The Government reported a $9.1 billion hit from the Canterbury earthquakes. Photo / Sarah Ivey
The Government reported a $9.1 billion hit from the Canterbury earthquakes. Photo / Sarah Ivey
Some homeowners will struggle with increased Earthquake Commission levies but the trebling of the charge to $207 a year is the fairest way to meet quake costs, Finance Minister Bill English says.
The rise, which takes effect in February, means that with reinsurance related premium increases, the cost of insuringan average Auckland home - excluding contents - will rise from $140 a year to $530, AA Insurance says.
Mr English yesterday announced levies were to treble to help meet the commission's running costs, to pay for claims from the Canterbury earthquakes and to rebuild the Natural Disaster Fund which was wiped out by the quakes.
The increase was revealed as the Government reported an $18.4 billion deficit for the year to June, much of it caused by a $9.1 billion hit from the quakes.
The levy - which homeowners pay as part of their home and contents insurance premiums - would rise from $69 a year to $207 a year for most.
Mr English said the increase was "the fairest way" to ensure EQC could meet its long-term costs and most homeowners' bills would rise by "a relatively small increase" of about $2.65 a week.
"It will put a bit more pressure, particularly on some homeowners who are full stretched on servicing their mortgages.
"But we think under the circumstances, in order to shore up the EQC's finances, it's an extra bit that households will be able to handle."
AA Insurance head of corporate affairs Suzanne Wolton said the levy increase was expected "but it does pose some significant challenges for home insurance customers for whom the affordability of home insurance is now becoming an issue".
AA Insurance customers' premiums for building insurance had risen about $250 because of higher reinsurance costs, "now they've got to find another $140".
Labour's finance spokesman David Cunliffe said his party supported the rise:
"The country can't afford not to have an EQC, it needs to be built back up and the fairest thing to do is to increase that levy".
Big shake-up
$207 New annual ECQ levy for most homeowners from February next year. Up from $69.
$530 The levy, reinsurance and GST component of the average Auckland home insurance bill. Up from $140.
$490m The likely shortfall in EQC funds to meet Christchurch quake claims which must be paid by the government. Down from $1.2b.
