Insurance premiums for house, content, and car insurance have all soared over the past year. Photo / 123rf
Insurance premiums for house, content, and car insurance have all soared over the past year. Photo / 123rf
Skyrocketing insurance premiums are forcing some Northlanders - including struggling pensioners, single parents, and families - to cancel their insurance policies, leaving them vulnerable to unforeseen disasters, accidents, and debt.
Recently released data shows insurance premiums for house, content, and car insurance have all soared over thepast year.
The cost of insuring a house increased six times faster than incomes for the year to March, while car insurance premiums were up 40% in the March quarter compared to the same period a year ago.
The Insurance Council of New Zealand says the hikes are due to several factors, including building cost inflation, rising global reinsurance costs, and the impact of the 2023 Auckland Anniversary Weekend and Cyclone Gabrielle severe weather events.
Far North Grey Power president Russell Bird said it’s a topic that’s regularly brought up, both at Grey Power meetings and in everyday conversations with friends.
Bird, a Kaitāia resident, said his contents and car insurance have gone from $700 to $900 over the last year, and his house insurance has increased by 25%.
“It’s very hard because I’m on a pension.
“I don’t know why we’re being punished. It’s hard on everybody.
“It’s not right.”
Far North Grey Power president Russell Bird said some pensioners are having to cancel their insurance because of soaring premiums.
Ōkaihau resident Karen Edwards said insurance was becoming “unaffordable”.
Edwards’ house, contents, and car insurance went up by $50 a month recently.
“That adds up to another $600 a year I have to find; it gets harder and harder on single parents like me when I’m trying to make ends meet.”
Edwards is now reviewing her policies, “and where I can cut costs”, including considering scrapping her contents cover.
Ōkaihau resident Karen Edwards said insurance was becoming unaffordable for many.
“Two years ago I increased the excess on each of them.
“It seems to go up more and more now, it’s making it unaffordable.”
Whangārei Budgeting Services co-ordinator and senior financial mentor Anna McIntosh said staff had seen “a large proportion of our families’ insurances being cancelled voluntarily or through lapse of payment”.
Those families now view having insurance as “a luxury item” which is low on their list of priorities while they struggle with the ever-increasing cost of living, she said.
“We are concerned that the average household will now be at risk especially with the high rate of vehicle theft, leaving families without transport during the winter months and with no income to replace these items.”
McIntosh advised families to visit an insurance broker, when possible, to get personalised and affordable insurance.
She also advised people to compare insurance policies and benefits online “to make sure they are getting the most affordable premiums for their policy and needs”.
Consumer NZ said the rising cost of house insurance, in particular, was concerning many New Zealanders.
Whangārei Budgeting Services senior financial mentor Anna McIntosh said a large proportion of families were cancelling their insurances either voluntarily or through lapse of payment.
More than two-thirds of respondents in Consumer NZ’s latest insurance satisfaction survey were concerned about the cost of house insurance, with 8% of homeowners letting their policy lapse due to high costs.
Investigative team leader Rebecca Styles urged people to review their current level of cover and “shop around”.
“It’s likely you’ll find a better deal and can maintain some level of protection - which is better than no cover at all.”
A Retail NZ report released in April found that nearly 60% of respondents said their insurance costs had increased “significantly” in the past year.
With council rates and other costs also rising, some retailers reported they were considering cancelling their policies.
The Insurance Council said insurance increases are due to several factors, including the impact of the Auckland Anniversary Weekend and Cyclone Gabrielle severe weather events last year.
Retail NZ chief executive Carolyn Young said she always recommends retailers have insurance.
“It’s one of those things, when you need it you need it most.
“There are often times when owners are trying to make decisions on how to survive in business, but if you let go of insurance you’ve got no backstop if something goes wrong.”
However, Young said retailers were looking at ways to lower their premiums.
“Consumer confidence is very low, and retail sales are also low.
“Retailers are not meeting their sales targets, and have to work out how to stay open ... including increasing their excess.”
An insurance council spokesperson acknowledged “it’s difficult for Kiwis dealing with the cost of living”.
“Like all Kiwis, we are hoping for a quieter period with events which could allow prices to stabilise.
“For example, some of the wider pressures on premiums are showing signs of slowing or are expected to ease back, including building cost inflation and reinsurance rates.”
The spokesperson said factors “outside our control” such as reinsurance rates, building costs and government taxes and levies made it difficult to estimate the impact on premium levels.
“Insurers are looking at ways to help their customers manage their cover to protect themselves and their homes as cost-effectively as possible, such as through their excess or other policy settings.
“People should take the opportunity to contact their insurer and see what’s available while also shopping around.”
Instead of paying $500 on a claim, you could increase your excess to between $750 and $2500 which could drop your premium. However, make sure you can afford it if disaster strikes.
Reassess your needs
No one wants to spend their spare time reviewing their insurance needs - but you could save hundreds each year if you do.
Consider a bare-bones policy, if you really need to
A fire-only or fire and burglary policy on your home will mean you’re not covered for everything but can keep some protection and, crucially, will still be entitled to EQCover in a natural disaster.
Some insurers offer discounts for combined house and contents policies, being claims-free for a set number of years, and having an alarm. Paying for your premium for the year ahead, rather than monthly, may afford you an annual discount.
Source: Consumer NZ
Jenny Ling is a news reporter and features writer for the Northern Advocate. She has a special interest in covering roading, lifestyle, business, and animal welfare issues.
