Jenee Tibshraeny: NZ Herald Wellington business editor on whether we should be concerned about insurance going up

The recent burst of bad weather and growing concerns about inflation have prompted Kiwis to worry about their insurance premiums going up.

Insurance premiums have dropped back down and more buffers have been built since Cyclone Gabrielle, but concerns have been raised.

NZ Herald Wellington business editor Jenee Tibshraeny explained further.

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Episode Transcript

Speaker 1 (00:00):
Now if you worried about your insurance premiums going up
in the wake of the bad weather events, there may
be some relief. The Herald's Wellington Business editor, Janative Trainey
has been talking to Tower bosses and is with us, Hi, Janame, Hey, Heather. Now,
with all of these bad recent therese recent bad weather
events and talk of inflation creeping back, can we expect, Jane,
that our home insurance premiums are going to shoot up again?

Speaker 2 (00:20):
Well, not necessarily. Actually, contrary to popular belief, in recent quarters,
home insurance premiums across the country on average have actually
dropped back a bit. So you're probably not feeling it
because they've gone up so much in recent years. But
since Cyclone Gabrielle there haven't been too many bad weather events,

(00:42):
so insurance companies have built up some butfers there. Of course,
we've had the recent flurry of them, but that's coming
off a period of relatively benign weather events. Also that
the global reinsurance market continues to be soft. So I
took to the Tower see Paul Johnston and the new chairwoman,
Naomi Balentine today and they said, you know, in terms

(01:05):
of the war, you know of course, is concerned about
that causing inflation, including with you know, building materials, but
they reckon it's too soon to sort of figure out
what impact that will have on insurance premiums. That they're
not seeing those pressures you know, caused by shipping disruptions
trickle through to them just yet. And also they aren't

(01:28):
hiking premiums preemptively, So that's I guess some positive news
for now.

Speaker 1 (01:34):
It does sound positive. Yeah, how do you think this
explanation will fly with the country's regulators, which we're asked
by the government to look into the insurance pricing and availability.

Speaker 2 (01:42):
Well, yeah, listeners will recall that earlier this year, Nikola
Willis ordered a bunch of the country's regulators to look
at insurance affordability. Now she's done this with some of
the other sectors like supermarkets, and we haven't seen too
much come of that. But Tower, you know, they were
saying to me and that they're bigone kind of letting

(02:03):
the market do its thing. You know, insurance is all
about the pricing of risk, and they're worried that the
government getting too involved could distort that. And Tower has
taken a bit a bit of a novel approach globally
to giving home own as a breakdown of how their
their homes, the different perils and then the different risks

(02:25):
that their homes face, and really taking quite a granular
approach towards pricing those premiums. Some other insurers don't do
it quite to this level, but Tower Is, you know,
sees value in doing that. So its argument is that
it's transparent about how it prices premiums. You know, if
transparency aids competition, the government should stick to focusing on

(02:48):
climate adaptation and not get involved with the market, you know,
So that would be their take that. They're also not
that firm on whether the Natural Hazards Commission should increase
it's levees or provide more covers. So that's the EQUC,
you know, should QC play a greater role or not?

Speaker 1 (03:06):
Yeah, why have they gotten a view on that? Do
you think?

Speaker 2 (03:11):
Ah? I think, you know, I think it's a tricky
one because on the one hand, EQC or it's now
called the Natural Hazards Commission, needs to increase its levees
because it doesn't have enough money in the kitty for
if there's a big event. But insurers are worried that
If those levies go up, that means people's insurance premiums
will go up, and people are already struggling to pay

(03:32):
the premi ens exactly. And there's also the whole moral
hazard thing because insurers want things to be priced according
to risk, and these levies are flat, so that takes
away the you know that you might have a risky
property and you might think it's fine because your your
your levy is flat, but it's not fine, and insurance
companies want you to know it's not fine to respond accordingly.

(03:53):
I guess thank you.

Speaker 1 (03:54):
You know that makes sense, you know, Tom Trainey, the
Herald's Wellington Business editor. For more from Heather duplusy Ellen Drive,
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