Low house insurance premium rises this year - but not for all, says IAG

Thursday, 14 August 2025

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House insurance policyholders with the country’s largest insurer, IAG, are told to expect low single-digit premium increases this year.

But some owners of flood-prone homes covered by the insurer, which owns the State, NZI and AMI brands, could see bigger increases, says chief executive Amanda Whiting.

IAG has been following Tower in deepening its risk-based pricing, where owners of homes that are more prone to natural hazards like floods pay more for their cover than people whose homes are in less risky locations.

Whiting, who received $2.93 million in various forms of remuneration for the financial year, said: “The things that are most prevalent in our risk-based pricing is riverine flooding, not so much the sea rise.”

But, she said: “We've been really careful here though … We want to make sure that we're not leaving customers stranded. There are very, very few homes that are uninsurable in New Zealand, and that is normally because they are very, very high risk, or there has been unrepaired damage, or there's been remedial work from earthquake that hasn't been completed yet.

“There are very few that are uninsurable, and our intention is to try and make sure that we continue to be here for all New Zealanders.”

IAG New Zealand, which is owned by ASX Australian sharemarket-listed insurer IAG, announced an insurance profit of A$606m (about NZ$664m) in its financial year ending in June, up from A$457m (NZ$501m) in the previous year as a result of having charged higher premiums, and having fewer extreme weather claims to pay.

In the 2025 financial year IAG New Zealand paid out A$1.1 billion (about NZ$1.21 billion) in net claims (including reinsurance recoveries), while in the 2024 financial year it paid out A$1.14b (NZ$1.25b) in net claims.

IAG collected NZ$1.31b in premiums from homeowners in the June financial year, up from NZ$1.2b the previous year, an increase of just over 9%, though that included an increase in the number of properties IAG insured.

Whiting said insurers’ experience of inflation was different from the nation headline Consumer Price Index rate. Stats NZ Tatauranga Aotearoa reported annual inflation increased to 2.7% in the three months to the end of June.

“One of the myths that we need to bust here is that CPI is how we actually measure inflation through our claims inflation,” she said.

For IAG, the cost of repairing and rebuilding houses, and repairing and replacing cars, determined its experience of inflation.

“I don't know if you’ve done any building or renovating lately. That has certainly not gone down,” she said.

“But all in all, we're seeing claims inflation come off. So that's good.”

Increased risk-based pricing for house insurance, and memories of 2023 flooding, appear to have resulted in an increased awareness among homeowners, homebuyers and renters of natural hazard risk.

More than 2000 Aucklanders are checking out properties on Auckland Council’s Flood Viewer every day, and Whiting said: “I think they’re making risk based decisions.”

She said: “There may still be consumers out there that are making decisions to buy a cheaper home knowing that they’re taking on flood risk.”

However, she said: “I think we still have a lot more work to do as a country to make sure that the community is very clear on the risk when they are purchasing a home.”

As well as selling insurance under the State, NZI and AMI brands, IAG’s policies are sold by ASB, BNZ, Westpac and the Cooperative Bank.

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