Wellington mayor calls for insurance forum after IAG's price hike announcement
Tuesday, 30 April 2019
Wellington mayor Justin Lester wants to hold a forum to discuss the country's largest insurer IAG's announcement to hike up insurance premiums.
IAG, which owns the State, AMI and NZI insurance brands, has announced it was making changes to its home and contents insurance that will mean people in disaster-prone areas pay more.
From July 1, IAG premiums will take greater account of natural and severe weather-related risks for specific homes.
Lester said IAG's announcement was a 'daunting prospect' for those facing increasing premiums on the homes they already own, and also made it more difficult for first home buyers.
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'IAG has between 40 and 50 percent of the Wellington market, so this could potentially affect a lot of our residents,' Lester said.
IAG also provides insurance through ASB, BNZ, The Co-Operative Bank and Westpac.
Customers who live in areas that are more prone to natural disasters and severe weather events might have to pay more for insurance. And those who live in areas that are less prone might pay less.
Have you been trying to get insurance? Will this change affect you? Get in touch anuja.nadkarni@stuff.co.nz.
It follows a similar move by Tower and reports that IAG was restricting the sale of new house and contents policies in Wellington.
Lester said he had raised the issue with Megan Woods, the Minister Responsible for the Earthquake Commission, and would be convening an insurance forum and inviting the Insurance Council, IAG, body corporate and home owner representatives who were significantly affected by premium increases.
'I want to canvas issues in the Wellington market and look at the immediate and long-term future for people needing insurance.
'It may be that the Government needs to consider what insurance companies are required to offer in a market, and they may have to offer an affordable option where they operate.
'Insurance is crucial for a city. It has to be available and affordable for banks to lend, for businesses to operate efficiently, and for people to have peace of mind,' Lester said.
Insurance Council chief executive Tim Grafton said he had not yet spoken with the mayor and found out about the forum through a media release.
'We welcome the opportunity to discuss this issue further with the mayor,' Grafton said.
Grafton said because changes in weather and sea levels related to climate change were inevitable, it was 'equally inevitable' insurance policies would have to respond o the changes.
'This doesn't have to be premiums increases – insurers have other levers available to them, including reducing the cover they offer, introducing sublimits for some types of cover or increasing customers' excesses.
Insurance companies would make the changes according to their business models and appetite for risk, Grafton said.