Sweeping changes proposed to help curb Wellington's skyrocketing insurance premiums

Raising the Earthquake Commission cap to $400,000 and changing MBIE building regulations to focus on saving property as well as life are among recommendations the Wellington Insurance Taskforce wants the Government to investigate.

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The city’s insurance task force is calling for urgent action to make sure Kiwis are covered for the next natural disaster. Source: 1 NEWS

The group, led by Wellington Mayor Justin Lester, held its final meeting today with recommendations for Finance Minister Grant Robertson finalised.

The taskforce was created following concerns from some people in the Wellington region that they were cut out, or priced out, of the insurance market.

“I don’t think we can any longer look at the insurers carrying all the risk and this is now happening with apartment blocks being base-isolated, developers and purchasers of apartments are having to look at covering their own potential risk by upping the standard of construction,” Maltbys quantity surveyor Dave Morriss said.

The taskforce states that approach needs to be taken by property developers and owners in the draft recommendation document.

“We want to make sure that regardless of where you live you're able to get insurance cover at an affordable price, but also we're designing buildings that are resistant to damage, are going to have good functionality after a disaster event,” Mayor Lester said.

“There is no choice, these words need to translate into action.”

The taskforce draft background document states that despite the large economic cost of the Christchurch and Kaikōura earthquakes, the country has not "substantially" changed how it deals with seismic risk and "it does not appear that we have implemented the lessons learned from the Canterbury earthquakes".

The recommendation to investigate increasing the EQC cap to $400,000 from $150,000 to reflect inflation is made with a proviso that the increase should be in line with mitigation measures being put in place.

Insurance Council of New Zealand chief executive Tim Grafton said an increase of that amount is not part of the solution.

“If that’s the case, there’s absolutely no competition in the market for earthquake cover and everybody is paying exactly the same regardless of where they are, regardless of their risk,” he said.

Other recommendations include creating a Wellington risk leadership group to lead action; creating risk modelling for the public to boost awareness and education of risk; investigating if lack of competition in insurance exists and whether the Commerce Commission should investigate; and restricting development in ‘inherently risky’ areas of Wellington or making property developers formally accept the risk.

The taskforce also wants the Government to investigate making building inspections when buying a property compulsory and recommends councils increase information about natural hazards in land information memorandums.

A spokesperson for GNS Science says while it is not known when it will occur, there is a 100 per cent probability of a severe earthquake in Wellington, as well as landslides, flooding, tsunamis and now sea level rise posing potential risks.

The Finance Minister will respond to the recommendations next month.