Insurers call for 'urgent' action as climate change drives up home insurance costs
Commerce Minister David Clark is dangling the threat of a market study over the insurance sector as Treasury monitors its charges, but the peak body representing insurers warns an urgent focus on climate change is needed to stop premiums becoming unaffordable. Clark is considering whether the competition watchdog should launch a study into the insurance sector to ensure it is operating as it should but is waiting for official advice. Meanwhile, Treasury is closely monitoring on whether there is a change in prices and uptake after the Earthquake Commission doubled how much it would cover for homes damaged in a natural disaster from $150,000 to $300,000, in the hope it would drive down insurance premiums I'd expect to see that to flow competitively into the market, he said in the Beehive on Thursday. READ MORE: * Insurers play pivotal role in the climate fight * EQC settlement cap and levies to rise next year * Big firms put knife into power market saying Meridian made $3.5b excess profit Treasury will be monitoring that closely, so that sector knows that that's an opportunity that might sit there for them. Having said that, the electricity sector is another one that's been suggested. He said he had signalled to the industry that he was considering the need for a market study to assure consumers the market was operating as it should. The monitoring work includes regular data collection which gives a high-level view on insurance pricing by regions as well as tracking insurance prices across time. Clark, announcing a new open banking initiative expected to increase competition in the sector and drive down fees for customers in the Beehive, said insurance and the electricity sector were two vying" for a market study. But Insurers Council of New Zealand chief executive, Tim Grafton, said there was no need" for a market study calling instead for an urgent focus on measures to reduce the climate change impacts which will support the affordability of insurance. The insurance sector was under pressure with more serious weather events linked to climate change, a shortage of building materials, and supply chain disruptions as well as global reinsurance costs expected to push claim costs higher. All these factors are outside of insurers control. So, a lot needs to be unpicked, the causes sourced and carefully reflected on, he said. The private insurance sector has 89 licensed insurers, more than half of which are foreign owned, with assets of $27 billion 7.5% of gross domestic product. Foreign-owned insurers account for about 85% of these assets, according to the Reserve Bank .