In the face of mounting financial pressure, car owners across Whangārei and beyond are being forced to make tough decisions regarding their insurance coverage. The plight of individuals like Courtney Kitto underscores the challenges many are grappling with as they navigate the realities of escalating expenses.
Courtney Kitto, a resident of Whangārei, highlights the impact of surging costs on her household budget. Alongside a significant spike in grocery expenses, the escalating prices of essentials like insurance have become increasingly burdensome. For Kitto, the necessity of diverting funds to cope with rising fuel costs, particularly in rural areas, has compelled her to cancel her car insurance—an action taken with a heavy heart, as the absence of coverage leaves her vulnerable to unforeseen circumstances.
Similarly, Sammy, another affected individual, shares her struggles with insurance costs, opting to let certain coverage lapse due to steep premium hikes. The lack of viable alternatives exacerbates the dilemma for many, with affordability remaining a critical concern.
Justin Lim, CEO of the comparison site Quashed, sheds light on the alarming trend of escalating insurance premiums. According to Lim, premiums for comprehensive and third-party car insurance have surged by 40 percent year-on-year, with house and contents insurance witnessing a 25 percent increase. The average annual cost of comprehensive insurance for a $20,000 vehicle stands at $1309, while third-party fire and theft cover averages $500—a significant financial burden for many households.
Consumer data further reinforces the staggering rise in insurance premiums, with a notable 38 percent increase observed between 2021 and October 2023. Figures from the Insurance Council reveal a substantial uptick in premiums, with $3.1 billion paid in motor insurance premiums in 2023—an increase from $2.7 billion the previous year and $2.25 billion in 2019.
Lim emphasizes the importance of exploring alternative insurance options to mitigate costs, citing potential savings of between $300 and $600 annually through diligent comparison shopping.
In response to inquiries regarding the factors driving premium hikes, a spokesperson for the Insurance Council cites several contributing factors. These include the proliferation of advanced technology in newer vehicle models, leading to higher repair costs, increased claims stemming from natural disasters such as flooding and cyclones, inflationary pressures on repair expenses, and the state of New Zealand’s road infrastructure. The cumulative impact of these factors underscores the imperative for individuals to reassess their insurance policies and explore potential adjustments in coverage and excess.
While insurance providers like Suncorp and IAG acknowledge the challenges faced by consumers, they defer inquiries to the Insurance Council, indicating a collective acknowledgment of the broader industry trends and the need for concerted action to address the growing affordability crisis in insurance coverage.
