Tower promises slower premium rises
Tower says house and car owners it insures can expect lower increases in their premiums this year.
The insurer, which is the third-largest after IAG and Suncorp, held its annual general meeting yesterday, at which it said it had increased the premiums it collected from its policyholders by 17% in its last financial year.
Chief executive Blair Turnbull said the insurer continued to be challenged by increasing car claims, and high inflation, which it had “offset” using premium increases for its customers. But, he said: “As inflation settles, we expect overall premium increases to level off near the second half of the year.”
Turnbull is the second insurance company chief executive to sound a note of relief for policyholders who have faced inflation-busting, double-digit increases in their house and car insurance premiums.
IAG chief executive Amanda Whiting has said IAG was acutely aware of affordability for customers, and said premium rises would be lower this year for most homeowners.
Turnbull acknowledged not all Tower homeowners would see lower increases in premiums. “Our approach to risk-based pricing means that pricing for individual customers will always reflect their individual risks,” he said.
Tower’s strategy on risk-based pricing is to charge people higher premiums if their homes are at greater risk of things like earthquake, or flood. That strategy, which it began in 2018, is now being followed more closely by IAG, which owns the NZI, State and AMI businesses, and Suncorp, which owns Vero and has a majority stake in AA Insurance.
Like Whiting, Turnbull called for action from the Government and local councils to ensure homes are no longer built in high-risk areas, and climate adaptation infrastructure is built.
“It is critical that insurance remains affordable and accessible,” he said. “To protect Kiwis now and in the future, as a country we must develop longer term plans to address infrastructure gaps and reduce the risks of climate change. That starts with more collaboration between business, central government, and councils to share data and ideas to accelerate this.”
Whiting has called for insurers to be informed when developers submit applications for building consents, so they can say whether they would insure them or not.
So fast have been the increases in house and car cover, they could have an impact on the kinds of homes and cars people choose to buy.
Whiting said IAG would start disseminating information on how expensive different kinds of cars were to insure so people could make informed choices.