IAG is refusing to say what a price hike could mean for Christchurch residents prone to disasters such as earthquakes.
The insurance company – which owns State, AMI and NZI – announced it is making changes to its home and contents insurance, meaning customers in areas prone to quakes, other natural disasters and severe weather events, will pay more from July 1.
However, customers who live in areas which are less prone may pay less.
IAG did not answer questions from The Star about what this would mean for its Christchurch customers and what areas of the city would be affected in terms of risk.
Insurance advocate Dean Lester said he could not predict how many people would be negatively impacted – but said Tower had increased its prices last year which saw major changes for insurers in the city.
“There is no information available yet, but if you look at the case of Tower, it could have a hugely big effect on some,” he said
“The major concern for Christchurch is where are the competitors, Christchurch insurers seem to follow each other . . . it doesn’t seem to be a competitive market in Christchurch.”
Mr Lester said people could reduce premiums by installing better security measures around their home, but it was impossible to simply move their whole home out of a disaster prone area. He also questioned how it could predict earthquakes.
From July 1, EQC will pay up to $150,000 plus GST per residential home, but it will no longer provide cover for contents. IAG will provide this to its customers who have contents insurance.
IAG executive general manager customer and consumer Kevin Hughes said premiums need to reflect the level of risk and costs associated with providing cover, including reinsurance.
“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,” he said.
Mr Lester said it was better for Christchurch residents to have a higher excess in case large sums of money had to be paid out in the event of an earthquake or flooding.
On Tuesday, Wellington Mayor Justin Lester said he had raised the issue with Megan Woods, the Minister Responsible for the Earthquake Commission and will convene an insurance forum and invite the Insurance Council, IAG, body corporate and homeowner representatives.
Minister of Commerce and Consumer Affairs Kris Faafoi said the Government was concerned about insurance costs and has asked for more information from IAG.
Mayor Lianne Dalziel said yesterday she would be discussing the matter with the Insurance Council.