Half of New Zealanders now worry they will not be able to keep paying for house insurance, according to a new survey from one of the country’s largest insurers, as a run of rising premiums collides with stretched household budgets.
The figures come from IAG’s annual insurance survey, run by polling company Ipsos in May 2026 and based on responses from 1,000 people. IAG, which trades under the AMI, State, NZI, Lumley and Lantern brands, has run the survey every year since 2018. This year it found 50 percent of people worried about being able to afford cover in future, while 80 percent said home and contents insurance was becoming less affordable. The results were reported by RNZ and interest.co.nz.
The worry is grounded in real price rises. Treasury monitoring data showed average house insurance premiums climbed by about a third between October 2022 and October 2025. For a household already squeezed by higher mortgage rates, rates bills and grocery costs, an insurance bill that has jumped by hundreds of dollars a year is one more fixed cost that is hard to trim.
Most people surveyed linked the increases to a rising risk of severe weather. More than 90 percent said they expected weather-related disasters to become more frequent and severe, and 69 percent believed that growing risk was a reason premiums were going up. About 35 percent named it as the main cause. The survey records what people think is happening rather than settling the question of what is driving prices, and insurers point to several factors at once. The biggest is the cost of reinsurance, the cover that insurers themselves buy to protect against large payouts. Global reinsurance prices rose sharply after a string of expensive disasters overseas, and those costs flow through to New Zealand policies regardless of local weather.
A second factor is the slow shift from flat pricing to risk-based pricing. For decades, insurers charged broadly similar premiums across whole towns and suburbs. Increasingly they price each address according to its own exposure to flooding, coastal erosion and earthquakes, using more detailed hazard mapping. That pushes premiums up steeply for the most exposed homes and can, in a small number of cases, make cover hard to get at all. The survey suggests people broadly accept the logic, with 74 percent saying they were comfortable with higher premiums for high-risk locations and 55 percent accepting that cover might be declined in the riskiest spots. At the same time, 56 percent said they were not willing to subsidise cover for high-risk areas through their own premiums.
One clear message from respondents was a demand for plain information. Ninety percent wanted insurers to be clearer about where they would and would not offer cover, and 89 percent wanted a clearer breakdown of what makes up a premium. Bryce Davies, an IAG spokesperson, told RNZ there was “some work that we need to do as an industry to kind of calm some people” worried about losing access to cover.
IAG used the findings to press for a longer-term plan. Chief executive Phil Gibson said the current path was not sustainable. “It is clear we cannot continue as we are,” he said, while adding that “the challenge we face is not insurmountable”. Gibson called for a long-term road map from central government to reduce the country’s exposure to natural hazards, floating a 15-year horizon for the work. That points to decisions about where new houses are allowed to be built, how stopbanks and other defences are funded, and whether some properties in repeatedly flooded areas should eventually be bought out rather than rebuilt.
Survey respondents leaned the same way. Between 70 and 80 percent supported limiting new development in high-risk areas, tighter zoning rules and more spending on protective infrastructure. Sixty-one percent wanted the government to do more to reduce hazards, and 84 percent wanted insurers working alongside government rather than leaving households to face the bill alone. The share of people who saw the government as carrying the biggest responsibility for managing climate risk had more than doubled since 2018, from 25 percent to 58 percent.
The pressure is not new to officials. A Cabinet paper earlier this year set out options for managing insurance affordability and the prospect that some homes could become uninsurable, and emeritus professor Jonathan Boston of Victoria University of Wellington has argued for years that the country needs a clear framework for managed retreat from the most exposed land. The hard part is cost and fairness, deciding who pays when a home can no longer be protected, and how much warning owners get before a buy-out or a refusal of cover changes the value of their largest asset.
For now, the practical advice for homeowners is unchanged. It pays to shop around at renewal, to check that the sum insured still reflects the real cost of rebuilding, and to ask an insurer directly about any hazard rating attached to a property before buying. Premiums are unlikely to fall, but the survey shows most New Zealanders want a system that is honest about the risks and shares the load rather than leaving it on the kitchen table one bill at a time.
What has happened to your house insurance bill this year, and do you think the government should be doing more to manage the risk? Share your view in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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