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Mayoral task force meets to discuss rising insurance premiums

News from WCC
The Wellington City Council this week hosted the first of three Wellington Insurance Taskforce meetings. The Taskforce was formed after Mayor Justin Lester hosted a Wellington insurance forum in June. It was felt important that the Government received feedback about insurance issues as they apply to the Wellington commercial, body corporate and residential sectors at a time of rising premiums.

The Taskforce is chaired by the Mayor and its membership includes representatives of the Insurance Council of New Zealand, Body Corporates, Engineering New Zealand, Risk analysts, GNS Science, Insurance legal specialists, property developers and disaster specialists.

“Wellingtonians have expressed concern about changes in the Wellington insurance market and what that means for premiums,” the Mayor said.

“These Taskforce meetings and recommendations are about the future insurability of Wellington. We want to make sure we’re ahead of required changes, rather than behind them, and that there’s openness and understanding of insurance pricing.”

The aim of the Taskforce is to determine how Wellington will respond to trends in the insurability of the city, with particular regard to property and business continuity insurance pricing and accessibility.

The Taskforce will also look at broader issues in the property insurance market and test ideas with regard to potential policy interventions. It will explore connections between city planning and insurability against natural hazards, including climate change and sea level rise, and will consider strategic options if parts of the city are uninsurable.

Finance Minister Grant Robertson has asked that the Taskforce consider the following:

· What changes to property insurance pricing and availability have occurred in Wellington for residential, commercial and multi-unit buildings.

· The current uptake of property insurance in Wellington for residential, commercial and multi-unit buildings, and how common it is for property owners to be unable to secure full replacement or indemnity cover.

· The main hazard and vulnerability factors driving rising property insurance premiums.

· Other problems contribution to insurance affordability of access issues.

The first Taskforce meeting heard presentations from Kelvin Berryman of GNS Science on the latest science on the Wellington fault line and Terry Jordan of the Insurance Council on the structure of the New Zealand insurance sector.

The next two meetings will be in September 19 and October 8, after which recommendations will be drawn up.

The recommendations will be forwarded to the Minister of Finance in late October. The recommendations will also go to the Minister for Commerce and Consumer Affairs, Kris Faafoi, the Minister for Building and Construction, Jenny Salesa, and Treasury.

Govt action sought on soaring insurance premiums

16 comments:

  1. Harry Welsford, 27. August 2019, 14:20

    Since when was this a WCC function? Why do the ratepayers have to fund the Council collaborating and drafting recommendations to/with insurance companies?

     
  2. Traveller, 27. August 2019, 15:06

    Harry: Homeowners have been asking the council and the government for help, as insurance premiums go through the roof and some apartment buildings become uninsurable. It’s relevant and reasonable for the the mayor to respond to them. And of course the council itself has insurance issues relating to several of its own buildings.

     
  3. Harry Welsford, 27. August 2019, 15:24

    For what end purpose is a task force? No part of the WCC Mayor’s function is setting private insurance premiums by way of appointing a task force.
    Obviously if the Council has insurance problems with some of OUR buildings (not theirs) they already have a dept that can deal with paying premiums on time and making claims. Recommendations: repeal the new code and open the undamaged Central Library.

     
  4. Andrew S, 27. August 2019, 15:27

    Private insurance premiums have been rising for a decade but let’s form a task force funded by ratepayers to just talk about it and write about it.
    It’s not a function of the council.

     
  5. Guy M, 27. August 2019, 18:24

    Andrew, Harry, I know this is not core focus of the Council, but it IS a very important thing to get resolved. WCC are keen for more people to live in the central city, but with exorbitant price gouging by Insurance companies over Apartment buildings, there is a very real danger that some people will just have to walk away and abandon their apartments. That is not a good thing for the future of the city: and that’s why the Council is getting involved.

    I doubt that they will be able to achieve much change, but the good thing is that it provides a chance for Body Corp managers (on behalf of the apartment owners) and Insurers to sit down and have honest face to face discussions. That’s got to be a good thing.

     
  6. Concerned Wellingtonian, 27. August 2019, 18:31

    If the Mayor can get involved with this sort of thing why is he washing his hands of the bus disaster?

     
  7. Andrew S, 27. August 2019, 18:59

    Private insurance premiums were raised and cancelled in part due to the Council’s enforcement of the flawed new code. The Council can be said to have played a major part in creating these problems so undoing them is the mayor’s role. Setting up a task force to make recommendations on private insurance is not the Mayor’s function.

     
  8. Ian Apperley, 28. August 2019, 18:18

    It’s a Labour Party Working Group. Let’s be honest. Reporting back to the Minister of Finance.

