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Topic # 239580 24-Jul-2018 21:39
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So, hard on the heels from this article on Stuff (with, IHMO, an overly sensational headline, but that's a comment for a different thread), and also a similar piece on TV News; I have the email from my insurance provider advising that our premiums are going up at the next renewal. 

 

The stated reason is "the difference in risk across the country hasn’t always been reflected in the price you pay for your insurance".

 

Fair enough; more "stable" parts of the country (hmmmm, are there any??) probably carry less risk WRT earthquake, for example, so should have less than "Average" loading; more shakey parts, more loading.  I'm not really opposed to that, it does make business sense from the Insurer's point of view.

 

However, I do wonder how "granular" their modelling is.  Does it tar everyone in (for example, Wellington) with the same brush, or does it take into account the significant differences between (for example) people in the Hutt Valley floor vs people higher in the hills on more solid ground.  Especially as one of the loadings is apparently around flooding.

 

Does anyone work in the sector who may know, and would be willing to share?

 

And yes, I'll accept "sorry, commercially sensitive information" as an answer.

 

 


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  Reply # 2061974 24-Jul-2018 22:09
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In general, I can't see why this was even worthy of reporting. All NZ seems to be doing is eventually doing what almost everywhere else already does.

 

Insurance reflects risk by definition, surely? Car insurance risks like driver age, car value, where the car is kept and so on all affect premiums. House construction type, location and so on affect premiums. Health insurance is affected by risk factors like age, previous history and so forth.

 

I would imagine the insurers use the same maps that are used by (to use the example above) Wellington City Council to show what parts of Wellington are in what risk zones - the maps are in the Local Plan document IIRC.






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  Reply # 2061976 24-Jul-2018 22:34
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I have just received my insurance renewal and I always compare each year by checking the rate per $1,000 from one year to the next.  I think it is the best way to compare apples with apples.   I live in Geraldine, South Canterbury - no records of earthquakes, destructive flooding or volcanoes and a very low crime rate.

 

House premium last year was $1.32 per $1,000, this year's renewal is $1.60 and we had no claims - a 21% rise.

 

Contents last year was  $2.26 per $1,000, this year $2.54 - a 12% increase and no claims.

 

It will be interesting if other forum members can show their changes (and rates per $1,000)


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  Reply # 2062015 25-Jul-2018 08:08
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Juicytree:

 

I have just received my insurance renewal and I always compare each year by checking the rate per $1,000 from one year to the next.  I think it is the best way to compare apples with apples.   I live in Geraldine, South Canterbury - no records of earthquakes, destructive flooding or volcanoes and a very low crime rate.

 

House premium last year was $1.32 per $1,000, this year's renewal is $1.60 and we had no claims - a 21% rise.

 

Contents last year was  $2.26 per $1,000, this year $2.54 - a 12% increase and no claims.

 

It will be interesting if other forum members can show their changes (and rates per $1,000)

 

 

Well, that blows the tread title out of the water. If more prone areas get higher increases, then that tells me that lower risk areas are subsidising the high risk, in order to reduce the complaint effect for higher risk areas? If increases are generally similar, well....


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  Reply # 2062070 25-Jul-2018 10:11
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and we all know that ChCh quakes were not even predicted. 

 

Auckland gets cheaper insurance because they live on dormant volcanoes....hello. 

 

This is simply another way for insurance companies to rip us off. 


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  Reply # 2062123 25-Jul-2018 10:34
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Tower made a similar announcement earlier in the year, however they were using a more granular approach to hazard risk modelling. Apparently 1% face a hike greater than $2000 - probably places like Petone which have flood, liquefaction (earthquake) and sea level rise risk.  

 

https://www.stuff.co.nz/business/102777201/all-earthquakeprone-houses-could-face-insurance-hike

 

Imagine if IAG didn't act, then most of Tower's risky customers would switch to IAG, increasing IAG's risk exposure but paying similar premiums to their low risk customers.

 

I think Tower has forced IAG's hand here, however IAG didn't have the same detailed modelling so have had to choose a less granular risk model. It looks like a case of IAG charing a blanket $500 to everyone in Wellington whereas Tower is charging an extra $3000 to everyone in Petone (as an illustrative made up example). In the case of IAG's case, less risky Wellington customers end up subsidising insurance premiums for Petone customers


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  Reply # 2062125 25-Jul-2018 10:36
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Pumpedd:

 

and we all know that ChCh quakes were not even predicted. 

 

 

The faults that hit chch in 2010/11 were not 'predicted', but the threat of a massive alpine fault earthquake was well known long before 2010, and reflected in the building code and the way infrastructure was designed.


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  Reply # 2062133 25-Jul-2018 10:49
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We have a house in Timaru which recently had a renewal notice from Tower that showed it had gone from around $900 last year to $1400 this year.

