New Zealand insurers are retreating from their much-vaunted switch to sum-insured home policies as competitive pressure grows.

Following the Canterbury earthquakes the industry began a campaign to move away from the unpredictability of total-replacement cover.

However, consumer groups were concerned about homeowners’ ability to get their calculations right.

Insurance Council of New Zealand CEO Tim Grafton confirms total-replacement offerings are increasingly available in relation to fire or other damage – but not earthquake.

“There was certainly a move after the Canterbury earthquakes to switch to sum-insured – and that remains the case for earthquake in the vast majority of policies,” he told insuranceNEWS.com.au.

“There are a small minority providing for total replacement whatever the event, but that would reflect the risk of the property concerned.

“When you have total-replacement policies in an earthquake situation, there is a lack of predictability over what the replacement costs will be.

“With fire it is easier to quantify the costs.”