     
  9. Northland, 28. August 2019, 22:26

    With insurance premiums rising rapidly mainly due, it seems, to earthquake risk, just what exactly is EQC doing for us? Currently it’s just an extra levy that does nothing to reduce the level of premiums private insurers feel they need to charge to insure our shaky isles. What New Zealand needs is a revamped EQC – an effective form of ‘communal’ insurance against the risk of earthquakes that is not capped at $100,000. Building on this as a base cover, private insurance companies can pick up the regular insurance risks – fire, flood, storms etc.

    Is this not possible? Would it not solve the issues faced by apartment owners today?

     
  10. Mathew Biars, 29. August 2019, 10:18

    Northland: No it wouldn’t solve it as the apartment owners face the problem of the Council’s enforcing of the erroneous new code. The insurance problems are not with the EQC (at this time).

     
  11. Guy M, 30. August 2019, 6:24

    “enforcement of the flawed new code” and “enforcing of the erroneous new code” – Mathew Biars / Andrew S – care to explain what you mean? Are you talking about the NZ Building Code or something else? What makes you say it is “erroneous”? Are you structural engineers? Please explain.

     
  12. Andrew, 30. August 2019, 8:11

    Playing the devil’s advocate here…

    You do not need to be a structural engineer to say the latest building code is flawed. The current code is fine until it is next tested by political climate/natural disasters/ulterior motives etc, just like the previous codes. Before the Christchurch earthquake I remember politicians frequently stating how robust the NZ code was.

     
  13. Steve, 30. August 2019, 9:51

    My house insurance went up 23% this year. I’m a pensioner on a fixed income. Add to that a steadily rising rates bill which sees me paying $90 a week to council (the council is becoming a quasi landlord) and soon us oldies won’t be able to afford to live in our own homes we’ve worked our lives to get. Meanwhile the Mayor and his council cronies seem to take the view that debt should never be repaid and the ratepayers are the golden goose to be plucked at every opportunity. Vanity project? No worries – the ratepayers will pay. They hid the real effect of damage from the Kaikoura earthquakes for years and now we have massive increases in premiums despite GNS Science saying that the actual risk of a major earthquake in Wgtn is 10% for the next 50 years. So why are home owners seeing 23% increases and commercial properties 54% increases per annum? Foreign companies taking us for mugs that’s why. It’s time the government stepped in and created a state-owned insurance company to inject some real competition into the market instead of allowing these foreign companies to monopolise it. Given that they’ve all put their premiums up in tandem perhaps an inquiry on possible price-fixing too? If there was a major earthquake in Wgtn the cost would be around $71 billion. Could the insurers even pay? Or would we see what they did in Christchurch – drip feeding payments so that people are still fighting for their entitlements eight years on?

     
  14. Guy M, 30. August 2019, 15:51

    Andrew, you may think that you are playing the devil’s advocate, but when you talk about things that you do not understand, you just come off as ignorant. I’m not an Engineer, but I work with them, and have an understanding on how difficult the problem is to create an affordable earthquake-resistant building. The NZ Building Code may not be perfect, but it is a reasonable middle ground between affordable response and completely seismic-proof construction.

    Steve, I understand your anger and I’m feeling the same way, but you also need to think of it this way: foreign companies were hit massively by the cost of Christchurch (it was the second-biggest insurance event EVER, second only to the massive Japan quake and tsunami) and so if anything, it was them that were the mugs, insuring us for low premiums. They are now attempting to catch up – and many of them have left the market completely – they’re not attempting to monopolise it, they’d be happy to leave it entirely. Our government used to have its own insurance company of course but that got sold off years ago to the private industry, so it is doubtful that they would want to set up a company themselves. Been there, done that. So: there are no local insurers left. All are foreign owned, as far as I know.

    New Zealand is one of the most heavily-insured countries in the world. Damage in Hurricane Katrina was far worse than NZ’s Canterbury quakes but their massive destructive event was, by the financial books, a lesser event than Canterbury, because the very poor african-americans down in New Orleans were mostly uninsured – because they couldn’t afford it, or just couldn’t get it.

     
  15. Andrew, 31. August 2019, 9:04

    Guy, my point is change is inevitable. You asked if the previous posters were engineers. Their calling the current code flawed could be because they know it’ll change again in the future, which could affect them financially and mentally, like the current situation with apartments?

     
  16. Mathew Biars, 31. August 2019, 14:05

    True knowledge of how large earthquakes can effect the land on which structures are built comes from geologists not structural engineers.
    It is my understanding, based on science of large earthquakes, that the new code is flawed.

     

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