Harry Machiela at his Bluff Hill home, holding records showing his insurance bill has tripled over five years. Photo / Rafaella Melo
What should you be paying for home insurance?
It’s a question Napier home owner Harry Machiela asked himself when he sat to down calculate his bill – and realised it had risen more than 300% in five years.
Insurers says a significant part of what customers pay is made up of taxes and levies.
The Insurance Council of New Zealand told Hawke’s Bay Today in a statement that there is no one-size-fits-all figure of what customers should expect their increases to be.
“There are a number of drivers of premium levels, some of which are out of insurers’ control, such as inflation, rising global reinsurance rates and the impact of severe weather events,” it said.
“The Reserve Bank reported last year that premiums tend to trend upwards after large-scale natural events, including the Auckland Anniversary Weekend flooding and Cyclone Gabrielle.”
In response, insurers have shifted towards more risk-based pricing, meaning the cost of cover can vary significantly based on where you live and how vulnerable your home is to natural disasters.
“Even with the same information, the insurance companies will take different positions, depending on their own appetite for risk,” the Insurance Council said.
That appetite for risk certainly lowered for AA Insurance in the case of its customer Harry Machiela.
Machiela, who was insured with AA Insurance for nearly three decades, said he didn’t realise the extent of the increases for the insurance on his Bluff Hill home, until he recently sat down and did the maths.
“The thing is that with these increases, you just get it sent out every year,” Machiela said.
“But you never kind of put them together on the top of each other ... When I did it, I was like ‘holy s**t’.”
Machiela’s total home and contents insurance jumped from $2263.85 in 2020 to $6807.44 in 2025.
The steepest jump came this year, when his premium rose by almost 40%.
“I was just stunned ... It’s turned from a trickle into an avalanche,” he said.
Machiela said he had made few claims over the three decades and lived in an area unlikely to be affected more than others by natural disasters.
“It’s not enough to justify these increases,” he said.
“We’re never going to get flooded here. We’re never going to have a tsunami.
“The hill is really strong for earthquakes. There’s usually very little damage for earthquakes up here, as we proved in the 1931 earthquake.”
Machiela said his home suffered no damage during Cyclone Gabrielle.
He believes New Zealanders are being punished by blanket pricing models, where customers pay not according to their personal risk but broader market trends.
“What I worry about is that you just end up getting hundreds of thousands of New Zealanders who don’t have insurance because they just can’t afford it,” Machiela says.
“That’s really bad for the country and bad for the insurance companies.”
Machiela said his attempts to negotiate the price with AA Insurance, and question the increases, were met with no interest and generic responses.
“I feel embarrassed ... you have this sense of loyalty that if I stick with the insurance company, they’ll look after me.
“But there is no loyalty, so you may as well just completely shop around, claim as much as you like because what’s the point of doing anything else?”
Machiela has now switched to another insurer, saving about $1700 across policies.
He said he’d like the Government to consider a solution.
“I think it would be really nice to see Kiwibank have a government-owned insurance company. Wouldn’t that be amazing?
“Something to keep the prices a bit lower.”
AA Insurance’s head of pricing Chris Taylor said the company had introduced risk-based pricing in recent years.
“This means that if a customer’s home is at higher risk of a natural hazard event such as a flood or earthquake, their premium may be higher. Conversely, those in lower-risk areas may pay less.”
He said Hawke’s Bay has medium to high earthquake risk and Bluff Hill was deemed by AA as “high-risk”.
The suburb is currently rated at a low risk of storm and flooding damage but “some individual properties” on the hill “have some flood risk”.
Taylor said rising premiums can be challenging for long-term customers as pricing was not determined by length of time with the company.
“It is important to note that together with natural hazard data, we use many factors to assist us in setting premium including, but not limited to, the costs of reinsurance and the number of claims we receive in a year, the location of the home, security, external wall material, roofing material, sum insured, the year the home was built,” he said.
“Around 43% of a premium is comprised of taxes and levies.”
Taylor said customers may be able to reduce their premiums by opting for a higher excess, paying annually instead of monthly or fortnightly and reviewing optional benefits and their cover type.