Brought to you by:
Vero
Vero

Consumers seek review after IAG’s Wellington pullback

Facebook Twitter LinkedIn Google

Consumer advocates have called for a wider review of the role played by New Zealand’s government-owned Earthquake Commission (EQC) after IAG announced it is taking a more conservative approach to home and contents cover in Wellington.

“The fact that IAG is being a lot more selective about new customers is significant because it is one of the biggest players in the market,” Consumer NZ Head of Research Jessica Wilson told insuranceNEWS.com.au.

“When you get one of the big players pulling back, it does raise an issue for consumers about what is going to happen if a natural disaster strikes and they don’t have cover.”

A review of the EQC’s handling of claims after the 2010/11 Canterbury earthquakes is under way, but Ms Wilson says a wider examination of its role is needed.

Consumer NZ surveys reveal significant premium increases for Wellington residents over the past couple of years as risk is reassessed after the 2016 Kaikoura quake, which caused substantial damage to some city buildings.

IAG says it is not withdrawing or retreating from Wellington, where it has about half the market, but it does intend to review its position regarding new and existing customers.

“Our approach is about being sustainable and being here for our customers now and in the future,” IAG EGM Customer and Consumer Kevin Hughes said.

The change includes giving priority to existing customers, taking a case-by-case approach.

This means some Wellingtonians approaching the insurer for contents cover may be unable to obtain it, a spokeswoman said.

Cover for contents claims up to $NZ20,000 ($19,328) will be removed from the EQC’s mandate in July under amendments that also include increasing the building cover cap to $NZ150,000 ($144,963).

Tower, New Zealand’s third-largest general insurer, last year moved to risk-based pricing across the country to more accurately price cover at specific property locations.

A spokesman told insuranceNEWS.com.au the company continues to offer cover for new and existing customers in Wellington. “Tower’s recent move to risk-based pricing provides customers with a sustainable choice to buy insurance at a price that is fair for the risk they face,” he said.

A Suncorp spokesman told insuranceNEWS.com.au the group’s approach to providing insurance in Wellington remains unchanged.

“We continue to accept applications for house and contents, subject to normal underwriting conditions,” he said.

EQC Minister Megan Woods notes that an Insurance Council of New Zealand submission last year supported the EQC contents change and said the private market could provide cover.