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

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

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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• 0:17
  Speaker 1: Ever do for ce Ellen Heather?
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  Speaker 2: I employ one hundred and five people. I recently recruited
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  Speaker 2: a CFO. The top runner was a woman. We had
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  Speaker 2: to pass on the woman because she couldn't commit to
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  Speaker 2: traveling to our offices in Taiwan and Vietnam, and she
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  Speaker 2: also had issues with the weekly late call with management
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  Speaker 2: because it interfered with her cooking dinner. Seventeen past six. Now,
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  Speaker 2: if your home insurance premiums have gone up, sparethal for
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  Speaker 2: owners of apartments and also multi unit buildings because it
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  Speaker 2: looks like they have been hit extra hard. Janative trainee
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  Speaker 2: as The Herald's Wellington Business editor, Hey do you name
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  Speaker 2: Hey Heather? How hard have they been hit?
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  Speaker 3: Well? Pretty hard, and it really depends on where you live.
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  Speaker 3: The Treasury recently surveyed a bunch of apartment and other
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  Speaker 3: multi unit building owners. It only surveyed one hundred and
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  Speaker 3: forty two of them, so quite a small sample size.
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  Speaker 3: But from that group it found that in Wellington and
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  Speaker 3: the five years to twenty twenty three, those premiums rose
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  Speaker 3: by fifty eight percent, and in Auckland they doubled. Now,
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  Speaker 3: by way of context, you know, houses on standalone houses
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  Speaker 3: owned and by people who live in them, those premiums
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  Speaker 3: only increased by thirty percent over that time, So we're
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  Speaker 3: looking at thirty percent versus fifty eight or one hundred percent.
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  Speaker 3: Now Wellington, particularly, those premiums were super high, about eight thousand,
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  Speaker 3: two hundred dollars a year, much lower in Auckland at
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  Speaker 3: about one eight hundred. Now, these numbers the Treasury Collee
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  Speaker 3: collected a little bit roper, you know, because that sample
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  Speaker 3: sizes is small, But I think that that general trend
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  Speaker 3: is there, those multi unit building premiums shooting up much
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  Speaker 3: more quickly than regular insurance.
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  Speaker 2: I tell you what I found fascinating was that the
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  Speaker 2: respondents who were talking about they said that the earthquake
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  Speaker 2: strengthening that they had done on their buildings hadn't lowered
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  Speaker 2: their insurance premiums.
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  Speaker 1: Why not?
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  Speaker 3: Yeah, you know, I think that is a real blow
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  Speaker 3: because I know somebody corpse are sinking really large sums
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  Speaker 3: of money into getting the buildings up to standard, and
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  Speaker 3: you think if you do that it would make a difference.
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  Speaker 3: The insurers told the Treasury that actually, just because a
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  Speaker 3: building meets the standards, the building standards to make it
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  Speaker 3: really safe, doesn't mean to say that that building won't
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  Speaker 3: be damaged. So the building could still be damaged and
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  Speaker 3: therefore costs the insurer a lot, even if it's built
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  Speaker 3: in such a way that keeps people safe. So I
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  Speaker 3: think that that is a real blow. The Treasury reckons
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  Speaker 3: that the amount you could save is only about ten
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  Speaker 3: percent on your premium if you go to all that
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  Speaker 3: hassle and expense to you know, to get your building
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  Speaker 3: up to scratch.
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  Speaker 2: Us is fascinating again. And then really quickly, why is
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  Speaker 2: Treasury pairing back its monitoring of the insurance costs?
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  Speaker 3: Yeah, you know this had me scratching my head. Previously,
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  Speaker 3: the Treasury got Infinity Consulting, which is the scrip of actuaries,
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  Speaker 3: to do these quarterly reports that go into much greater
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  Speaker 3: detail than the survey we've just been talking about, really
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  Speaker 3: sort of gnali stuff to see how much insurance is
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  Speaker 3: costing and what the coverage is like. That has only
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  Speaker 3: happening annually. Now I think that is probably a cost
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  Speaker 3: saving thing. Also, the Treasury is no longer as interested
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  Speaker 3: in monitoring how the private insurance market is responding to
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  Speaker 3: EQUC doubling its coverage. So in twenty twenty two, EQC
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  Speaker 3: took on a whole lot more risk. Everyone was worried
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  Speaker 3: that if that happened, the insurers wouldn't actually cut their premiums.
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  Speaker 3: That didn't actually happen, which is why the Treasury was
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  Speaker 3: monitoring it, So it's pairing that back. The thing I
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  Speaker 3: think is significant here is that the government is acknowledging
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  Speaker 3: that it can't really do anything about this risk based pricing,
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  Speaker 3: the fact that some property owners face very, very high
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  Speaker 3: insurance bills. In fact, the government is happy for this
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  Speaker 3: to happen because if insurers kind of do the dirty
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  Speaker 3: work making people who live in risky properties pay more insurance,
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  Speaker 3: that encourages people move to move to safer areas, which
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  Speaker 3: means if there's a storm or something bad, the government
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  Speaker 3: doesn't effectively have to bow out those people. So that
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  Speaker 3: government is actually quietly happy for the insurance industry to
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  Speaker 3: do a lot of the heavy lifting encouraging people to
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  Speaker 3: move to safer places.
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  Speaker 2: I see that makes sense. Thanks very much, appreciate it.
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  Speaker 2: Jenetive Trainee, the heralds Wellington Business Editor.
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