Wellington apartment owners in earthquake-prone buildings are facing insurance premium hikes of up to 320 per cent, on top of massive strengthening bills.
One woman living in an apartment on Cuba St told the Herald she's facing a $250,000 bill for her share of the building's earthquake strengthening.
And she expects that will blow out even further by the time the detailed design phase comes back sometime this year.
"It's not going to be pretty."
The 60-year-old didn't want to be identified, fearing the value of her property could be impacted further and for privacy reasons during what is already a very stressful time.
She told her story to the Herald, on the condition of anonymity, because she wanted to join those exposing the extent of the issue in Wellington.
The building she lives in was constructed at the turn of the 20th century and is heritage listed.
It's rated at just 12 per cent of the New Building Standard (NBS); anything lower than 34 per cent NBS is considered to be earthquake prone.
The woman said insurance for the building was recently renewed.
However, she said the company indicated that unless there were spades in the ground by the time it came up for renewal again next year, they might not be re-insured for total replacement.
The building's most recent premium increase was almost 30 per cent year-on-year.
When the woman bought her apartment 13 years ago she said she did her due diligence to confirm the building was compliant.
"After the Kaikōura Earthquake everything changed; they moved the goalposts", she said.
"It was just a total shock."
The deadline to strengthen the building is 2027, which is a shorter timeframe of seven and a half years because it's located on what's considered a priority route.
She acknowledged she was in somewhat a privileged position with not much of a mortgage left to repay.
"But I'm not sure the bank is going to give me another quarter of a million dollars to do the strengthening when I'm five years off retirement.
"My plan was to sell the apartment and move to a little cottage somewhere."
Michael Cummins, who lives in a different earthquake-prone apartment building on Kent Terrace, also doubts he'll be able to renew insurance.
His share of earthquake-strengthening costs is $400,000.
Inner City Wellington, a residents' association, submitted to the Governance and Administration Select Committee on the issue of insurance in November.
The group provided case study examples of recent insurance premium increases.
One was a small block of six apartments in an inner city suburb that was deemed earthquake prone in 2013.
Insurance premiums for the building have jumped from about $10,000 in 2012 to more than $42,000 in 2019 - an increase of 320 per cent.
But it's not just earthquake-prone building owners struggling with insurance affordability issues.
Buildings with NBS ratings between 34 and 66 per cent are still considered a potential earthquake risk.
Another case study building, constructed in 1962 and converted to apartments in 1994, was strengthened to 45 per cent NBS in 2015 at a cost of more than $1 million.
The year it was strengthened, the cost to insure the building was $23,000, but fast forward to 2018 and the cost had increased to more than $56,000.
A report commissioned by MBIE into potential funding support for earthquake strengthening said discussions with the Insurance Council confirmed in most cases buildings would need to be strengthened to 67 per cent NBS or more to secure insurance.
The Cabinet paper settling on a loan scheme for financial assistance recognised changes to the insurance market and costs following the 2010/11 Canterbury Earthquakes and the 2016 Kaikōura Earthquake, as well as bank lending practices, had contributed to affordability concerns.
Insurance Council of New Zealand chief executive Tim Grafton said earthquake-prone buildings were by definition considered a higher risk because of their construction, age and location.
He said insurers viewed Wellington as a higher seismic risk area in any event.
Grafton pointed to the more than $1 billion of insured losses incurred in 2016 after the Kaikōura Earthquake, despite its epicentre being more than 200km from the capital.
"Even modern buildings constructed this century became total losses after that earthquake and this has added to insurers' understanding of the risks. Obviously each insurer will have its own appetite for risk in Wellington and which buildings they are prepared to insure.
"Insurers support making buildings more resilient to seismic shocks and one would hope building owners would share that view from the perspective of the safety of themselves and their family members", Grafton said.