The cost of insurance is rising faster than local pay packets and industry experts say there are risks it could rise further.
Figures from Statistics New Zealand show the cost of insurance has risen by 48% in the last 10 years - far surpassing the 31% rise in wages and the 19% increase in inflation, reports New Zealand Herald.
House and health insurance skyrocketed the most over the last decade. Since 2007, the cost of dwelling insurance has risen by 259% with a 154% rise in the wake of the Canterbury Earthquakes in February 2011. Linked to that is contents insurance which has risen 53% since 2007. Health insurance has risen by 99%.
Mr Tim Grafton, Chief Executive of the Insurance Council of New Zealand, said while the Canterbury earthquakes had been a big driver of the cost rise, there had also been increases in government taxes and levies over that time including a GST rise, the Earthquake Commission levy and the fire service levy.
Mr Grafton said the Canterbury earthquakes had resulted in a recalibration of risk and how reinsurers charged to cover that risk. That meant prior to the quakes consumers were probably paying a lot less for their insurance than they should have been, particularly given policies were open-ended allowing people to claim an unlimited amount for damage, he said. The model has since been scrapped with insurers moving to a "sum insured" model where they will only pay out to a specified amount. In addition, there were the November 2016 Kaikoura quakes.
"In the space of six years 2010 to 2016 this country has had significant losses to earthquakes," Mr Grafton said.
The Reserve Bank has also increased the solvency margin for insurers in the wake of the failure of AMI in 2011, which was subsequently bought by IAG. Now instead of having enough access to capital to cover a once in 200 year event they have to have enough to cover a once in 1,000 year event. Insurers have had to raise capital and buy more reinsurance to cover it, "which comes at a cost as well", Mr Grafton said.
New Zealand's insurance cover is also based on what reinsurers charge and what happens globally affects insurance in the country.
Mr Roger Styles, Chief Executive of the Health Funds Association of New Zealand, said the past decade had seen a doubling of both claims and premiums with around NZ$1.2 billion (US$875 million) paid out last year compared with NZ$600 million in 2007.
"There are several reasons for this, although essentially insurers are funding access to both a greater number and a wider range of treatments than they were a decade ago."
Mr Styles said medical inflation -- the cost of hospital stays and surgical procedures -- had risen much faster than the consumer price index. That accounted for about one third of the cost rise while new procedures was another third and the last third was more people accessing elective surgery because of difficulties accessing the public system quickly.