“After the Christchurch earthquakes and insurance companies raising their premiums to cover their losses from the earthquake, I decided to avoid the eye gouging behaviour of big international companies and have not had any insurance since.”
That’s what one person told Consumer NZ research team leader Rebecca Styles.
Styles, who has written a report called Will you be able to get home insurance by 2035?, says that’s what stood out to her when researching how climate change is affecting the cost and availability of house and contents insurance in Aotearoa.
Because, this person is not alone. A growing number of New Zealanders are ditching their insurance because of the cost.
“They’re putting their main assets, their financial future at risk … I was a bit scared that people don’t quite realise what they’re going without and all the potential financial harm that could come from not having insurance.”
“If insurance becomes a luxury only available to a privileged few, the impacts on communities, our economy and society will be severe,” Styles says.
That’s why Consumer NZ is calling for action. Some of the things the consumer advocacy group wants to see is leadership when it comes to the climate adaptation framework.
It also wants the Commerce Commission to look at competition in the house insurance sector and whether it’s working for people. Additionally Consumer NZ wants the Financial Markets Authority to look at risk-based pricing and whether it has been applied fairly with the best interests of consumers at heart, Styles says.
“If we don’t act now, it’s entirely possible that many New Zealanders won’t be able to get insurance at all by 2035.”
Alongside this, academics who specialise in insurance and its connection to climate say in the report the country has until 2040 before we start to see some insurers exiting Aotearoa. They also suggest some of the country’s main centres could see insurance retreat by the end of the decade.
“We need a plan, and we need to start implementing that plan now,” Styles says.
A 916% increase
In the report, Styles spoke to homeowners, insurance representatives and academics about the issues, exploring topics such as consumer experiences, the increasing cost of insurance, climate adaptation, local authorities, the Natural Hazards Commission and growing inequity.
Looking at data from Statistics New Zealand, the report says since 2000, the price of house insurance has increased 916%.
“That’s the greatest increase in price for all goods monitored by the Consumers Price Index in the past 25 years.”
The report says Statistics NZ data shows insurance costs tracking up in 2011, 2017, and once more from 2022 to 2023. These years mark major natural disasters - the Christchurch earthquakes, the Auckland Anniversary floods and Cyclone Gabrielle.
The report also found homeowners were increasing their excesses in an effort to bring down their premiums which could potentially shift their excesses to “unaffordable levels”.
In 2022, Consumer NZ research found 7% of people surveyed had dropped house insurance due to cost. This jumped to 17% in 2025.
When it came to ditching contents insurance, 23% of those surveyed in 2025 had dropped it because of the cost.
While there’s still a high uptake of house insurance, the report says it’s concerning people are making the decision to go without house insurance.
“Without house insurance, owners aren’t eligible for natural hazards cover in the case of a natural disaster, which makes it a huge financial risk.”
Transparency
The report also found consumers have a lack of trust in the insurance industry and there was a lack of transparency when it comes to risk-based pricing and difficulties shopping around.
There was a “general feeling that the claims process isn’t as smooth as insurance companies would like us to believe”, the report says.
Challenging an insurer’s premium increases was also a struggle for people.
In the report, Styles speaks to Labour’s Christchurch Central MP Duncan Webb - a former law professor and former Minister of Commerce and Consumer Affairs - who developed an interest in insurance following the Christchurch earthquakes.
Webb says there’s no avenue for people to contest insurance costs and while insurers are using “sophisticated modelling now”, he doesn’t know if the modelling is true or not.
“If … your insurer says, for Wellington, we’ve done all the modelling, everyone’s premiums are going up by 5% as a result … plus inflation and the model’s wrong, then there’s a problem there: it’s overpricing. But there’s no real way to challenge that.”
While insurers offered some general information about this, the report says there was a “reluctance” with many saying they couldn’t or don’t share natural hazards data with customers due to it being commercially sensitive.
The report asks: “Given the rise in risk-based pricing, how do customers know their insurer is using the right data to calculate their property’s risk and hence the premium price? At what point does a customer’s right to know override commercial interests?”
“Should customers be able to challenge the data insurers use? Do we need more transparency and is that something the insurance industry supports?”
There’s potential for more transparency in the future and that should come out of the Government’s climate adaptation framework plans, says chief executive of the Insurance Council of New Zealand - Te Kāhui Inihua o Aotearoa (ICNZ) Kris Faafoi in the report.
“But the insurer spends a considerable amount of money to get some of the data and obviously that’s commercial information that they want to keep tight to have a competitive advantage.”
Climate change
Consumer NZ is calling for strong government leadership when it comes to the climate adaptation framework.
