Rising premiums hit apartment owners
CATHERINE HARRIS AND JAZIAL CROSSLEY
Many apartment dwellers in central Wellington may be forced to downsize, sell up or run the risk of living in uninsured buildings as soaring insurance premiums deal them devastating financial blows.
Premiums for both commercial buildings and body corporates in the capital have skyrocketed because of Wellington's fault-line location, and nervousness and losses among overseas reinsurers after the Christchurch quakes.
Examples uncovered by The Dominion Post include premiums rising three-fold at the lower end of the scale to more than 12-fold: one jumped from $40,000 in 2010 to $142,000 today, others from around $20,000 two years ago to between $218,000 and $250,000 this year. In another case the costs rose from $35,000 in 2009 to the current $350,000.
"I think you'll be finding that people are talking about at least a tripling of their premiums over that period . . . somebody rang me up and said their premium had gone up 14 times," said Geoff Holgate, of Your Property Matters, which manages 80 body corporates as well as commercial buildings. He said it was likely premiums would rise further next year.
"You just might find some owners in apartments can't afford to live in the body corporate any more," he said.
Owners of commercial building have reported similar increases.
Project management specialist Impact estimates the premium increases will suck an extra $100m a year out of the regional economy.
Gus Charteris, of the Wellington Inner City Residents and Business Association, said the increases had come at the same time that some building owners were facing "significant" earthquake strengthening costs.
"Christchurch came along and changed the equation immediately and essentially you've got a whole lot of buildings with apartments which are essentially unsaleable at the moment . . . so all of this work has been escalated."
Previously they had had 10-15 years to do the strengthening work, he added.
Mr Charteris said that, in his own building, the premium hike meant residents would have to each find an additional $13,000 a year.
"So many body corporates now are really grappling with the financial sustainability of taking on that insurance. For a lot, it's just totally unaffordable."
To compound their woes, owners of buildings have also reported a lack of choice in insurers.
Of about 17 insurance companies in the market, four are believed to have quit Wellington and a fifth is dealing only with newer buildings.
Some owners had been forced to stay with their existing insurer, and others had found insurance overseas but at a higher rate.
Mr Holgate said there were reports that many buildings around Wellington were either uninsured or only partially insured, although body corporates, under 2010 changes to the Unit Titles Act, were legally obliged to be fully insured.
Insurance Council spokesman Chris Ryan said he was aware of only two insurers pulling out of Wellington, although other companies had full books.
"They can only insure what they're able to reinsure, and they've taken on as much reinsurance as they possibly can.
"So while they may not be taking new policies, they're still in the market, they're just full for this year, and I think by next year, they'll come back on the market again."
PROFITEERING AND PRICE-GOUGING ALLEGED
INSURANCE premiums at the Dominion Building on Mercer St have rocketed from $57,800 two years ago to $190,000 today.
Body Corporate Chairs Group president Neil Cooper, who owns an apartment in the building, said further rises of up to 30 per cent were expected next year in "profiteering" by the insurance companies.
"It's a little horrifying for people on fixed incomes or who might not have the ability to manage those sort of increases," he said.
Insurance for Tory St apartment building Maison Cabriole has risen from $35,000 in 2009 to the current $350,591.24.
Oxygen corporate manager Alan Young, who manages the Maison Cabriole body corporate, said the increases were very hard on apartment owners.
"It's quite traumatic actually telling owners they have to pay this . . . the added levies have compromised their investments."
A 74-year-old widow, who did not want to be named for fear publicity would affect her ability to sell her Wellington city apartment, said insurance premium increases had raised her monthly costs, including other body corporate fees, from $315 a month in November last year to $1179.
"I think it is price-gouging, personally, I can't see they can justify this."
- © Fairfax NZ News