A recent survey conducted by Interest.co.nz in March has revealed a troubling trend in New Zealand’s car insurance landscape: soaring premiums are leading many individuals to opt for less comprehensive insurance coverage.
According to the latest Consumer Price Index (CPI) data from Statistics New Zealand (Stats NZ), insurance costs surged by 14% for the year ending March 2024. This significant increase reflects the financial strain experienced by many households. However, it does not provide detailed insights into specific insurance categories such as vehicle, home, or contents insurance.
The survey, which collected responses from 562 participants anonymously, aimed to examine the escalating costs associated with car ownership.
Shift from Comprehensive to Basic Insurance
In response to the rising costs, a considerable number of survey participants have transitioned from comprehensive insurance to more basic third-party coverage.
One respondent expressed, “I am considering moving to third-party only given the age of the car, yet the premiums are rising – also skeptical about the agreed value being paid out in full if the car was written off,” as reported by Interest.co.nz.
Another respondent noted, “On a fixed income, last year’s premium price increase necessitated reducing coverage from comprehensive to third-party, fire, and theft.”
Call for Minimum Car Insurance Coverage
Discussions in the survey also touched on the potential for mandatory third-party insurance, with several respondents advocating for legislation that mandates minimum insurance coverage.
One survey respondent commented, “Previous increases were managed by increasing the excess from $500 to $1000, but this year saw no change to the excess, and the premium increased by 22.6%,” according to Interest.co.nz.
High Satisfaction with Insurers
Despite significant feedback on rising costs and coverage adjustments, overall satisfaction with insurance providers remained relatively high. More than 51% of respondents expressed satisfaction, in contrast to approximately 12% who reported dissatisfaction.
The survey also highlighted concerns about loyalty within the insurance market, with many noting the absence of benefits for long-term customers.
Reported premium increases varied widely, with most participants citing hikes between 20% and 30%. Some even reported increases of 40% to 50% compared to the previous year. These rises in premiums are partly attributed to insurers seeking to recover losses from recent events such as the Auckland floods and Cyclone Gabrielle, which have significantly impacted their financial positions.
