite a significant increase."
The new EQC levy applies to all insurance contracts that start next month or later. The part of the levy that applies to housing insurance has gone up from $50 to $150, excluding GST, and for contents from $10 to $30.
Home Owners & Buyers Association president John Gray said some homeowners were forgoing insurance for the sake of putting food on the table and paying their mortgages.
"It's extremely risky to go without insurance, because we clearly can't rest on our laurels saying it [damage leading to an insurance claim] is never going to happen to me.
"But it [the premium increase] is a lot of money to find for some households, given the stresses on family budgets."
The insurance bills were being met with surprise and anxiety, Mr Gray said.
"It certainly adds to the problems we're having with home-ownership affordability."
He encouraged homeowners to shop around for better deals and pay close attention to the details of policies. Increasing excesses for cheaper premiums could be an option.
AA Insurance head of corporate affairs Suzanne Wolton said the underlying components of an insurance bill that went straight to the Government and overseas reinsurers had increased from $220 to $610, on average.
"A lot of people need to be prepared for the impact," she said.
Premiums paid to reinsurers - which cover claims in the case of major events, which local insurers cannot pay for alone - had multiplied after the Canterbury earthquakes.
The whole of New Zealand was now considered a significant risk, Ms Wolton said.
"Does the premium increase completely fund the reinsurance costs? No, it doesn't, because there's always a time lag... We've got to do everything to protect customers and work with the Government to make sure cover is affordable. It's become more a matter of affordability than availability.
"Unfortunately, the news isn't good for people who open their insurance bill."
Ms Wolton said the AA was focusing its increased premiums on housing insurance rather than spreading them among other types, such as contents and vehicle, as most other insurers have done.
Vero chief executive Gary Dransfield said his firm wanted to keep premiums within reach of consumers, but insurance in New Zealand had probably been underpriced in the past considering the country's earthquake risk.
The increases in premiums reflected insurers' higher costs rather than being geared to recoup losses, he said.
"We're very mindful that household budgets are under pressure and we don't take any pleasure in having to increase prices."
Tower Group managing director Rob Flannagan said the increases were likely to happen again this year.
"We're sort of anticipating another round of increases because a whole lot of reinsurance contracts come up for renewal.
"We have no immediate plans, but it could be about 10 per cent. I would think that's the indication we're getting.
"Unfortunately, it's just the whole industry adjusting at the moment."
Insurance Council spokesman Brett Solvander said insurers would not price themselves out of the market, and it was important that people retained cover for their most valuable asset - their home.
In Christchurch, most companies have been declining to offer new policies unless they are sure of the properties' risks.
Commercial properties and apartment blocks around the country have been hit particularly hard - in many cases their premiums have doubled or tripled and their excesses have increased 10-fold - because of fears a natural disaster could trigger a deluge of loss-of-profit claims and badly damage specialised equipment.
Finance Minister Bill English, in announcing the increase to the EQC levy last year, said it was a responsible step to take to ensure the commission could meet its long-term costs.
He said the levy rise amounted to $2.65 a week.