IAG customers in areas that are high-risk for natural disasters or weather events will face higher premiums under changes recently announced by the insurer.

IAG, which operates the State, AMI, NZI and Lumley brands as well as offering insurance through major banks, is moving to a risk-rating approach.

Customers who live in areas that are more prone to natural disasters and severe weather events will likely have to pay more for insurance.

Those who live in areas that are less prone may pay less. 

IAG’s executive general manager customer and consumer Kevin Hughes said premiums needed to reflect the level of risk and costs associated with providing insurance cover, including reinsurance costs.

“Every customer and every property is different and so every policy will be affected differently, whether that be a price increase or decrease.

 “We realise these changes will be a challenge for some customers and we will work through this with them.

“There are a range of options available to customers to make this easier, including taking a higher excess or adjusting the frequency of payments to suit them.

“We will continue to provide solutions and work to make insurance as affordable as possible.

“New Zealand’s environmental risks have evolved over the past few years and we need to take more account of those risks, so we can continue to be there for our customers across New Zealand when misfortune strikes.”

There will also be changes as a result of EQC moves.

EQC will cover more of the costs for rectifying damage to residential homes.  From July 1, EQC will pay up to $150,000 plus GST per residential home.  But EQC will no longer provide cover for contents.  IAG will provide this to its customers who have contents insurance. 

Insurance expert Michael Naylor said the extent of premium changes would depend on how deep the isurer’s algorithms went.

He said it seemed to indicate it would use data based on individual building type and ground type.

“The results for individual properties could vary widely even in areas with the same general risk level.”