Average household can expect insurance to cost $561.50 more this year

Tuesday, 30 May 2023

The average household renewing its house, contents and car cover can expect to pay over $560 more in premiums this year.

Online insurance comparison service Quashed has published the first in what it hopes will be a series of quarterly reports into premium inflation, bringing transparency to the general insurance market.

The Auckland-based company’s chief executive Justin Lim said house insurance premiums had risen on average by 20.3% in the 12-month period ending March 31.

Contents insurance premiums had gone up on average by 14.7% and car insurance by 10%, Lim said.

That data was calculated using the premiums quoted to households who used the Quashed Market Scan comparison tool in January, February and March.

An “average” household with insurance on its house, contents and two cars, faced paying $561.50 more this year for cover than last year, with the bulk of the increase being on people’s house insurance.

Not all households would be hit with equal rises. Factors like the make of people’s cars, the location of homes, and the value of their household contents all influenced the premiums insurers quoted for policies.

Factors driving up premiums included the extreme weather events that hit the country earlier this year, as well as rising car crime, Lim said.

However, price increases were also the result of a rise in Toku Tū Ake EQC levies.

Lim said general inflation had resulted in insurers having to pay more to replace household contents, replace or fix cars, and to repair houses.

The average car premium quoted in the first three months of the year was $951.80, Lim said.

The average house premium was $2330.45, and the average contents premium was $777.55.

The actual premiums paid by individual households varied depending on the assets they were insuring, Lim said.

The price of insurance had increased at a faster rate in the first three months of this year, than it did in the last three months of 2022, Lim said.

“Our insurance comparison tool, Market Scan, has found that the difference in premiums quoted across insurers has increased compared to the prior quarter,” Lim said.

“That means consumers shopping for insurance would find a bigger difference in prices and potential savings,” he said.

Market Scan data on house cover comparisons in the first three months of the year showed an average price difference between the cheapest and priciest premium quotes of just under $830.

For contents cover the average price difference was $323, and on car insurance it was $436.

The big differences in price indicated households could save hundreds, and in some cases more than $1000 on their cover by switching to a cheaper insurer.

Insurer Tower has been leading the charge on risk-based pricing, charging higher premiums to insure riskier assets.

Tower was the first major insurer to introduce individual risk-based pricing for homes based on their risk of being damaged in earthquakes and flooding.

Increasing crime levels, which have led to a political war of words between the Government and opposition, recently prompted Tower to lift premiums for owners of the most commonly stolen models of cars.

“With cost-of-living and natural disasters being front of mind for many New Zealanders, we encourage everyone to take a moment to look at their insurance,” said Lim.

Lim launched Quashed in 2020, and has been growing rapidly, both through casual users, but also in partnerships with large companies like life insurer AIA, which use it to help their employees save money on their insurance.