The cost of insuring a home has risen six times faster than incomes over the past year and the cost of insuring what’s inside has risen even faster.

Latest figures from Stats NZ show home insurance premiums have increased 24.6 per cent in the year to March, the highest increase since the Canterbury quakes and the 1980s.

Contents insurance premiums have shot up 28.0 per cent, the highest annual increase since 1987.

By comparison, the Labour Cost index – a key measure of wages and salaries – has increased 4.1 per cent over the same period.

Insurance Council chief executive Kris Faafoi says insurers are having to pass on the rising costs of replacing assets, repairing buildings and reinsurance.

“Reinsurance – the insurance that insurers take out – the cost of that has increased somewhere in the likes of 25 to 40 per cent, and I think you’re seeing that reflected in premiums.”

Premiums have fluctuated over the years and even fell for a few years during the mid-1990s.

However, Faafoi says affordability will now be a “continuing” challenge for the sector as severe weather events become more common.

A recent Consumer NZ survey found more than two-thirds of respondents were concerned about the rising cost of insurance. About eight per cent had let a policy lapse due to the high costs.

Campaigns adviser Abby Damen says people should consider other options instead, like increasing their excess, combining policies for a multi-policy discount, and paying up-front annually if that’s possible.

Households can also save money by changing insurer, but many insurers won’t provide an online quote without getting a risk assessment for the area first.

“The best piece of advice would be to not cancel your house or contents insurance completely. There is always the option of the third party or burglary-only or fire-only house and contents insurance. It’s a crucial safety net.”

Faafoi says the insurance industry understands people are finding the rising cost of living very difficult, and rising insurance premiums are part of that.

“Our message to people as if they’re finding those things difficult to speak to the insurers. There are lots of things insurers can do, looking at their policy details to make sure the settings are right for them.”

-NZ Herald.