Wellington woman's insurance premium skyrockets over 300 per cent

Properties located in high-risk areas in Wellington face a lift in insurance premiums. Photo/123RF.

A Wellington woman was shocked this week upon discovering her insurance premium had increased over 300 per cent.

Posting to the Wellington Facebook group I love Karori, Ursula Egan said that her annual house insurance premium, provided by Tower, had increased from $2200 to $7200.

She said that she had not changed the details of her insurance and that the change simply came into effect when her account rolled over to a new year.

Egan said that she had contacted two brokers to find out if she could a cheaper premium.

The Herald is waiting for confirmation from Egan in regard to whether she has found an alternative insurance provider.

This follows on from Tower's decision earlier this year to employ risk-based pricing for natural hazards, charging more for properties in high-risk areas.

The move meant that thousands of home owners who live in high-risk earthquake-prone areas and insure via Tower faced hikes in their premiums while those in low-risk areas like Auckland got a cut when the changes came into effect on April 1.

Tower chief executive Richard Harding told the Herald at the time the aim was to bring an end to cross-subsidising, which sees low-risk regions such as Auckland pay more to subsidise the premiums in high-risk regions such as Wellington, Canterbury and Gisborne.

"The New Zealand economy faces a range of climatic and geological risks, which in the long term could see reinsurers charging more, or restricting cover in certain areas," Harding said.

"We believe risk-based pricing is the fairest way to distribute the costs we face as an insurer and is an important step in better educating the community on the risks facing New Zealand."

At the time of Tower's announcement, there was industry speculation that other insurers could also be tempted to follow Tower's lead.