Households across New Zealand are experiencing sustained financial pressure as the cost of living continues to rise, with insurance premiums forming a significant part of the burden.
Many families are finding it increasingly difficult to manage essential expenses, according to recent data and interviews with consumers.
In an interview with RNZ, Helen Gilby, a Christchurch resident and single parent, described the challenge of keeping up with rising costs.
“Basic costs, which you can only rearrange and cut so many times,” she told RNZ. “When I compared my power bills from May to July this year with last year, they’d gone up about 10%, and my insurance renewal was around 20% higher across my policies."
Gilby also reported that her grocery budget no longer covers as much as it previously did, and she has considered suspending her KiwiSaver contributions to address immediate needs, despite concerns about her long-term financial outlook.
She explained that for those receiving government support, increases in income do not always translate to higher take-home pay due to abatement rates.
She calculated that a solo parent moving from $100,000 to $130,000 in annual income would see only a modest weekly increase after taxes and adjustments.
Data from Infometrics indicates that since 2020, all income groups in New Zealand have faced at least one year where living costs outpaced income growth.
In the period following the COVID-19 pandemic, lower-income households were most affected, but more recently, higher-income earners have also experienced increased pressure.
In 2022, the lowest-earning quintile saw their incomes rise by 9% more than their living costs, while the highest earners experienced a 4.9% increase.
However, in 2023, the lowest earners’ expenses outpaced income by 3.5%, and the highest earners faced a 1.8% gap.
By 2024, income growth for the top two quintiles lagged behind cost increases by 1.7% and 1.3%, respectively.
Insurance premiums have become a substantial component of household budgets.
According to Quashed, a comparison platform, the average New Zealand household now spends $5,154 annually on a standard mix of home, contents, and car insurance, representing a 6% increase over the past year. Households with multiple vehicles often face costs closer to $6,000 per year.
Over the past three years, the total cost of household insurance has increased by $1,610. House insurance premiums rose by $978, comprehensive car insurance by $386, and contents insurance by $246.
Regional differences are evident:
Car insurance premiums have declined in some areas, with Canterbury seeing a 6% decrease, Wellington 5%, and Auckland 4%.
Contents insurance trends varied, with increases in Canterbury, a slight decrease in Auckland, and little change in Wellington.
Consumer NZ’s recent report highlights ongoing affordability issues. The organisation found that house insurance premiums have increased by more than 900% since 2000.
By 2025, 17% of households had cancelled insurance cover due to cost, up from 7% in 2022.
Insurance now ranks among the top four household expenses, alongside housing, food, and debt.
Consumer NZ also reported that consumers are frustrated by limited transparency in pricing models and restricted opportunities to compare policies, particularly for high-risk properties.
According to the group’s sentiment tracker, 67% of respondents identified the cost of living as a top-three concern, with food and power bills also cited as major issues.
