Warning issued on unnecessary insurance hikes

Photo / Simon Baker

Businesses and consumers are being warned to be wary of unnecessary insurance hikes.

The insurance sector is predicting higher premiums across the country as companies adjust for claims and perceived risk.

Auckland University economist Rhema Vaithianathan said any perception New Zealanders will cop a higher re-insurance levy because of the Christchurch earthquakes has absolutely no logic.

She said our insurance premiums were rising by more than the rate of inflation before the September earthquake.

"Every year we didn't have an earthquake our insurance prices didn't fall, so the year we have an earthquake I don't see why our insurance prices should rise, she said.

Vaithianathan said after catastrophes like Christchurch, re-insurers exploit people's increased awareness of disasters.

"If our retailers could go back to the re-insurers and say actually New Zealand is going to see the justification for the height in re-insurance because they think we've been paying you premiums for the last 50 years without making a claim."

Rhema Vaithianathan said the idea of reinsurance is that you spread risk across the world, you don't just isolate risk for each individual.

- Newstalk ZB