Press Release – AA Insurance
AA Insurance response to EQC levy increase Auckland, 11 October 2011 – Today the government announced that Earthquake Commission (EQC) levies will treble after 1 February 2012 and will be capped at a maximum of $207 for each customer This is in …AA Insurance response to EQC levy increase
Auckland, 11 October 2011 – Today the government announced that Earthquake Commission (EQC) levies will treble after 1 February 2012 and will be capped at a maximum of $207 for each customer
This is in response to the unprecedented demand on the Natural Disaster Fund from the Canterbury earthquakes. The government needs to replenish this fund to ensure it can look after New Zealand home owners in the event of a large scale natural disaster.
The government adds EQC levies to insurance premiums to fund the Earthquake Commission.
“From 1 February 2012, the total amount our customers pay will rise to meet these new EQC levies,” says Suzanne Wolton, Head of Corporate Affairs, AA Insurance. “This is on top of premium increases from insurers themselves.”
AA Insurance increased its home insurance premiums by an average of fifty percent in May 2011 to take account of the increase in its reinsurance rates. “We did not increase our motor or contents premiums – the reinsurance increase relates to buildings, and we don’t see why car owners should subsidise homeowners and vice versa,” Suzanne continued.
“It is important that you keep your home insured. It is usually your most valuable asset and not many people could afford to rebuild their home without insurance or EQC cover. The issue for our customers is now one of the affordability of home insurance. Many of our customers have already seen increases of an average of $250 as a result of the increase in our reinsurance costs and now they will need to find another $140 on top to pay for EQC cover and GST. This is going to be a major issue for the average New Zealand home owner.”
The EQC levy is set by the government, so it is not something that insurers control, although they collect it on the government’s behalf.
“A year ago an average AA Insurance home insurance customer paid $140 to cover reinsurance, EQC and GST. From 1 February, 2012 that figure will be around $530. That’s an increase of $390,” says Suzanne.
However there are some ways customers can manage insurance premiums to partly offset the increase in EQC levies:
You can choose to have a voluntary excess and receive a discount. Remember, you only need to pay an excess if you need to make a claim, so this can be a good option if you don’t claim often.
• Choose the cover that suits your needs
Consider what you need from your insurance and select the cover that best meets your needs. If you don’t claim often, you could consider reducing your cover to protect you only for the big events and receive a discount on your premium.
• Shop around to find the right insurer for each of your assets
Your car insurance needs are different from your home insurance needs. It is important to put your home insurance with an insurer that has sufficient and robust reinsurance in place and your car insurance with an insurer that has the expertise to get back on the road quickly if you have an accident. Remember – don’t select a home insurer based on price alone.
“From our perspective, as an insurer of homes rather than commercial buildings, it seems that New Zealand’s insurance future will be determined by the attitudes of global reinsurers, and of course these will be shaped partly by when Canterbury’s seismic activity ceases – and whether we have the misfortune to experience another major event,” says Suzanne. “However, our reading is that reinsurance is available currently, but that reinsurance prices have increased significantly.”
Editors’ Note: This information has been compiled and released by AA Insurance.
About AA Insurance
AA Insurance was launched in 1994 and is a joint venture between New Zealand Automobile Association and Suncorp-Metway Limited.
AA Insurance has over 400 staff servicing 200,000 customers and manages over 300,000 policies. Over half of those policies cover motor insurance risks including cars, bikes, caravans and motor homes, and the remainder are house and contents insurance.
In 2008, 2009 and 2010 AA Insurance was a finalist in the unlimited/JRA Best Places to Work Survey in the medium-large workplace category, making it one of the top places to work in New Zealand.
AA Insurance Limited has an A+ (Strong) Insurer Financial Strength Rating given by Standard and Poor’s (Australia) Pty Ltd on 7 January 2011. For further information visit, www.aainsurance.co.nz.
AA Insurance is proud to support youth charity Blue Light as its principle corporate sponsor.