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Spending figures reveal NZ coverage gap

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New Zealand spends only 2.5% of GDP on insurance, according to the Commission for Financial Capability (CFFC).

It ranks 35 out of 45 OECD countries for insurance spend, the national financial education body’s research shows. The average is 8.4%.

The US ranks sixth at 11.2% of GDP, the UK is ninth at 9.2% and Australia 21st at 4.9%.

The CCFC’s quarterly financial capability survey found only half of respondents can count on insurance to cover property loss due to theft, serious damage to their home, a car crash or major breakdown. Only about 59% of people aged 18-34 have car insurance.

A 2016 New Zealand Treasury report found 85% of homes were underinsured by an average of 28%, equating to underinsurance of $NZ185 billion ($169.62 billion).

CFFC head and Retirement Commissioner Diane Maxwell says a “she’ll be right” attitude may explain New Zealanders’ “lackadaisical attitude” towards insurance.

Another factor may be cultural expectations that family and community will help in times of hardship.