AMI and State are both owned by IAG.
Another major player, Vero, has said effective from May 1 this year, multi-policy discounts will not be offered on ANZ Asset Protector Home, contents or motor vehicle insurance policies.
People insured with Vero through ANZ had been generally eligible for up to a 15% multi-policy discount.
It said ANZ insurance policies eligible for multi-policy discounts issued before May 1 will keep the discount until their next renewal.
Consumer NZ’s Rebecca Styles said the changes were likely a result of regulatory action and the rise in risk-based pricing.
“Basically, the dropping of discounts could be because of two factors: increasing use of risk-based pricing at properties, and the Financial Markets Authority (FMA) action brought against insurers in recent years for not applying discounts properly,” she said.
The FMA filed proceedings against AA Insurance in 2023 for failing to apply multi-policy and membership discounts.
The same year, Vero was ordered to pay a $3.9 million penalty for failing to apply multi-policy discounts to customers.
Styles said insurers claimed the lack of discounts meant customers would get a fairer price upfront.
“While we haven’t got a clear answer from insurers about what this actually means, we think it’s because the price for house insurance, in particular, is based on increasingly sophisticated natural hazard risk data available for individual properties.”
Consumer NZ said for some homeowners living in low-risk areas this could mean a reduction in price, more than those discounts would have amounted to.
“However, if you live in what’s determined a high-risk area, it’s likely you’ll be paying more.”
Consumer NZ said the lack of discounts meant there was less reason for people to be loyal to one insurer for all their insurance needs.
“Yet, given the cost of house and contents insurance is increasingly determined by the risk factors of your property, depending on what data the insurer uses to calculate the price, there may not be a great deal of difference in house and contents premium between insurers if you switch.”
The consumer group added: “This has potentially big implications on the choice available to consumers in the house and contents insurance market.”
State Insurance said on its website it was making the changes to “simplify our policies and services”.
“We’re introducing brand new home, contents, landlord’s, car and motorcycle policies. With more data at our fingertips, we are able to provide you with a personalised price to suit your individual needs and circumstances, giving you a simple price upfront. ”
An IAG spokesperson said customer needs evolved over time.
“We optimise our pricing to ensure all customers are getting a fair, low price regardless of how many different products they insure with us.
“We utilise our data and expertise to personalise our pricing, and this provides customers with a price upfront that truly reflects the value of our products and policy benefits.”
For both AMI and State, policies offered several optional benefits that enabled customers to customise their insurance, the insurer added.
“Our car, home, contents, and landlord’s policies are flexible and give customers more choice when it comes to their cover to better suit their individual circumstances. This approach also makes insurance easier for our customers to manage and understand.”
The company said removing multi-policy discounts made the sale and administration of insurance easier and simpler.
IAG trades under the AMI, Lantern, Lumley, NAC, NZI and State brands. It also provided general insurance products which the ASB, BNZ, The Co-operative Bank and Westpac sold.
Tower this week still had a multi-policy discount offering savings of up to 20% for people with two or more eligible policies who met certain criteria.
A spokesman for Vero owner Suncorp said from May 1, multi-policy discounts would not be available on any new Vero insurance policies and would be removed on renewal of any existing policies.
“This includes policies written through our commercial partners,” he added.
“This move is part of our focus on pricing and product simplification and will bring our policies into alignment with others in the market, several of which have already removed multi-policy discounts.”
Suncorp Group chief executive Steve Johnston told Markets with Madison last year the company would focus on general insurance and had faced a global reinsurance market that had “been significantly dislocated over the last two or three years”.
It’s been an expensive few years for insurers with Cyclone Gabrielle and numerous storms hitting the country.
Insurance Council data shows there were $2.589 billion in gross written premiums for domestic buildings and contents insurance in the year to September 2023 but the loss ratio was 86% — the highest loss ratio in the last five years.
In 2019 the loss ratio was just 48.79%.
Motor vehicle insurance gross premiums were $3.1b in the year to September 2023 and had a loss ratio of 76%. That compared to 69.4% in 2019.
