A new Consumer NZ report has raised concerns about the future of home insurance in New Zealand, warning that affordability issues are already pushing some households out of the market.
The organisation noted that, as extreme weather risks rise, cover could become increasingly limited or unavailable in parts of the country.
House insurance premiums have grown sharply in recent decades. Stats NZ figures show a 916% increase since 2000.
The survey also found that a growing share of households are going without insurance altogether, with 7% dropping cover due to cost in 2022 and 17% doing so by 2025.
Insurance is now among the four biggest financial pressures for New Zealanders, following housing, food, and household debt.
Trust levels in insurers were also found to be low, with common frustrations relating to slow claims handling, settlement delays, and a lack of clarity about how prices are set.
Risk-based pricing was highlighted as a particular point of tension. Many policyholders are unable to see the data underpinning their premiums, making it difficult to challenge assessments.
Limited opportunities to compare policies online, especially for homes in high-risk locations, further reduce consumer choice.
Consumer NZ also observed that insurers’ profits have rebounded despite large payouts after recent weather events, noting that trans-Tasman insurers appear to earn higher margins in New Zealand than in Australia.
The report put forward several recommendations for policymakers and industry participants.
These include a government-led national climate adaptation framework and further scrutiny of home and contents pricing.
Consumer NZ suggested that the Financial Markets Authority (FMA) should examine fairness in premium setting, while the Commerce Commission should study the level of competition across the sector.
For insurers, the report recommended clearer explanations of how risk drives premium changes, more transparent communication of policy updates, and improvements in claims management.
It also encouraged the development of comparison tools and incentives for homeowners to reduce exposure to flooding and other natural hazards.
A further proposal called for expanding the mandate of the Natural Hazards Commission (NHC) so that it can include cover for flood losses and extend protection for at-risk communities.
The report was released alongside new climate modelling from Earth Sciences New Zealand and the University of Waikato, which suggests rainfall associated with tropical cyclones could increase by as much as 35% by 2100 if emissions remain high.
The research team analysed more than 1,800 years of simulated cyclone activity using higher-resolution models than those previously available.
While the total number of storms is not expected to rise, stronger systems – Category 4 and above – are projected to become more common, with heavier rainfall and stronger winds.
The findings reflect the effect of a warmer atmosphere, which can hold more moisture and fuel more intense downpours when storms occur.
Although New Zealand only experiences one or two ex-tropical cyclones each year, recent events have underscored their impact.
Cyclone Gabrielle and the Auckland Anniversary floods in 2023 caused an estimated $14.5 billion in damage, with insurers paying $3.8 billion in claims.
The release of the research coincides with Willis’s latest Natural Catastrophe Review, which projects insured losses above US$100 billion worldwide for 2025 – continuing a run of seven consecutive years above that threshold.
Major events this year have included the Los Angeles wildfires, with insured losses exceeding US$40 billion, wildfires in Japan and South Korea, record tornado activity in the US, and Australia’s first cyclone landfall near Brisbane in five decades.
An active North Atlantic hurricane season is also forecast, adding to reinsurers’ concerns about the persistence of high catastrophe losses worldwide.
