Kris Faafoi: Insurance Council CEO on the rise in people switching to third-party car insurance due to costs

Rising premiums are pushing more people into considering third party car insurance.

The average quote for comprehensive car insurance on comparison website Quashed has increased 41 percent in the past two years.

Insurance Council CEO Kris Faafoi says newer cars have more technology attached to them - which contributes to the rising insurance costs.

"It depends on the individual situation - the cost of the car, who's driving it, where you're parking it, where you are. These are all factors, but it became more expensive to insure them because fixing them is more complex."

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Episode Transcript

Speaker 1 (00:00):
Car insurance premiums have got so expensive that some people
are looking at switching to third party only. According to
data from insurance comparison website Quashed Comprehensive car insurance quotes
have gone up in price by forty one percent. That's
in just two years. And while there hasn't yet been
a mass switch to third party only policies yet, inquiries

(00:22):
about third party insurance are up forty six percent. So
we're thinking about it. Chris Partfoy is the Insurance Council
Chief Executive, joins you now, hello, Chris.

Speaker 2 (00:30):
Good Aston Andrew.

Speaker 1 (00:31):
So, why are the premiums going up so much?

Speaker 2 (00:36):
A lot with a number of factors. I think people
are driving home this afternoon, they've cars are driving around,
have been born in the last ten years, moving computers,
is a lot more electronics and modern cars and as
a result, you know, they can be more expensive to fix.
I think bumpers are one of the most expensive, expensive

(00:57):
than suffix, with the likes of censers and and cameras
that you have and backs of cars these days. And
it does depend on the individual situation. You know, the
cost of the car, who's driving it, where you're parking it,
where you are. They are all factors, but you know,
there's becoming more expensive to ensure them because the cars

(01:17):
are fixing them. Fixing them is more.

Speaker 1 (01:19):
Complex if somebody brought in us because we always get
that suspicion, you know, when you have to pay a
fortune for a light bulb, you go, someone's clipping the ticket.

Speaker 2 (01:28):
I look up. We acknowledge that, you know, just a
lot of just insurance that everyone's finding paying the bills
more difficult. The stats that you quite did are interesting,
but you know, the big picture steps. Indeed, last year
said that vehicle insurance inflation is coming back from about
last to twenty percent twelve months ago, at the end
of last year to fifteen percent, so it's heading in

(01:50):
the right direction. But you know, things are becoming more
challenging in terms of fixing the vehicles. So I'm sure
as are doing things like trying to you know, bring
costs down when they are repairing vehicles up, you know,
exceplishing hubs where they can affect these vehicles to try

(02:10):
and bring down costs, and trying to get costs stuff
from supplies to you. So they all trying their best
to keep the pressure down.

Speaker 1 (02:16):
That's it. The premiums keep going up, So people making
the choice to drive around uninsured, I.

Speaker 2 (02:22):
Like, we hope they're not, because that's putting them and
others at risk. We'll always say people should shop around
and make sure that they've got the right insurance policies
for them, whether the excess is right. But as most
people would know, if you move away from comprehensive coverage
to third party, you're not covered in terms of their
own vehicle. The third party, the person that you might

(02:43):
do some damage, is covered, but it obviously leaves you
at the risk of having to fund the money to
replace the vehicle yourself. So we understand that people are
finding things difficult, but first things first, they should probably
go to the insurance company and find out what they
can do to make sure that they can make it
work for them.

Speaker 1 (03:01):
So the insurance companies are bargainable.

Speaker 2 (03:05):
Oh absolutely, I think you know what they are a members.
But one thing the insurance counsel would say is shop around.
I've certainly seen examples of that myself where people have
shopped around and able to get a bit of deal.
So you know, it's a pretty competitive market. You should
ga able to ring around competitors of your parent assurance

(03:25):
insurer and find out if someone can do a bit
of deal.

Speaker 1 (03:28):
Okay, so more and more people are looking at the
party insurance. I don't know if more and more people
are taking it up. But here is a perennial talkback question.
Should third party insurance actually be compulsory? Because until you've
been running too by some dude who hasn't got insurance,
you don't know how frustrating it can be.

Speaker 2 (03:46):
Well, okay, it is a perennial, but it's got some
barbes here and there. If you do make it compulsory,
then you know, what price does someone pay for whose
low ESST driver as opposed to a higher AST driver?
If the government was looking to you know, capping that,
in my risk drivers would end up subsidizing HIGHERST drivers.
We've got pretty good coverage in terms of comprehensive coverage

(04:10):
vehicle coverage in New Zealand, so we understand and respect that.
But you know they're ours and fishoks and going to
a third party. You know, some other countries do have
third party insurance that's compulsory, but they don't have the
acal system that we heat with body because that's around
bodied palm and obviously if you have an accident here
and you're giving your covered by a SEC so we've

(04:31):
got the the you know, the added advantage of having
the acyssistant therefore the bodily.

Speaker 1 (04:36):
Harm Okay, good, Thank you. Chris Farafoy, He's from the
Insurance Council. For more from Hither Duplessy Alan Drive, listen
live to news talks. It'd be from four pm weekdays,
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