Commerce and Consumer Affairs Minister Kris Faafoi tells insurers to communicate price and policy changes more clearly, but won't force them to ensure insurance remains accessible 

Kris Faafoi is a busy man , his work ethic is very good, he is across many details and onto many current issues, and one has to be impressed .

But I am left wondering if he does not have too much on his plate , or too many balls up in the air , for his effort to be sustainable

Massive hit coming up to property prices if it’s hard to insure 100k contents what about the house in WGTN

Empty Sabre rattling from Faafoi. Insurers have been steadily withdrawing capacity from older masonry buildings and houses in natural disaster prone areas for some time now, with zero reaction from the government. Onto the scene comes household contents and thus an opportunity to virtue signal to voters so suddenly they are issuing empty threats.

The underlying message in this and similar articles is the degree of rort that the insurance industry has become. Buffet bought into IAG because it is essentially easy money. But for consumers it is little more than a rip off.

A lesson; insurance is about off setting risk. Consumers pay someone else to take on the risk that something bad will happen to whatever is insured. Anyone can figure out that statistically there is a chance that something will happen in any one year. From nothing to a totally devastating calamity is possible. Insurance companies factor these odds into a calculation that determines the level of risk and premium that should be paid. And this is where the problems begin. The chance of a minor event might be comparatively high, but significant events low, indeed 1 in 10 or 100 years or so, but they are still paid for int he premium. But what the insurance companies do is take any of their funds not paid out in a year as profits. They do not put them aside as a pool to cover them off for the bigger more expensive events. It is common knowledge that statistically the longer it is between major events it is more likely for them to occur. But due to their practices, insurance companies can no longer claim to be covered for them. This goes against the implied principle of their business, while covering for major events, their ability to genuinely cover them is limited to non-existent at best. Instead they rely in re-insurance to do this. This is at least in part why insurance companies became problematic after the Christchurch earthquakes and are running scared from Wellington.

What do we expect.. Insurance companies have been considering these matters for some yrs now. Government local and central how been dragging feet. Banks caught in the middle as to coving high risk areas for mortgages
Both insurance and banks have not been shy in these areas for several yrs now.
Comsumers have persisted in building and buying. In spite of commercial sector warnings, in building and buying.
Comsumers ignoring warnings, well a where of climate change issues for several decades are expecting government to fix anything and cover anything that happens blindly.. And those tax payers who have taken notice of these warnings are shaking there heads and when the time comes will be a huge political force in not contubuting to... Idiots stupidity.
Insurance is based and spreading the cost of loss where there is risk.
They cannot survive where there is not risk just 100% or near 100% certany loss will happen

Smart property buyers would investigate the cost of insurance for any building they would consider buying and factor this in to their assessment of the value of the entire property. Dumb ones will buy and first and find later that the "house" they bought was more of a liability than an asset.

Imagine the conversation you would have with a vendor of a property with an at risk building laying out the options for them to remove the building and sell the bare land at reduced cost or be offered that same reduced cost less the cost of removal. Some folk are in cloud cuckoo land thinking that those lovely old buildings are still worth something. Newsflash, they are no longer fit for purpose for a range of reasons and will cost to remove.

As to comments about rorts etc.. Not thought thru at all
Regardless if insurance companies are rorting or 100% squeeky clean, given the now long term inaction of local and central government.. Banks insurance companies would have no alternative to gently slide limited cover and eventually refuse cover on very high to 100% risk areas.
Will have to Co ordinate with banks and current mortgages on these areas.
We will see in the not to distant future banks refusing mortgages because of lack of insurance and risk to many areas.
It's not rocket science

Reminds me of a bach out Ngawi way that some of my surfing mates used to ponder collectively buying. Might have been $15k but uninsurable because it was going to end up in the drink one day. But the conversation was how much use could we and friends/family get out of it before it finally did, and whether we'd feel like we'd get enough value out of it.

Added to the extreme weather events, fingers crossed that we won't get any more shaking. The whole country would end up in financial administration.

A proment Auckland major purchased a Clift top home to retire to a decade or so back. The backyard fell into to the sea.. Think from memory house also at risk..
Having lived in Auckland all my life. These clifts have been crumbling going back to at least the 60s...widely reported off and on for decades.. Yet he brought there then when section dropped away.. Shock horror on his part.
Compensation insurance issues, rate payer got to meet the loss etc.
And this is the head I the sand stupidity that has existed for decades..
And rate payers, tax payers and thosevwhonpaybinsurane premuims have to /expected to foot the bill
A tuis yeah right

This is classic neo-liberal economics of privatise profits and socialise losses. Insurance is a form of gambling that is only tolerated by society because it assists in the pooling of risks and the reduction of losses that could wipe out individuals.

It is no accident of history that the first insurers were mutuals that shared their profits amongst those that pooled their risks. That way all were incentivised to remain - both the bad risk and the good risk and everyone benefited.

However,. since the model has changed to a shareholder model, driven purely by returns being paid back to shareholders, who generally dont share in the risk pool, insurers of all ilks have been removing higher probability risks from the pool and leaving lower or almost zero probability risks in the pool.

This leaves a probability outcome no different to a casino, and allows super-normal profits to be taken, as the probability of a payout is minimal, and if a major one does come along - bankruptcy is an option.
What is left is that the worst risk pool is left out of the insurance classes and therefore government has to pick up the mess. Classic privatization of the profits from the pool, and socialization of the losses.

Remember - the house always wins.

Insurance should again be seen as pure gambling, unless the persons in the pool, are actually the owners. No other model will effectively work.

Yes, nothing is theoretically 'uninsurable' there is a price for everything. But often the competitive market informed or uniformed will make it too difficult for an individual insurer to obtain the price they believe they need. Therefore they may decide to allocate their capital to risks or to territories where they believe the returns they may get may be greater. They must be allowed to do this without criticism. The removal by the legislators of contents from EQC cover has compounded the difficulties in the allocation of insurance capacity to best advantage. The nominal EQC amount of previous cover was based on providing at least beds and beddings, chairs a fridge and so on. Now 30+ years later the fears that the EQC cover will be valuable if private insurers can not or will not provide cover to everyone seem to becoming real; but the EQC backstop has nearly gone..