New Zealand

Hefty insurance premium rises on the way

15:09 pm on 9 June 2011

Insurers are beginning to put a figure on the increase in premiums that property owners will face following the Canterbury earthquakes and other disasters overseas.

Canterbury-based insurer AMI says its policies are set to rise by about 20%.

Chief executive John Balmforth expects the company will have to pay substantially more for reinsurance and home insurance premiums will go up by about 20%, contents cover by 15% and motor insurance by up to 5% from 1 July to reflect that.

People living outside Christchurch are having to pay more as well, since insurance works by sharing risks around the country.

Wellington building manager Melissa Ridley, who helps administer 45 buildings, says increases of 10% - 30% have been received so far.

However the premium for one pre-1930s building doubled, and in some cases, she says it has been hard to get insurance at all.

International reinsurance companies' profits have been eroded by huge payouts for Japan's massive earthquake and tsunami on 11 March, floods in Queensland and the Canterbury earthquakes.

Insurance Council chief executive Chris Ryan says premiums are likely to remain high for a while.

"This is likely to be a reasonably long-term phenomenon, but competition is alive and well and it can be a very powerful force to drive premiums down again," he says.