Wellington's biggest insurance provider says it is rejecting more applications than it accepts in the capital - but insists it does not have a blanket policy to say no to new home and contents customers.
People living in Wellington say they have struggled to get property insurance since last year.
IAG, which covers more than half of the Wellington market, today confirmed it had been more conservative in taking on customers since the Kaikōura earthquake and had changed its policy to prioritise existing customers over new ones.
IAG spokesperson Kevin Hughes. Photo: RNZ
"Previously we were focused on supporting where we had the house risk to make sure we were supporting the house. We've changed that to supporting the customer. Wherever IAG customers are going or moving to, we're making sure we're providing insurance to them as a priority," IAG spokesperson Kevin Hughes said.
"We're still available for non-customers if the circumstances are appropriate."
Mr Hughes said IAG did still plan to grow its customer base overall in New Zealand - but only in certain areas.
"Climate change and coastal erosion will always play a part in whether we think there's a risk there."
The decision by IAG to limit its home and contents policies in Wellington wasn't a surprise to head of the Insurance Council - who said it was a natural response to the large earthquake risks in the city.
Citing the impact of the Christchurch and Kaikōura earthquakes, chief executive of the Insurance Council Tim Grafton said insurers could "increase price, not accept the risk or approach it in a different way by limiting their exposure to a risky market".
"There is absolutely no secret about the risks here in Wellington," he told Checkpoint.
The Insurance Council's Tim Grafton. Photo: Supplied
"There's not a lot of appetite for people to be trying to get more and more of a very risky market.
"So, we're seeing situations where IAG has indicated that it's not looking for strong growth in Wellington ... other insurers may be in a different position and may want to grow."
However, there were parts of the country that we at more risk, not just seismic risk, but coastal areas too, he said.
Mr Grafton said New Zealand had high levels of insurance penetration - much higher than other parts of the world with similar risks like California, Japan, Canada.
Building standards were non-compliant with respect to nonstructural seismic restraints, he said. While it was focused on life safety, it ignored building resilience, in that the buildings being able to function or house people after the events.
"If we're thinking that living in one of the riskiest countries on earth for earthquakes that we can rely either on the private insurers or the government to pay for everything, then we need to have a serious conversation about that, because, then we would never become a resilient country."
