What is Driving Insurance Premium Increases Across New Zealand?

You may have noticed that insurance premiums are increasing, and for some insurance types such as property, increases may be significant.  

Insurance premium increases are not isolated to one insurer, or even to New Zealand. Over the past 12 months insurance premiums have increase globally.

What’s driving increases across New Zealand?

Aon have outlined 4 key factors to help you understand the increasing cost of insurance premiums across New Zealand in 2023. For a deeper dive, please continue reading below.

Firstly, it’s important to understand how insurance premiums are calculated. Annually, all insurers review insurance premiums and calculate pricing to account for any changes to the cost of providing cover. This year, several things have impacted pricing and for some, availability of insurance cover. Factors driving premium increases in New Zealand include:

  1. Claims and losses:  Insurance premiums are influenced by the frequency and severity of claims made by policyholders. New Zealand is prone to natural disasters such as earthquakes and increasingly floods and storms. When there is a significant event, insurers face a surge in claims. This year has been challenging for insurers with two of the most significant weather events in New Zealand’s recent history happening within weeks of each other in the first quarter, resulting in  some of the largest claims volumes ever experienced. As at the end of June 2023, insurers have paid out $1.8 bn of an estimated total of $3.18 bn with over 107,569 claims recorded from the Auckland Anniversary Weekend floods and Cyclone Gabrielle. For context, the general insurance sector incurred total claims in 2022 of $3.08bn and claims from the 2016 Kaikoura earthquake totalled $2.27 bn*.

  2. Underwriting:  Insurance premiums are typically based on the risk profile of the policyholder. Factors such as the location of property, size or value, owned or occupied, nature of business activities, risk management (e.g. fire and security protection), previous claims history, coverage limits, specific property features or items you choose to insure along with other policyholder characteristics, can all affect premium calculations. It is important to ensure that your insurer has up to date and accurate underwriting information about your risk and that you advise your broker of any material changes to your home, business or circumstances that may occur during the period of insurance.

  3. Inflation: Periods of high inflation can result in insurers experiencing higher claims and operating costs. Higher costs of materials and labour, coupled with supply chain constraints continue to drive increased costs in building. As prices increase, insurers adjust their premiums to ensure that the coverage remains adequate to protect against higher replacement and repair costs. The impact of inflation may also mean that you need to buy higher levels of insurance to ensure you remain adequately covered, which also impacts the price of premiums.

  4. Government Taxes and Levies: With effect from 1 October 2022, the New Zealand Government increased the EQCover residential building cap and associated premium (levy) for homeowners. These changes respond to increased residential repair costs and support continued natural disaster insurance for homeowners in New Zealand. Your EQCover premium is collected by your private insurer and paid to the Natural Disaster fund which his managed by Toka Tū Ake EQC and used to pay EQC claims.

  5. Reinsurance Costs: Insurance companies purchase reinsurance to mitigate their own risks. If the cost of reinsurance increases, insurers pass this expense on to policyholders through higher premiums. At the most recent reinsurance renewals for some New Zealand insurers (1 July),  significant price increases were applied as a result of the severe weather events in January and February. In addition, insurer retention levels (the amount they must pay before a reinsurer contributes to a loss) increased as a result of the catastrophe loss activity and increased inflation **. The effects of the Auckland Anniversary Weekend floods and Cyclone Gabrielle events on reinsurer appetite for New Zealand risks are likely to last for a number of years.

It is important to note that insurance premiums are determined by individual insurance companies, and the specific reasons for premium increases may vary between insurers and policy types. You need to review your insurance policies regularly and consider factors like coverage, excess, your current circumstances and changes, as well as premiums before making decisions.

Home and Contents Insurance

Many home and contents policies have an inflationary increase applied by the insurer to the sum insured at renewal. This indexation increase is used to better reflect your risk, as the estimated cost of building homes and replacing household goods and personal items changes over time. While inflation has eased over the last quarter, it still remains high, and construction materials and labour continue to drive up the cost of building. 

However, this indexation may not account for your unique situation, including any changes made to your home and contents, and whether your original sum insured was correct when the policy began. 

Additionally, where a home insurance policy provides replacement cover, insurers may have a minimum acceptance threshold cost per square metre for homes. If your sum insured is below the threshold, it is most likely your sum insured will need to be increased to maintain replacement insurance.

Remember to check your sum insured

Please check that your sum insured value reflects what it would cost to replace your home and contents, should you need to. Online home and contents sum insured calculators are good tools you can use to help estimate your sum insured. Your home sum insured should cover the full cost of rebuilding your home to its equivalent size and quality and, should include recreational features, retaining walls and any special characteristics. It needs to include costs for demolition, building consents and other fees. If you’ve made changes to your home, your sum insured will need updating to reflect these also. If you have a claim and your sum insured is too low, you may need to pay additional costs to rebuild your home or replace contents.

