Major insurer may not provide contents cover
The decision by New Zealand’s largest insurance group to no longer provide content cover to all Wellington homes will not necessarily create a domino effect, says one industry expert.
The announcement came after Insurance Australia Group (IAG) – which owns State, NZI and AMI – said it would be taking a ‘‘conservative approach to writing new business in Wellington due to the high earthquake risk in that part of the country’’.
The firm, which also underwrites the general insurance provided by ASB, BNZ, Westpac and The Co-operative Bank, said the new policy would be implemented across its brands.
‘‘Wellington remains a highrisk area with regard to natural perils such as earthquakes and IAG is taking account of that in its pricing and underwriting approach,’’ an IAG spokeswoman said.
‘‘As a result, people living in Wellington approaching IAG for contents insurance may find they are unable to obtain cover.’’
The news will come as a shock to both homeowners and renters in Wellington, but Tim Grafton, chief executive of the Insurance Council New Zealand, said having one company make this decision did not necessarily mean all others would follow suit.
‘‘Where one or some insurers may see a need to reduce their exposure or business growth in Wellington, others may see an opportunity to expand their portfolio of domestic cover there.
‘‘The price of insurance is heavily influenced by risk – both the likelihood of future events and the real costs of past events.
‘‘Wellington faces earthquake risks from multiple fault lines as well as tsunami, flood and landslide risks, depending on which area of the city is being considered.
‘‘Events of the past decade and increased availability of data have helped insurers understand better than ever what it takes to help communities recover from large-scale events.’’
Other insurance companies have moved quickly to insist they will still provide home contents cover to Wellingtonians.
A spokeswoman for AA Insurance said its approach hadn’t changed.
‘‘We are continuing to offer contents insurance in Wellington to new and existing customers.’’
Vero’s approach remained unchanged. ‘‘We continue to accept applications for house and contents, subject to normal underwriting conditions,’’ a spokeswoman said.
Minister of Commerce and Consumer Affairs Kris Faafoi said he was closely following the issue.
‘‘Wellington remains a high-risk area with regard to natural perils.’’ IAG spokeswoman