Insurance Australia Group (IAG) is the biggest general insurer in Australia and across the Tasman where it slipped out news yesterday of a change in the way it will be insuring home and contents that will see thousands of policyholders pay more if they live in areas of the country that are more prone to natural disasters such as quakes and floods.
From this year, IAG said in a statement issued yesterday that its insurance premiums will take greater account of natural and severe weather-related risks for specific homes across the country.
The changes take effect from July 1 and will be communicated to NZ customers as their policies come up for renewal in the following 12 months.
IAG operates the State, NZI and Lumley brands in New Zealand. It also provides insurance through ASB (Commonwealth bank), BNZ (NAB), The Co-Operative Bank and Westpac.
Customers who live in areas that are more prone to natural disasters and severe weather events might have to pay more for insurance while those who live in areas that are less prone might pay less.
IAG’s announcement follows changes by NZ’s Earthquake Commission (EQC) to the level of cover EQC provides in relation to damage to residential homes and contents from natural disasters.
EQC will cover more of the costs for rectifying damage to residential homes and From July 1, the EQC will pay up to $NZ150,000 plus GST per residential home (from $NZ100,000).
But EQC will no longer provide cover for contents.
IAG will provide this to its customers who have contents insurance with EQC.
IAG’s move follows a similar statement from Tower and reports that IAG was restricting its new contents policy issuance for the Wellington area which had been It follows a similar move by Tower and a statement in March from IAG that it will be restricting his contents policies in the Wellington areas.
In the March statement, IAG said it would be taking a “conservative approach to writing new business in Wellington due to the high earthquake risk in that part of the country”.
“Wellington remains a high-risk area with regard to natural perils such as earthquakes and IAG is taking account of that in its pricing and underwriting approach,” an IAG spokeswoman said in reports on March 12 this year. “As a result, people living in Wellington approaching IAG for contents insurance may find they are unable to obtain cover.”
Other insurers have not followed the move by IAG in regards to contents policies for the Wellington area, but rival Tower has triggered a surge in home and contents policy premiums across NZ with its move to grade areas of the country based on natural risks such as quakes and floods.
IAG’s Executive general manager customer and consumer Kevin Hughes said in Monday’s statement that premiums needed to reflect the level of risk and costs associated with providing insurance cover, including reinsurance costs.
“Every customer and every property is different and so every policy will be affected differently, whether that be a price increase or decrease.
“We realise these changes will be a challenge for some customers and we will work through this with them,” he said.
“There are a range of options available to customers to make this easier, including taking a higher excess or adjusting the frequency of payments to suit them. We will continue to provide solutions and work to make insurance as affordable as possible.
“New Zealand’s environmental risks have evolved over the past few years and we need to take more account of those risks, so we can continue to be there for our customers across New Zealand when misfortune strikes.”
