Insurance premiums to rise by up to $69/year

Earthquake levy rises to $20c per $100 of cover

Advertisement

Natural Disaster Fund to rise to return to "safe" levels by 2027

Homeowners' insurance premiums are set to rise by up to $69 a year, as government aims to top up a natural disaster fund depleted by the Canterbury and Kaikoura earthquakes.

At present, insured homeowners pay a premium rate of 15c per $100 of insurance cover, to a maximum of $207 a year.

As of November, that will rise to 20c per $100 of cover, to a maximum of $276 a year.

"This is an increase of up to $69 per homeowner per year," Finance Minister Steven Joyce said today.

The levies would help to top up the National Disaster Fund, which pays out claims related to earthquake damage.

The fund has paid out $9.5 billion so far in claims to people affected by the Canterbury earthquakes. Another $550m is expected to be paid out for claims related to the Kaikoura earthquake.

That had exhausted the fund's reserves, Joyce said.

"The Earthquake Commission has a Government guarantee and $4.7 billion in re-insurance cover, so homeowners will be covered if there is another natural disaster.

"But we need to start the process of replenishing the fund so it is available to contribute to future natural disasters."

Earthquake Commission Minister Gerry Brownlee said under existing settings, and barring no further natural disasters, it would take 30 years to reach the EQC's reinsurance excess of $1.75b.

Under the higher levy, the fund would be restored to this level within 10 years.