Earthquake premium investigation wanted
There are calls for the Government to investigate soaring earthquake premiums, particularly in Wellington and Christchurch.
Allegations of "price gouging" are being made by inner-city residents in Wellington, who like commercial building owners, are facing huge increases in premiums.
Neil Cooper, the head of the Body Corporate Chairs Group, said it easy to call for Government involvement but he did think an inquiry into premiums was warranted.
"They looked into what was happening in the milk market - something similar with the insurance market is probably overdue, especially given the size of the profits that some of them have announced recently."
Another body corporate chairman in Wellington, Jon de Groen, suggested the Government could do more.
"The insurance thing is a complete waste of money. It should be going into a national fund."
Insurance Council spokesman Chris Ryan said people needed to shop around, even offshore if necessary.
"Price gouging only works in a non-competitive environment. We've got 25 insurance companies. If they're doing that, they're in breach of the law."
New Zealand's earthquake risk did push up premiums but there was also the cost of capital, "there are reinsurance costs internationally to be factored in and there are deficiencies in some buildings where they're not structurally sound," he said.
Insurers had to pass on the cost of the Christchurch quakes, he added.
"Nobody really wants to put up costs to the extent they're accused of price gouging, or of losing customers to somebody else, which they will do if people go off shore."
But several Wellington building owners or property managers cited cases of people being unable to get more than one quote, usually from their present insurer.
Brent Slater of the Wellington branch of the Property Council said his building manager had gone to a dozen providers "in New Zealand, Australia, the UK and China and didn't get anything that was acceptable".
His own building's premiums had jumped from $48,000 in 2010 to $130,000.
"The sort of increases we're getting are not sustainable and if we have to have it - for example if you have a mortgage, the banks will demand it - what do you do then?"
A survey of companies by the Property Council in August showed that 83 per cent were facing insurance hikes. Twenty-three per cent were facing increases of more than 100 per cent, the biggest being a 600 per cent increase for a Christchurch property.
Only 11 per cent of companies in the survey had encountered issues which had stopped or hindered them renewing their insurance but that was expected to change in coming years.
- © Fairfax NZ News