Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on the Government delaying insurance levy hike

Transcript

Jenee Tibshraeny: NZ Herald Wellington business editor on the Government delaying insurance levy hike · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed be
• 0:12
  Speaker 1: follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: The government's delaying a hike, as I was telling you
• 0:18
  Speaker 2: earlier to its insurance levy. The hikes supposed to go
• 0:21
  Speaker 2: up by about two to three hundred dollars from mid
• 0:24
  Speaker 2: next year. Nichola Willis has just announced she's going to
• 0:27
  Speaker 2: delay the rise by a year, so it kicking after
• 0:29
  Speaker 2: the election Water Surprise. Jenative Trainee is The Herald's Wellington
• 0:32
  Speaker 2: business editor and with us Hi Jena Hi, why the delay.
• 0:37
  Speaker 3: Well, Nikola Willis told me that she's aware that, you know,
• 0:40
  Speaker 3: insurance premiums have been rising a lot in recent years.
• 0:43
  Speaker 3: They've really put households under pressure, and you know, she
• 0:47
  Speaker 3: doesn't want to add to that cost. She's also mindful that,
• 0:52
  Speaker 3: you know, if insurance premiums go up by too much,
• 0:56
  Speaker 3: then some households might water down their cover or get
• 0:59
  Speaker 3: rid of their insurance altogether, which then would cause an
• 1:02
  Speaker 3: even bigger problem for you know, New Zealand for the
• 1:06
  Speaker 3: resilience of households. So look, I think that this issue
• 1:11
  Speaker 3: is pretty interesting. I became aware of it because the
• 1:16
  Speaker 3: Treasury reached out to insurance companies to let them know
• 1:20
  Speaker 3: that nothing would be done before mid twenty twenty seven.
• 1:24
  Speaker 3: So I don't know if the government was ever going
• 1:25
  Speaker 3: to announce this, but it has just quietly pushed the
• 1:29
  Speaker 3: can down the road. The issue is that the Natural
• 1:33
  Speaker 3: Hazards Commission does not have enough money to cover the
• 1:37
  Speaker 3: costs of a big disaster. So you know, the Treasury
• 1:41
  Speaker 3: reckons these levees really do need to go up, but
• 1:44
  Speaker 3: of course no government minister, particularly this government, wants to
• 1:49
  Speaker 3: hike taxes effectively, if we're being political about it.
• 1:52
  Speaker 2: Yeah, so at the moment it has about six hundred
• 1:54
  Speaker 2: million and it's kitty, right, What should it actually have
• 1:57
  Speaker 2: in order to cover a big event?
• 2:00
  Speaker 3: Yeah, So the reinsurance that the Commission has that only
• 2:06
  Speaker 3: kicks in if the cost succeed two point two billion dollars,
• 2:11
  Speaker 3: So anything below two point two for a certain event
• 2:15
  Speaker 3: needs to be covered by the Commission. But the Commission
• 2:18
  Speaker 3: only has six hundred million and it's kitty. So that
• 2:23
  Speaker 3: means if there is a big disaster, the Crown could
• 2:25
  Speaker 3: have to pay up to one point six billion dollars.
• 2:29
  Speaker 3: So the thing here is that effectively someone always has
• 2:32
  Speaker 3: to pay the model we have. The idea is that
• 2:36
  Speaker 3: it's sort of doesn't expose the Crown's balance sheet too much.
• 2:40
  Speaker 3: You know, it keeps the cost contained. You're a homeowner,
• 2:43
  Speaker 3: you pay the levees, you know, the levees attacked onto
• 2:45
  Speaker 3: your private insurance premiums, you pay levies, and then when
• 2:49
  Speaker 3: you need to pay out, you tap into this. But
• 2:52
  Speaker 3: you know, if more of the cost falls on the Crown,
• 2:55
  Speaker 3: then that means the Crown needs to borrow more and
• 2:58
  Speaker 3: the cost of that, you know, of covering homeowners is
• 3:04
  Speaker 3: covered by all of us people who don't own homes
• 3:06
  Speaker 3: as well, and the cost gets pushed out into the future,
• 3:09
  Speaker 3: you know, the future generations who then take on that debt.
• 3:13
  Speaker 2: So in the point that you've just made is that
• 3:16
  Speaker 2: at two point two billion, that's when if the cost
• 3:19
  Speaker 2: exceeds that, that's when the reinsurers kick in because it
• 3:22
  Speaker 2: hasn't got enough money and it's ketty. We are not
• 3:24
  Speaker 2: going to miss out on this, right. The government can
• 3:25
  Speaker 2: top it up to two point two and then we
• 3:27
  Speaker 2: get the reinsurance.
• 3:28
  Speaker 3: Yes, the government can top it up. So it's just
• 3:30
  Speaker 3: you know, it's just a matter of who pays, Do
• 3:32
  Speaker 3: we all pay or do just homeowners pay.
• 3:34
  Speaker 2: Yeah, brilliant Jinnay, thanks very much for really appreciate you
• 3:37
  Speaker 2: explaining that's gen Naty of training the Heralds Wellington Business Editor.
• 3:40
  Speaker 1: For more from News Talks at b Listen live on
• 3:43
  Speaker 1: air or online, and keep our shows with you wherever
• 3:46
  Speaker 1: you go with our podcasts on iHeartRadio