Dean Lester: Insurance consultant reveals impact of government changes on homeowners

Homeowners will have to pay more for home insurance to help the Natural Hazards Commission.  

Associate Finance Minister David Seymour says levies will almost certainly need to rise further, with Cabinet set to decide on the changes in the coming months.   

Insurance consultant Dean Lester told Ryan Bridge that these changes could cost homeowners two to $300 more a year.  

The government says they'll carry $2 billion worth of risk but have about $500 million in the kitty. 

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Episode Transcript

Speaker 1 (00:00):
Right now, homeowners are in for another punch to their wallet.
David Seymour says insurance levies will have to increase to
help fund the Natural Hazard's Commission. This used to be
the EQC Cabinet will soon begin consultation on the changes.
Could increase levies by two hundred to three hundred bucks
a year. Dean Leicster is an insurance consultant with me
this morning.

Speaker 2 (00:18):
Dean, good morning, Lareena, good morning, Ryan.

Speaker 1 (00:20):
Good morning, good morning. So two to three hundred bucks
a year? You reckon why? And this is all because
what's there are more natural disasters and we don't have
enough money in the kitty.

Speaker 2 (00:32):
The second part, so there's not enough money in the kitty.
So the Natural Hazard Commission and the insurance cover that
the government provides for earthquakes, land damage, for flood's, volcanic eruption, tsunami,
that the government decides that they want to pay the
first two billion dollars worth of claims. At the moment,

(00:53):
they've got about five hundred billion in the kitty and
they need to increase that amount of funds. It doesn't
relate to the larger proportion of the program, which is
the world reinsurance market where they obtain about nine billion
on the world insurance World reinsurance market. World re insurance
market's pretty positive. Those rates seems to be really confusing

(01:15):
reporting in these other times, but world reinsurance rates are
generally consistent. They had a good program last year of
getting good cover for nine million dollars at good premiums.
This relates to the first amount where the government says
that they'll carry two billion dollars with a risk, and
currently there is five hundred million in their.

Speaker 1 (01:35):
Kiddy So how will does this just mean basically we
have to swallow it. We will all have to pay
more for our levies, and that's just the way it.

Speaker 2 (01:44):
Is in essence s The surprise that has existed since
the recent changes to the natural hazard cover where it's
increased cover to three hundred thousand, is that there has
been no positive reaction from private insurance to reduce their
premiums because they now don't have as much risk. So

(02:06):
at the time of the christ Church earthquake, for example,
eqc AS it was paid the first one hundred and
fifteen thousand that under the current legislation they now play
the first three hundred thousand and It's always been a
surprise that private insurers are not recognizing that their exposure
and far less and that their premiums are reducing.

Speaker 1 (02:27):
Right, I've got you, Dean. Thank you very much for
that update. Really interesting stuff. Dean Leicster, insurance consultant with us,
talking about the fact that the NHC, which is the
Natural Hazards Commission, used to be EQC. The levy's probably
going to go up, David Simols, the minister in charge,
he said so. For more from Early Edition with Ryan Bridge,
listen live to News Talks at be from five am weekdays,

(02:49):
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