AA Insurance has temporarily stopped accepting new home insurance applications in two Canterbury postcodes, citing its exposure limit for seismic risk in those areas.
The company’s move affects properties in Lincoln’s 7608 and Rolleston’s 7615 postcodes, both of which have been identified as higher-risk zones for earthquakes.
Seismic risk exposure prompts policy restriction
Dee Naidu, AA Insurance’s head of underwriting, said the company’s decision is based on internal risk assessments and historical claims data.
“Limiting new policies in high-risk areas is never something we do lightly. It’s a necessary step to honour our commitments to existing customers and uphold our role as a responsible and trusted insurer,” she said, as reported by Star News.
According to Naidu, the insurer regularly reviews its risk exposure and may reopen to new business in these areas if its risk profile changes.
“We regularly review areas where underwriting holds are in place and, if our exposure reduces, we intend to reopen to new customers,” she said.
Customer impact and industry context
Residents in the affected postcodes have reported being unable to obtain new home insurance from AA Insurance.
The restriction does not affect current policyholders. Homebuyers purchasing properties already insured with AA Insurance in these postcodes can continue coverage under the existing policy, provided they meet standard underwriting criteria.
Naidu declined to specify the company’s aggregate limit, citing commercial sensitivity.
The affected areas in Lincoln include parts of Gerald, James, and Edward Streets. Meanwhile, in Rolleston, the restriction applies to the eastern portion between Lowes and Selwyn Roads.
The Greendale fault, which was activated during the 2010 Darfield earthquake, is the closest known seismic feature to these communities.
IAG, which owns AMI, State, and NZI, confirmed that it currently has no similar restrictions in place for new home insurance policies in Selwyn.
Broader insurance market trends and challenges
This development comes as Consumer NZ raises concerns about the future affordability and availability of home insurance in New Zealand.
The organisation’s recent report pointed to rising premiums and a growing number of households opting out of cover due to cost pressures.
Since 2000, house insurance premiums have increased by over 900%, according to government statistics.
Consumer NZ’s survey found that insurance is now one of the top financial pressures for New Zealanders, alongside housing, food, and debt.
The report also highlighted issues with risk-based pricing, limited transparency in premium calculations, and challenges in comparing policies – particularly for homes in higher-risk locations.
Recommendations from Consumer NZ include the creation of a national climate adaptation framework, increased scrutiny of pricing practices, and expanded coverage for natural hazards.
The report also calls for clearer communication from insurers about how risk affects premiums and for the development of online tools to help homeowners reduce exposure to events such as flooding.
Insurance Business NZ
