Insurance Australia Group (IAG) has indicated that it would be taking a "conservative approach to writing new business in Wellington due to the high earthquake risk in that part of the country".
As a result, people living in Wellington approaching IAG for contents insurance may find they are unable to obtain cover.
IAG, which also underwrites the general insurance provided by ASB, BNZ, Westpac and The Cooperative Bank, said the new policy would be implemented across its brands. IAG owns the State, NZI and AMI brands.
"Wellington remains a high risk area with regard to natural perils such as earthquakes and IAG is taking account of that in its pricing and underwriting approach," an IAG spokeswoman said, according t o a report by the news website, suff.co.nz.
"The IAG approach includes a commitment to give first priority to existing customers. However each approach is considered on a case by case basis and IAG is continuing to write new business in Wellington."
Other insurers say they continue to provide cover
Mr Tim Grafton, chief executive of Insurance Council New Zealand, said having one company make this decision did not necessarily mean all others would follow suit. Other insurers may see an opportunity to expand their portfolio of domestic cover in Wellington.
Indeed, some other insurance companies have moved quickly to insist they will still provide home content cover in Wellington. For instance, AA Insurance, Tower and Vero said separately that their approach remained unchanged.
Consumer NZ head of research Jessica Wilson told NZ Radio that its most recent survey showed some insurance companies were clamping down.
"We're seeing insurers either not willing to provide new policies in particular areas or increasing premiums to the point where they're going to be unaffordable for many consumers.
"So that's effectively the insurer signalling it's not willing to provide coverage for the person," she said
Ms Wilson said if people had no private insurance they would not get access to cover from the government Earthquake Commission (EQC) which was set up to provide cover for natural disasters.
"The only exception at the moment where you can get cover direct from EQC is if you've been refused cover in the private market. You have to supply evidence of that, few people have that at the moment," she said.
Wellington faces earthquake risks from multiple fault lines as well as tsunami, flood and landslide risks.
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