Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on whether we should be concerned about insurance going up

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

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  Speaker 2: Now if you worried about your insurance premiums going up
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  Speaker 2: in the wake of the bad weather events, there may
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  Speaker 2: be some relief. The Herald's Wellington Business editor Janative Trainey
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  Speaker 2: has been talking to Tower bosses and is with us
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  Speaker 2: Hi Janame, Hey, Heather. Now, with all of these bad
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  Speaker 2: recent therese recent bad weather events and talk of inflation
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  Speaker 2: creeping back, can we expect, Jane, that our home insurance
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  Speaker 2: premiums are going to shoot up again?
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  Speaker 3: Well, not necessarily. Actually, contrary to popular belief, in recent quarters,
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  Speaker 3: home insurance premiums across the country on average have actually
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  Speaker 3: dropped back a bit. So you're probably not feeling it
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  Speaker 3: because they've gone up so much in recent years. But
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  Speaker 3: since Cyclone Gabrielle there haven't been too many bad weather events,
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  Speaker 3: so insurance companies have built up some buffers there. Of course,
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  Speaker 3: we've had the recent flurry of them, but that's coming
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  Speaker 3: off a period of relatively benign weather events. Also that
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  Speaker 3: the global reinsurance market continues to be soft. So I
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  Speaker 3: took to the Tower CEO Paul Johnston and the new chairwoman,
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  Speaker 3: Naomi Balentine today and they said, you know, in terms
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  Speaker 3: of the war, you know, of course is concerned about
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  Speaker 3: that causing inflation, including with you know, building materials, but
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  Speaker 3: they reckon it's too soon to sort of figure out
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  Speaker 3: what impact that we'll have on insurance premiums. That they're
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  Speaker 3: not seeing those pressures you know, caused by shipping disruptions
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  Speaker 3: trickle through to them just yet. And also they aren't
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  Speaker 3: hiking premiums preemptively, So that's I guess some positive news
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  Speaker 3: for now.
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  Speaker 2: It does sound positive. Yeah, how do you think this
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  Speaker 2: explanation will fly with the country's regulators, which will ask
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  Speaker 2: by the government to look into the insurance pricing and availability.
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  Speaker 3: Well, yeah, listeners will recall that earlier this year, Nikola
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  Speaker 3: Willis ordered a bunch of the country's regulators to look
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  Speaker 3: at insurance affordability. Now she's done this with some of
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  Speaker 3: the other sectors like supermarkets, and we haven't seen too
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  Speaker 3: much come of that. But Tower, you know, they were
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  Speaker 3: saying to me and that there bigone kind of letting
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  Speaker 3: the market do its thing. You know, insurance is all
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  Speaker 3: about the pricing of risk, and they're worried that the
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  Speaker 3: government getting too involved could distort that, and Tower has
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  Speaker 3: taken a bit a bit of a novel approach globally
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  Speaker 3: to giving home own as a breakdown of how their
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  Speaker 3: their homes, the different perils and then the different risks
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  Speaker 3: that their homes face, and really taking quite a granular
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  Speaker 3: approach towards pricing those premiums. Some other insurers don't do
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  Speaker 3: it quite to this level, but Tower is you know,
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  Speaker 3: sees value in doing that. So its argument is that
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  Speaker 3: it's transparent about how it prices premiums. You know, if
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  Speaker 3: transparency aids competition, the government should stick to focusing on
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  Speaker 3: climate adaptation and not get involved with market, you know,
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  Speaker 3: So that would be their take that. They're also not
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  Speaker 3: that firm on whether the Natural Hazards Commission should increase
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  Speaker 3: its levees or provide more cover. So that's the EQUC,
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  Speaker 3: you know, should QC play a greater role or not?
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  Speaker 2: Yeah, why have they gotten a view on that? Do
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  Speaker 2: you think?
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  Speaker 3: Ah? I think, you know, I think it's a tricky
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  Speaker 3: one because on the one hand, e QC or it's
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  Speaker 3: now called the Natural Hazards Comission, needs to increase its
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  Speaker 3: levees because it doesn't have enough money in the kitty
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  Speaker 3: for if there's a big event. But insurers are worried
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  Speaker 3: that if those levies go up, that means people's insurance
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  Speaker 3: premiums will go up, and people already struggling to pay
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  Speaker 3: the premiens exactly. And there's also the whole moral hazard
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  Speaker 3: thing because insurers want things to be priced according to risk,
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  Speaker 3: and these levies are flat, so that takes away the
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  Speaker 3: You know that you might have a risky property and
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  Speaker 3: you might think it's fine because your your levy is flat,
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  Speaker 3: but it's not fine, and insurance companies want you to
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  Speaker 3: know it's not fine to respond accordingly.
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  Speaker 2: I guess thank you, Jane, that makes sense, you know.
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  Speaker 2: Tip Trainey, the heralds Wellington Business Editor.
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