It wants the Government to develop “effective climate adaptation legislation” with cross-party consensus that’s supported by an “effective” national framework that outlines how climate risks will be assessed, managed and paid for.
Styles says if there's another extreme weather event this year or the next, insurance prices will rise in response so it will just keep going up and up until a climate adaptation framework is in place.
Once that's in place, the country could start adapting and moving people out of harm’s way, she says.
“If we don’t have government leadership on that, it could happen that people can’t afford insurance.”
While ongoing calls have been made for New Zealand to make urgent and critical changes when it comes to managing climate change and natural hazards, there are also ongoing questions around who will pay for these climate adaptation measures.
The Independent Reference Group (IRG) - a group put together by the Ministry for the Environment shared its recommendations for the country’s climate adaptation framework in July.
One of its recommendations included putting the onus on people to know the risks that come with their properties and to make their own decisions. The IRG also said people should not expect buyouts.
While in the past central and local governments have offered buyouts, IRG's feedback was; “these decisions reduce incentives for people to understand and manage their own risk, can distort property prices, and have given rise to an expectation that buy outs will continue, creating a moral hazard”.
Consumer NZ’s report found it interesting that IRG is advocating for individual responsibility over a shared response to climate change.
“From our surveying, there is a clear sentiment among consumers that costs need to be shared between all parties - insurers, central and local government, and property owners.”
The report says if a cost-effective and credible climate change adaptation framework isn’t in place, and the country continues to experience severe weather events, “insurers could decide to leave Aotearoa because the risk of providing coverage becomes too great”.
“We cannot afford to be complacent.”
A looming economic crisis
If house insurance was no longer available, the report says the “knock-on effects could create a financial crisis similar to the 2008 global financial crisis - without the recovery”.
“Although homeowners recovered from that global financial crisis, there will be no recovery from the impacts of climate change.”
And if people choose to drop house and contents insurance because it’s too expensive for them, insurance would become more expensive for the consumers still buying it “as the collective premium pool that insurers collect from reduces”, the report says.
Feeling hopeful
“People have been looking at the climate adaptation framework and a lot of research has been done,” Styles says.
“We just need a decision and leadership from the Government to put it in place and get the ball rolling. I think once that’s rolling and we have some reassurance on what the hazard based data insurer are using to charge us, I think that will help rebuild trust.
“And if we can give local councils the resourcing and expertise to help to stop building in more at-risk places, I think all these things will help us keep insurance here and keep it affordable.”
“Despair is not going to get us anywhere,” Styles says.
26 Comments
Need a mortgage then insurance is non negotiable on housing. Surley then abdicating insurance is a boomer only option.
Also hilights that parts of NZ will become increasingly uninsurable. Low lying beach front, river flat and flood plain, and near faultless.
Is it though? I don't think my bank has ever checked if I have insurance.
I guess its only an issue if its damaged and you can maintain payments, either rent or job loss.
Avman. Not just a boomer luxury. Being able to secure only partial insurance is common in multiple parts of the developed world, due to natural hazards. Banks factor this in to their lending risk calculations and continue to provide mortgages, life goes on.
The finance industry will secure themselves. I can see a return to the mortgage insurance of old which will protect the mortgagee while leaving the home owner exposed to the risk of loss if unable to secure house cover.
LmbF. A traditional mortgage insurance approach would be a very expensive approach. More likely the banks will carry on as now by applying general insurance availability as a key risk underwriting metric which drives property values and manages their exposures.
Not sure how you draw that conclusion, while claim rates on mortgage insurance would have been very low historically the premiums were derisory at the time (IIRC we paid $500 for cover of a 20 year mortgage of 44k)....the lenders will be finding an affordable solution as the pool of those unable to secure insurance increases, they after all have no choice as their existence depends upon it.
I'm a bit hazy now given how long ago those mortgage insurance schemes were a thing but were they not contingent on general insurance being in place for the house? I think logic suggests that if not having general insurance was an included peril the premium would be enormous.
From memory the condition of mortgage was mortgage insurance, not home insurance.
Its a difficult situation for sure. I certainly hope we don't end up with a situation where the climate change deniers get their insurance subsidised. In saying that, many of the risky properties would not have been so obvious a decade or two back. Chch was not considered an earthquake risk, Auckland wasn't really a flood risk, etc.
While some areas are severe risk, most of Auckland is not a flood risk.
JJ. The EQ risk was always reasonably well understood but insurers significantly discounted their potential impacts. Key factors such the catastrophic liquefaction effect which academics had clearly identified years before were largely ignored. The trend seems to be that support for govt funded retreat buyout schemes is fading so hopefully we won't be funding the CC denier mob for much longer. A group of more concern is the growing number ditching insurance because they genuinely can't afford it. A bare bones indemnity value only pool fund might need to be considered for them.