Sum insured calculators

A good home insurance calculator to use is Sum Sure (corelogic.co.nz). Alternatively, you may want to get an insurance valuation by a qualified valuer or an estimate from a quantity surveyor. These are more accurate ways to establish the cost of re-building your home, particularly for more complex or high valued homes. In some instances, an insurer will require a valuation for insurance purposes. Aon has a valuation team of registered valuers. Please talk to your Aon broker should you wish to arrange an insurance valuation.

A good home contents insurance calculator is Home Contents Calculator. Calculators such as this can provide you with a general estimate of the value of your contents, however these will not reflect the individual characteristics of your contents and belongings. Some insurers also have contents valuation guides on their websites that can assist you to work out the value of your contents.

Your home contents sum insured is the total amount your contents are covered for collectively. All contents policies have limits on some types of items. For example, items of jewellery are only covered up to a certain amount. If you have an item that would cost more to replace than the limit, you will need to specify it on your policy. Your sum insured needs to include the value of both general contents and specified items. 

Other things to consider

  1. Type of cover options – insurers offer a range of home and contents insurance options from basic, more affordable policies, through to more premium policies.

  2. Excess options – the excess is the amount of money you pay towards a claim on your insurance. Insurers offer a range of excesses which can make premiums higher or lower.

  3. Change in occupancy - for example, are you running a business from home, renting out your home, is it vacant, undergoing renovation/new building work? If so, you may need a different policy.

  4. Standard benefit limits/time periods - for example, is the alternative accommodation limit sufficient? If you rent your home where loss of rent cover and/or landlord’s fixtures and fittings are included under your home policy, is the standard benefit limit sufficient?

  5. Additional possessions - have you acquired additional possessions or valuable items which may need to be specified?

  6. Children living away from home - are their items covered under an extension or do they need a separate policy?

  7. Contents in storage - if you have stored contents, you may need additional cover.

  8. Home office – is the cover you have enough for the equipment you have?

  9. Inflation - some of your possessions may now cost more to replace.

Please contact your Aon broker to discuss any of the above with them.

Motor Vehicle Insurance (personal and commercial)

As a result of increasing parts and repair costs across the motor industry, insurance premiums are increasing.  Insurance premiums are influenced by several factors - some are general and others relate specifically to you, for example the vehicle you drive, where you live, your past vehicle claims, and the sum insured amount.

Increasing severe weather events are also having negative impacts on costs. One insurer’s recent data shows that 85% of motor vehicle claims from the Auckland Anniversary Weekend floods and Cyclone Gabrielle could be written off. Another stated that the frequency of motor vehicle claims has increased by 15% over the past 12 months, and the average cost of parts has risen 8-10% over the last year.

Newer vehicles often come with advanced features such as reversing cameras and multiple sensors. These components are easily damaged and often cannot be repaired, requiring replacement and calibration by trained technicians.

Remember to check your sum insured

The value of most vehicles depreciates over time (noting that the value of some vehicles can also increase too). Some insurers alter your sum insured annually, others do not. Check that your sum insured correctly reflects the current value of your vehicle(s), otherwise you may be paying more premium than you need to.

If your vehicle(s) is insured for market value, this is the estimated amount you could have sold your vehicle for just before the time of loss. If your vehicle(s) is insured for agreed value, this is where you and the insurer agree the value of your vehicle. 

Other things to consider

  1. Level of cover – insurers offer a range of motor vehicle cover options. Generally, these are:
  • Full Cover – covers damage to your vehicle and damage you cause to someone else’s vehicle or property.

  • Third Party Fire and Theft – covers damage to your vehicle by fire or if stolen and your liability for damage you cause to someone else.

  • Third Party – cover for damage you cause to someone else’s vehicle or property.

  • Each car insurance product comes with various automatic and optional benefits.

  1. Changes in drivers/vehicle usage/modifications.

Please contact your Aon broker to discuss any of the above with them.

Pleasurecraft Insurance

Pleasurecraft insurance premiums are influenced by several factors, such as the type and age of your boat, mooring type and location, as well as the boat’s sum insured. Other general factors affecting the cost of insurance include an increase in the number and severity of weather events, general claims costs, which are also impacted by inflation and supply chain constraints, limited availability of parts, an increase in the frequency and severity of large fire claims and increases in reinsurance costs.

Remember to check your sum insured

The value of most vessels changes over time. Check that your sum insured correctly reflects the current value of your boat, trailer and equipment, otherwise you may be paying more premium than you need to. If your boat is insured for market value, this is the estimated amount you could have sold your boat for just before the time of loss. If your boat is insured for agreed value, this is where you and the insurer agree the value of your boat.

Other things to consider

  1. Is there any change to where your boat is mainly used?

  2. Are there any modifications or changes to your boat or accessories?

  3. Do you require cover for yacht racing risks? If so, insurers may offer an optional racing extension.

  4. Is there any change in mooring location or type of mooring e.g., marina, swing, pile?

  5. Is there any change in the location of where your boat is kept or the security measures in place?

  6. Do you require cover for accidental loss or damage to your floating mooring, dry dock or air berth used with the insured boat? If so, some insurers offer an optional extension to cover.

