Extreme weather events sparking insurance companies to look at risk-based pricing

September 17, 2018

Commerce Minister Kris Faafoi was asked if some coastal areas could become uninsurable.

Risk-based pricing is already being talked about by some insurance companies, as the possibility of some disaster-prone areas becoming uninsurable grows. 

It comes as the Government looks at the way insurance is carried out in New Zealand, with Commerce and Consumer Affairs Minister Kris Faafoi saying they would keep a "pretty close eye" on rising insurance premiums.

"There's got to be a flip side to this if we're seeing massive increases in people's premiums in higher risk areas."

Road workers in the area are also continuing to struggle with clearing debris from the roads.

When asked by TVNZ1's Q+A host Corin Dann if some coastal areas could become uninsurable, Mr Faafoi said some insurance companies were beginning to talk about risk-based pricing. 

"If you look at Cyclone Gita and Fehi earlier this year some of those coastal towns on the West Coast got hit pretty hard.

"People start talking about the long term future of those places and in amongst that it becomes an insurance debate."

When asked whether there could be a stand-alone insurance regulator, Mr Faafoi said: "There could be but it depends on what comes out of the recommendations during that review."

"The whole system does need a look at."

Finance Minister Grant Robertson said last week Kiwis are being priced out of the insurance market, in particular places such as Wellington and places where there could be natural disasters. 

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