Insurance costs are rising fast: Can you still afford to have home insurance etc?

Forums › Off topic › Insurance costs are rising fast: Can you still afford to have home insurance etc?

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SJB

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#3150487 20-Oct-2023 13:34

billgates:

They checked with Vero, Classic cars and Star as well and Classic cars did an agreed value cover for $1388/year on $1000 excess for $99k car.

Was that with a mileage restriction?

boosacnoodle

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#3150513 20-Oct-2023 15:22

It's not clear to me why NZ insurers aren't adopting a model where they either exclude some natural risks (i.e. floods, earthquakes) or cap them (perhaps at the EQC limits). Anyone know more on this?

This is becoming more common overrseas, like trying to get tornado insurance in some parts of the USA now (just not a thing anymore), see also:

Major insurers say they will cut out damage caused by hurricanes, wind and hail from policies underwriting property along coastlines and in wildfire country, according to a voluntary survey conducted by the National Association of Insurance Commissioners, a group of state officials who regulate rates and policy forms.

Insurance providers are also more willing to drop existing policies in some locales as they become more vulnerable to natural disasters. Most home insurance coverages are annual terms, so providers are not bound to them for more than one year.

Tinkerisk

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#3150594 20-Oct-2023 18:19

boosacnoodle:

It's not clear to me why NZ insurers aren't adopting a model where they either exclude some natural risks (i.e. floods, earthquakes) or cap them (perhaps at the EQC limits). Anyone know more on this?

This is becoming more common overrseas, like trying to get tornado insurance in some parts of the USA now (just not a thing anymore), see also:

Major insurers say they will cut out damage caused by hurricanes, wind and hail from policies underwriting property along coastlines and in wildfire country, according to a voluntary survey conducted by the National Association of Insurance Commissioners, a group of state officials who regulate rates and policy forms.

Insurance providers are also more willing to drop existing policies in some locales as they become more vulnerable to natural disasters. Most home insurance coverages are annual terms, so providers are not bound to them for more than one year.

Understandable, but it is a kind of desolidarisation. In any case, the purpose of insurance used to be that risks were borne by the community of solidarity by not calculating down to the cent how great one's own risk was. Instead, people were happy to be spared. If you now tailor your contract precisely by excluding certain non-existent risks, you save money but increase the premiums to the point of unaffordability for everyone else who has to live with this excluded risk.

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billgates

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#3150598 20-Oct-2023 18:52

SJB:

Was that with a mileage restriction?

Nope. There was a question about estimated milage and I ticked 15,000km but the policy states nothing about max mileage allowed in a year.

Do whatever you want to do man.

decibel

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#3150599 20-Oct-2023 18:54

tripp:

It's happening to all insurance, my pet insurance is up 20% (just had the re-new last month).

Well, judging from your mugshot Tripp, no insurance company should be messing with you!

Geektastic

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#3150691 21-Oct-2023 07:01

ANglEAUT:
Geektastic: ... From talking to people who work in insurance, reinsurers are starting to regard NZ as too much of a risk. ...

would be interesting to know the details here.

I know a couple of people work in brokers and they’ve told me of very difficult conversations in which NZ insurers have apparently said that re-insurers are starting to find out market unattractive.

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frednz

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#3151433 23-Oct-2023 13:05

Tinkerisk:

boosacnoodle:

It's not clear to me why NZ insurers aren't adopting a model where they either exclude some natural risks (i.e. floods, earthquakes) or cap them (perhaps at the EQC limits). Anyone know more on this?

This is becoming more common overrseas, like trying to get tornado insurance in some parts of the USA now (just not a thing anymore), see also:

Major insurers say they will cut out damage caused by hurricanes, wind and hail from policies underwriting property along coastlines and in wildfire country, according to a voluntary survey conducted by the National Association of Insurance Commissioners, a group of state officials who regulate rates and policy forms.

Insurance providers are also more willing to drop existing policies in some locales as they become more vulnerable to natural disasters. Most home insurance coverages are annual terms, so providers are not bound to them for more than one year.

Understandable, but it is a kind of desolidarisation. In any case, the purpose of insurance used to be that risks were borne by the community of solidarity by not calculating down to the cent how great one's own risk was. Instead, people were happy to be spared. If you now tailor your contract precisely by excluding certain non-existent risks, you save money but increase the premiums to the point of unaffordability for everyone else who has to live with this excluded risk.

There’s an interesting article by Susan Edmunds on Stuff on 23 October 2023 titled ‘Petone will be underwater’: Here’s what you need to know if your home is a flood risk.

Here’s a short extract from this article:

Insurance premiums are rising – IAG said its house insurance was going up by 20% to 30%. But only some insurers charge according to the specific risks of an individual property. In 2021, Tower began to charge higher premiums to people whose homes were at an elevated risk of flooding. Consumer NZ investigative team leader Rebecca Styles said for now, people who were facing big increases in insurance cover costs could shop around to see if another firm could offer a better deal. “Other insurers are basing prices on community spread,” she said. “They spread the risk across the country. That would be my first port of call.”

I think there’s some merit in the view that people should be given the option of whether or not they want to be insured against flooding and earthquakes, because the “community spread” concept is likely to make insurances unaffordable to many people, even though their homes are not at an elevated risk of experiencing flooding or major earthquakes.

Tinkerisk

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#3151484 23-Oct-2023 13:41

@frednz The solution probably lies somewhere in the middle between pocket stuffing and social institution.

frednz

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#3151623 23-Oct-2023 20:06

Tinkerisk:

@frednz The solution probably lies somewhere in the middle between pocket stuffing and social institution.

However, it's possible that insurance may not be available at all if people buy properties in flood-prone areas. In an article about flood-prone land by Ben Leahy in the NZ Herald on 20 October 2023, it was disclosed that some new-build Onehunga townhouses are being built on a site that was heavily flooded in January 2023. Here are some brief extracts from this article:

A new development of townhouses being built on land that flooded like a “lake” during Auckland’s record-breaking January 27 downpour has drawn criticism from surrounding neighbours as “stupidity” and a potential risk for buyers.

Auckland Mayor Wayne Brown told the Herald he has concerns there are plots of land with resource consent that have been flooded previously but neither the developer nor Auckland Council are aware of it. …

Insurance Council NZ spokeswoman Sarah Knox said home buyers should not rely on a new home having building consent alone as a guarantee they will be able to get insurance for the property.

She urged buyers to do their full due diligence on any home before buying.

This situation raises the important point that home buyers should try and avoid buying properties that are likely to flood, either now or in the foreseeable future. But, if people do own properties on flood-prone land, it’s possible they will not be able to get insurance at all, or if it is available, it may be very expensive and have a significantly higher flood damage excess.

https://initio.co.nz/faqs/five-tips-to-insuring-in-a-flood-zone/

cddt

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#3151672 24-Oct-2023 09:47

boosacnoodle:

It's not clear to me why NZ insurers aren't adopting a model where they either exclude some natural risks (i.e. floods, earthquakes) or cap them (perhaps at the EQC limits). Anyone know more on this?

I wonder whether banks would accept policies which exclude certain natural risks.

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