  7. Is there any change of skipper, or in your experience or qualifications or anybody else operating the boat?

Please contact your Aon broker to discuss any of the above with them.

Commercial Property Insurance

The property insurance market continues to  apply premium increases, which for some will be significant. The three key factors contributing to increases in commercial property premiums are severe weather events, increasing claims costs and rising reinsurance costs.

Over the past two years insurers have experienced an increase in the number and severity of natural disasters, including weather related losses, large commercial fires, and general claims costs which are being further impacted by inflation and supply chain constraints. Building, construction, and equipment costs are increasing, driven by strong demand and restricted supply. Rising claims costs are having significant impact on insurer’s reinsurance programmes with both increased cost and retention of their risk (the amount they must pay before the reinsurer contributes to a loss). These costs are being passed on to the policy holder.

There is increased focus on exposure to flood risk and storm damage and, along with increasing pricing, insurers may seek to reduce the impact of flood losses by limiting coverage and increasing excesses.

Insurers are often mandating up-to-date valuations for buildings to determine an adequate sum insured. Where a new valuation is undertaken, it should be prepared and available well ahead of the placement date.

Where an increase in sum insured is required following a revaluation, it can for some risks, result in capacity constraints for the existing insurer(s), meaning additional support for the full placement will be needed. This may come at additional cost or necessitate a programme restructure.

Insurance valuations

The most accurate way to determine your correct sum insured values, and Aon’s recommendation to all our clients, regardless of insurer requirements, is to get an insurance valuation. This is the most accurate way to clarify the total reinstatement cost of assets, and the correct methodology to minimise underinsurance risk will be applied. Aon has a team of registered valuers. If you would like a valuation to determine accurate sum insured values and indemnity periods for your insurance cover, please talk to your Aon broker.

Aon Valuation Services Team annual inflation for the 12 months to December 2022

Building Construction:


Non-residential buildings


Civil construction


Residential buildings


Land improvements


Other Assets:


Plant, machinery and equipment


Transport equipment


Remember to check your sum insured

Your sum insured should include the cost of demolition, building consents and other fees. If you don’t have the right sum insured in place, you may not have enough cover to rebuild or replace your business assets. If you have made any changes to your building or other assets, your sum insured may need to be updated to reflect these.

Business Interruption insurance 

Business interruption insurance protects your business profit from interruptions to your business, such as damage to your business premises, damage to your business assets, a power failure, damage to roads and railways or even damage to your largest supplier. A well-constructed business interruption policy will cover your business for a specified period, covering you for the ways a loss might impact your bottom line:

  1. An increase in costs, or;

  2. A decrease in income.

The most often overlooked aspect in business interruption cover is the indemnity period. This is the length of time you are covered to get your business back up and running. When choosing this period, you need to be realistic, as while selecting a shorter period may save on premium, it can mean that losses that extend beyond the end of the indemnity period are not covered.

Things to think about when selecting an indemnity period include:

  1. The time it could take to inspect damaged premises after an event e.g. fire, flood or earthquake (i.e. how long before work can begin again)?

  2. The time it could take to plan, design, obtain consents and a contractor to build a replacement building.

  3. The time it will it take to repair or replace a building.

  4. The time it will take following the building replacement to get customers back and reach the level of sales experienced prior to the damage.

Check your gross profit item sum insured

Aon has specialists available that can assist in designing business interruption solutions for all types of businesses. They can meet with you to review your business and discuss what you might do in a claim situation. Please talk to your Aon broker for assistance.

Aon is here to support you

We understand the financial pressure our clients may be facing. As your insurance broker, we are here to support you and provide you with insurance cover at a competitive price. This means working closely with the insurers, negotiating on your behalf, and if required, providing you with options.

Many businesses have experienced significant change over the past few years which may result in changed risk and changed insurance needs. It is important that you regularly review your insurance, including excess levels and sum insured values, as they may need to change to ensure that should you need to make a claim, you are adequately insured and get the right outcome.

Talk to your Aon broker about payment options including premium funding which enable you to pay your insurance in easy to manage monthly instalments.

Contact your local Aon insurance broker or your local branch here or call 0800 266 276.  Having a real conversation can make a real difference, so that we can help protect your tomorrow.

*Source: Insurance Council of New Zealand June 22, 2023)
**Source: Aon Reinsurance Dynamics June and July 2023).

This website contains general information only and does not take into account your individual needs or financial situation. It is important to note that limits, excesses, terms and conditions and exclusions apply to the products and services outlined on this website. Please refer to the relevant policy documents for details of cover, the provision of which is subject to the insurer’s underwriting criteria that apply at the time. Please contact us if you have any questions.