IAG survey shows majority think insurers should be able to say no risky homes

Tuesday, 17 June 2025

Scenes from the Esk Valley in early 2023 were a wake-up call for the country over the threat that climate change will see more extreme wet-weather events striking the country.

For the first time in its annual climate survey, the country’s largest insurer, IAG, asked the public whether it would be acceptable for “higher risk” homes to be denied cover.

And the majority of people agreed.

IAG said including the question in its survey was not a reflection of an intention to start withdrawing insurance from owners of riskier homes. However, it has signalled it is deepening its risk-based pricing, so owners of homes at higher risk of things like flood and landslide pay higher premiums.

“Our intention is to continue to insure as many New Zealanders as possible,” the insurer said.

Since 2019, there has been a steady move by insurers to increase the premiums paid by people who own homes at higher risk of damage from natural disasters, and the Government is in the process of working out the principles of “managed retreat” from risky areas, including whether homeowners should be compensated by the taxpayer.

There’s a growing concern that some homes prone to the likes of coastal flooding may soon be uninsurable.

By the numbers

67%

IAG, which owns the State, NZI and AMI brands, surveyed just over 1000 people. It asked people if they agreed it was okay for an insurer not to offer insurance to new customers if their home is in a location that was “unsafe”. Just over two-thirds agreed.

Many didn’t know what they thought. But 11% disagreed, and felt that insurers should be required to insure everyone’s homes, even those at higher risk of things like earthquake, flood and landslide.

The bravery of New Zealanders in the face of disaster is celebrated with 38 recipients of the nation's highest awards. Among them are the officers who attempted to rescue a victim during Cyclone Gabrielle’s destruction on Auckland's West Coast.

The current industry practice is to always quote on homes, though the premiums can be high.

53%

There was a slightly different view of whether an insurer should be able to tell their current customers, whose homes they already insured, they no longer wished to insure them.

Just over half of people 53% agreed that an insurer should be able to jettison a current policyholder, and 22% disagreed.

“A majority of New Zealanders agree that a high level of risk from climate hazards is a legitimate reason for not offering insurance, but expect insurers to treat their existing customers more favourably than new customers,” IAG said, summing up its findings.

78%

However, the public’s thinking is more nuanced than that. Nearly 80% thought people had a right to be insured. Expectations of the government becoming an insurer of last resort may explain this.

Building owners must have insurance to be covered by the Natural Hazards Commission Toka Tū Ake insurance scheme. Photo shows damage from the Canterbury earthquakes in 2011.

Under current settings, building owners must have insurance to be covered by the Natural Hazards Commission Toka Tū Ake insurance scheme, which used to be called the Earthquake Commission.

17%

There has been an intensifying battle between insurers to insurer the least-risky homes since Tower began to go down the road of more exact risk-based pricing in 2019. Tower justified the move, saying owners of homes in lower-risk areas did not believe they should be paying the same as owners of homes in risky locations. IAG found just 17% were willing to “subsidise” the insurance of people who lived in high-risk locations.

67%

Just over two-thirds of people agreed the Government should “step in when insurance became unaffordable” and 55% agreed the government should step in “when insurers pull back from insuring high-risk locations”.

The phrasing of that question appears to indicate that for IAG, there will be a time when it is no longer willing to insure homes in some locations it considers high-risk.

Flooding in Auckland in 2023 came as a huge shock to the city, revealing it was less resilient to heavy rain than was previously thought.

60%

There appears to be a growing resignation from many homeowners that insurance on their homes will keep getting more expensive.

Six in 10 agreed that insurers should raise premiums for those homes and businesses that face more risk, and 71% said they accepted they would have to pay more for their insurance, if they lived in a high-risk location.

There has been a significant shift in sentiment since IAG’s survey in 2019, when just 41% of people agreed that it was OK for insurers to increase premiums for owners of riskier properties.

90%

Nine in 10 people who answered the survey expected more extreme storms, and 89% foresaw more frequent and intense flooding.

IAG New Zealand’s chief executive Amanda Whiting says people understand increased risk leads to higher insurance costs.

A fifth

20% said they had used their knowledge of climate hazards to help decide where they lived.

Summing up the survey answers it got from the public, IAG said the public expected insurers to reflect rising extreme weather risks to be reflected in the premiums of people who are exposed to their impacts, and people did not want to “pay for other people’s risks.”

It said: “But, at the same time, they recognise the importance of having insurance and want insurers to focus on keeping as many people insured as possible. They do not want insurance to become unaffordable, or be withdrawn and they think the Government should step in if this occurs.”