The Insurance Council of New Zealand has welcomed the government’s decision not to increase the Natural Hazards Commission levy on homeowners.

The levy of NZ16c per $NZ100 insured – with a cap on building cover of $NZ300,000 ($259,000) or a maximum charge of $NZ480 ($415) – covers earthquake, landslide and flood loss and is paid as part of a home insurance premium.

Finance Minister Nicola Willis announced the charge will be unchanged due to cost-of-living pressures.

ICNZ CEO Kris Faafoi says the decision keeps insurance accessible, adding: “Taxes and levies already account for around 40% of a home premium.”

Last year the government announced a review of the charge amid concern it was too low to meet expected costs under new risk modelling.

A Treasury consultation document said retaining the current levy would mean government funding was required to support the scheme and “it also fails to build resilience to the potential for long-tail risks and does not keep pace with construction sector inflation and other increases in exposure”.

Treasury proposed four options, with rises that could be phased in and would lift the building cover to $NZ400,000 ($346,000).

Apart from maintaining the rate, the options were to increase it to NZ22c, NZ24c or NZ25c per $NZ100 insured.

Government data shows residential property insurance premiums increased 24% from October 2022 to April last year.