 

Along with the renewal notice was the information about recalculating the premium based on riskier areas. However when we talked to Tower it turned out that for some reason nobody could explain they had decided the rebuild cost had gone from around $450,000 to $650,000 since last year.

 

When we ran one of the online rebuild calculators (how accurate are these I wonder) it came out with a figure of $300,000 to rebuild so where Tower gets their figures from I don't know.

 

I get the feeling they are trying to recoup some of the losses made over recent years due to the earthquakes as well as covering themselves for future events.

 

I'm about to ask Tower if they do a policy without earthquake cover and if so what the premium is. Has anybody else tried this?

 

 


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  Reply # 2062170 25-Jul-2018 11:21
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nickb800:

 

Pumpedd:

 

and we all know that ChCh quakes were not even predicted. 

 

 

The faults that hit chch in 2010/11 were not 'predicted', but the threat of a massive alpine fault earthquake was well known long before 2010, and reflected in the building code and the way infrastructure was designed.

 

 

Wasn't predicted as far as Insurance risk modelling was concerned.


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  Reply # 2062175 25-Jul-2018 11:34
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SJB:

 

I'm about to ask Tower if they do a policy without earthquake cover and if so what the premium is. Has anybody else tried this?

 

 

 

 

Bit risky to say the least. You are in Timaru. The Alpine Fault will be 7.5 to 8.5. For ChCh they say to drop one magnitude down, so we will get a 6.5 to 7.5 when the waves arrive. Maybe more if closer line of sight, less if further north or south. Same will apply to you. It will happen and its due. Tomorrow or in 50 years who knows


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  Reply # 2062243 25-Jul-2018 12:51
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You worry about Insurance rise and in our case AMI will not insure the house at all because of high risk, our house is on the hill, Aro Valley, Wellington :)


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  Reply # 2062284 25-Jul-2018 13:34
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01EG:

 

You worry about Insurance rise and in our case AMI will not insure the house at all because of high risk, our house is on the hill, Aro Valley, Wellington :)

 

 

 

 

I'm not sure they understand how insurance works. 

 

If you want to insure something for $100, they are free to quote a premium of $99 so that their risk is only $1...it's supposed to be up to you whether to accept that offer. They could go out into the market and re-insure their risks to further mitigate them. Or find a syndicate of Lloyds Names who will underwrite.

 

 

 

If every insurer does that to you - or any subsequent owner - you would be unable to get a mortgage.






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  Reply # 2062286 25-Jul-2018 13:36
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Pumpedd:

 

and we all know that ChCh quakes were not even predicted. 

 

Auckland gets cheaper insurance because they live on dormant volcanoes....hello. 

 

This is simply another way for insurance companies to rip us off. 

 

 

 

 

I'm no geologist but I have always understood that earthquakes cannot actually be predicted with much accuracy, unlike volcanoes.






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Master Geek
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  Reply # 2062288 25-Jul-2018 13:38
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Geektastic: I'm not sure they understand how insurance works. If you want to insure something for $100, they are free to quote a premium of $99 so that their risk is only $1...it's supposed to be up to you whether to accept that offer. They could go out into the market and re-insure their risks to further mitigate them. Or find a syndicate of Lloyds Names who will underwrite. If every insurer does that to you - or any subsequent owner - you would be unable to get a mortgage.

 

I agree, AMI now is part of IAG and they make the rules.


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  Reply # 2062306 25-Jul-2018 14:12
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There does now seem to be a lack of competition in this market due to consolidation.  IMO this is approaching the stage of people needing to self insure, or the government is going to have to step in, so everyone can get insurance at an affordable level. The whole point of insurance is that the cost is spread across a large population relatively evenly, and kiwis are essentially looking after one another. It is the kiwi thing to do, but I do think this attitude has changed over the last decade.

 

The whole point I believe we have EQC,  is so people who live in higher risk areas are also well protected at an affordable level. In't this sort of thing the reason the state setup an insurance company, because people were having problems getting insurance, or that insurance was going to be cost prohibitive based on their location. The fact is that nothing has changed in terms of earthquakes, they have always occurred, and will continue to occur.

 

 

 

 


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  Reply # 2062308 25-Jul-2018 14:18
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SJB:

 

We have a house in Timaru which recently had a renewal notice from Tower that showed it had gone from around $900 last year to $1400 this year.

 

Along with the renewal notice was the information about recalculating the premium based on riskier areas. However when we talked to Tower it turned out that for some reason nobody could explain they had decided the rebuild cost had gone from around $450,000 to $650,000 since last year.

 

When we ran one of the online rebuild calculators (how accurate are these I wonder) it came out with a figure of $300,000 to rebuild so where Tower gets their figures from I don't know.

 

I get the feeling they are trying to recoup some of the losses made over recent years due to the earthquakes as well as covering themselves for future events.

 

 

 

 

 

 

How big is your house, because I doubt you can rebuild much these days for 300k? Even 450k is stretching it, as it also needs to factor in demo work


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