The cost of insuring some buildings could rise by more than 50 percent in just three months according to new figures from insurance brokers.
David Crick managing director of Runacres Insurance (formerly Runacres & Associates) says the cost increase is likely to be disproportionately larger for lower value dwellings.
“Immediately following the Christchurch earthquakes in 2010 and 2011, we saw insurance costs jump by up to five times higher than the year prior. However, over the past 12-18 months we have seen a sustained drop in the cost to insure as insurers looked to grow their client base and new competitors entered the market.
“We expect that trend to change in 2017 and 2018 with the impact of increased taxes on insurance and the influence of other market forces coming through such as the Kaikoura earthquakes and limited supply of cover from some insurers,” says Crick.
Jo Mason CEO of NZbrokers, the country’s largest insurance brokerage collective says competitive changes in the market, the rising cost of cover for methamphetamine damage in tenanted buildings, as well as increases in EQC and the Fire Service Levies will see the cost to insure some properties increase by up to 56 percent according to her organisation’s analysis.
“If we take the example of a 1970’s farm house occupied by a farm worker with a replacement value of $230,000 which cost $944 to insure eight months ago, this will rise to $1478 in November – an increase of 56%,”
“While the fire service and EQC are essential factors in managing the risk of home ownership, it’s a real concern to see that this increase is going to hit many of those in lower value housing disproportionately higher,” says Mason.
She says while the sharp increase in the cost to insure a building may be off-putting to some, the cost of not being adequately insured could be far higher.
“All too often we have seen disaster strike, with devastating consequences for those who are under-insured or not insured at all. My advice to commercial property owners and homeowners is to talk to their broker about making sure you have the right level of cover with the right sums insured,” she says.