Jenee Tibshraeny: NZ Herald Wellington business editor on apartment owners bearing the brunt of increased insurance premiums

Insurance has been a hot topic of late, as premiums are continuing to shoot up while general inflation abates.

Findings of a Treasury survey show owners of apartments and other multi-unit buildings (MUB) are being hit extra hard.

NZ Herald Wellington business editor Jenee Tibshraeny revealed how much insurance premiums had gone up - and how that impacted owners.

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Episode Transcript

Speaker 1 (00:01):
Ever du for see Ellen Heather. I employed one hundred
and five people. I recently recruited a CFO. The top
runner was a woman. We had to pass on the
woman because she couldn't commit to traveling to our offices
in Taiwan and Vietnam, and she also had issues with
the weekly late call with management because it interfered with
her cooking dinner. Seventeen past six. Now, if your home

(00:22):
insurance premiums have gone up, sperrethal for owners of apartments
and also multi unit buildings, because it looks like they
have been hit extra hard. Genati Traine, as the Heralds
Wellington Business editor.

Speaker 2 (00:30):
Hey you name Hey Heather.

Speaker 1 (00:32):
How hard have they been hit?

Speaker 2 (00:34):
Well? Pretty hard, And it really depends on where you live.
The Treasury recently surveyed a bunch of apartment and other
multi unit building owners. It only surveyed one hundred and
forty two of them, so quite a small sample size.
But from that group it found that in Wellington in
the five years to twenty twenty three, those premiums rose
by fifty eight percent, and in Auckland they doubled. Now,

(00:58):
by way of context, you know houses on standalone houses
owned and by people who live in them. Those premiums
only increased by thirty percent over that time, so we're
looking at thirty percent versus fifty eight or one hundred percent.
Now Wellington, particularly, those premiums were super high, about eight
two hundred dollars a year, much lower in Auckland at

(01:21):
about one eight hundred. Now, these numbers the Treasury colle
collected a little bit rope, you know, because that sample
sizes is small, But I think that that general trend
is there, those multi unit building premiums shooting up much
more quickly than regular insurance.

Speaker 1 (01:38):
I'll tell you what I found fascinating was that the
respondents who were talking about they said that the earthquake
strengthening that they had done on their buildings hadn't lowered
their insurance premiums. Why not?

Speaker 2 (01:48):
Yeah, you know, I think that is a real blow
because I know some body corps are sinking really large
sums of money into getting the buildings up to stand
in and you'd think if you do that, it would
make a difference. The insurers told the Treasury that actually,
just because a building meets the standards, the building standards

(02:08):
to make it really safe, doesn't mean to say that
that building won't be damaged. So the building could still
be damaged and therefore costs the insurer a lot, even
if it's built in such a way that keeps people safe.
So I think that that is a real blow. The
Treasury reckons that the amount you could save is only
about ten percent on your premium if you go to

(02:30):
all that hassle and expense to, you know, to get
your building up scratch.

Speaker 1 (02:34):
This is fascinating again, and really quickly, why is Treasury
pairing back its monitoring of the insurance costs?

Speaker 2 (02:39):
Yeah, you know, this had me scratching my head. Previously,
the Treasury got Finity Consulting, which is the scrip of actuaries,
to do these quarterly reports that go into much greater
detail than the survey we've just been talking about, really
sort of gnally stuff to see how much insurance is
costing and what the coverage is like. That has only

(03:01):
happening annually. Now I think that is probably a cost
saving thing. Also, the Treasury is no longer as interested
in monitoring how the private insurance market is responding to
EQUC doubling its coverage. So in twenty twenty two, EQC
took on a whole lot more risk. Everyone was worried
that if that happened, the insurers wouldn't actually cut their premiums.

(03:22):
That didn't actually happen, which is why the Treasury was
monitoring it, So it's pairing that back. The thing I
think is significant here is that the government is acknowledging
that it can't really do anything about this risk based pricing,
the fact that some property owners face very, very high
insurance bills. In fact, the government is happy for this

(03:43):
to happen because if insurers kind of do the dirty
work making people who live in risky properties pay more insurance,
that encourages people move to move to safer areas, which
means if there's a storm or something bad, the government
doesn't effectively have to bow out those people. So that
government is actually quietly happy for the insurance industry to
do a lot of the heavy lifting encouraging people to

(04:06):
move to safer places.

Speaker 1 (04:07):
I see that makes sense, Jine, Thanks very much, appreciate it.
Janet to training The Herald's Wellington Business Editor. For more
from Heather Duplessy Allen Drive, listen live to News talks
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