It also wants the Commerce Commission to look at competition in the house insurance sector and whether it’s working for people. Well it is working for the reinsurers!
“Global reinsurer capital rose by $5 billion to $720 billion in the first quarter of 2025, surpassing the previous record of $715 billion set in 2024, despite the financial impact of the California wildfires.
According to Aon, this growth was driven by strong retained earnings among established players, with two-thirds reporting double-digit annualised returns on equity."
https://www.artemis.bm/news/reinsurance-capital-outstrips-demand-at-mid…
and that's the point; insurance these days is not about covering risks cumulatively, but making a profit. That's where the wheels are falling off.
Insurers are very thankful they have climate cry babies to run cover for them. Best social fad that ever happened to the industry.
In many cases (particularly in Auckland but this is spreading), the house is actually worth bugger all, its the land that holds most of the value. Maybe the land with no house is worth $100k less than the land with a house, so all you need is $100k of insurance, or the capacity to lose $100k in the worst case scenario.
My question to others in the know is this: Does your house insurance cover your land, and if so is it based on the value you are insured for? For example, lets say a property is worth $1 million, the house is worth $200k and the land $800k. If I insure for $200k, and then the land becomes unusable (e.g. under water / under lava / slid down the hill), does the insurance company pay me out $1 million?
JJ. The 'indemnity' or market value (as opposed to 'replacement') insurance approach you describe will increasingly become the norm for properties at high risk from natural hazards. It breaks down in widespread events such as ChCh as the insured sum plus land value becomes insufficient to buy a new place due to elevated demand but its a reasonable alternative to abandoning insurance. Once cover ceases on a property with a high NH exposure, it's a mission to get new insurance. As people who drop insurance find out when they come to sell.
Your house insurance premium includes a levy paid to the natural hazards commission who provide 'indemnity' or market value cover for the decrease in value of your land but only for land and driveways adjacent to the house out to stipulated distances. Under your example the insurer would pay up to $200K if the house were destroyed plus you'd get a diminished value land payment from the NH Com. Note the insurer pays for actual physical damage to the structure, this doesn't include the property simply being rendered inaccessible.
So if I insure my house for $1, I still get the same land cover as someone who insures their house for much more?
At the end of the day I am not that worried about the house as it is not worth much, but I am the land. I have never heard of anyone else that sees it that way for some weird reason! I know people who have had half their land fall down a bank and now their property is almost worthless as no one would take the risk, but their house is still 100% OK. Does their insurance company pay out for the fact their property is now worth less than half as much?
JJ. NHC building cover is your policy sum insured up to a cap of $300K. Land cover for everyone is capped at the market value of the damaged portion only. NHC only cover the land area under your house out to 8m, a little more for driveways etc. Insurers cover only physical damage, they don't pay out for diminished value due to inability to access the house or issues such as the consequences of land elevation reductions where a house is physically reparable. This was a key issue in ChCh.
Have you ever tried to ask an insurance company whether they'll insure a property if you don't own it? Unless something has changed in the last year or so you won't get an answer until you own it. Sometime ago, 2-5y years I asked for an insurance company for a quote on a section without a house but I knew the size of the house I wanted to build, had a good handle on the sum assured of both the section and prospective house. No luck.
Look to some of the Councils. Here in NP the Council rely on NIWA for some or maybe all of it's flood prediction. NIWA are full of Climate alarmists and for a particular section sub-division accepted IPC6.5 where the year in which inundation will occur on this particular property is around 2083.
Section prices, insurance availability and consequent property values in said subdivision will reflect the perceived risk tolerance profile of purchasers. Average home ownership period is about 5 years. Yer pays yer money and takes yer chances.
As a matter of interest the flood risk was mitigated by NPC requiring the floor level to be about 750mm above the section natural ground level, due to the IPC 6.5 and NIWA's inundation report. I'm querying the requirement using IPC 6.5 and NIWA's inundation basis.
The report asks: “Given the rise in risk-based pricing, how do customers know their insurer is using the right data to calculate their property’s risk and hence the premium price? At what point does a customer’s right to know override commercial interests?”
“Should customers be able to challenge the data insurers use? Do we need more transparency and is that something the insurance industry supports?”
I would suggest that pricing transparency is the last thing the industry wants. As Profile points out, the big reinsurers are very well capitalised and it would be naive in the extreme to imagine that they are above using a real issue-extreme weather events- to raise premiums above what is necessary.
As the great Scot Adam Smith wrote a very long time ago; "People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices". Closer to home, does anybody believe that Woolworths and Foodstuffs are in cut-throat competition with each other?
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