IAG says home and contents premiums will rise for New Zealand customers in areas prone to natural disasters and certain weather events.

The company is reviewing its risk approach, and says it anticipates changes will be made in July to the Earthquake Commission (EQC) Act, which will increase insurers’ exposure to contents claims after earthquakes.

Legislative changes passed in February mean the state-owned insurer will no longer provide $NZ20,000 ($18,908) cover for contents, leaving private insurers to pick up all claims.

However, the EQC building cover cap has been raised to $NZ150,000 ($142,086) from $NZ100,000 ($94,724).

“New Zealand’s environmental risks have evolved over the past few years and we need to take more account of those risks, so we can continue to be there for our customers across New Zealand when misfortune strikes,” EGM Customer and Consumer Kevin Hughes said.

“We will continue to provide solutions and work to make insurance as affordable as possible.”

IAG says premiums for addresses in lower-risk areas may drop.

The insurer will inform customers of premium changes over the next year through annual policy renewal documents.

Customers with policies issued by IAG-owned brands including AMI, NZI and State will be affected, as will clients who obtained cover via banks with ties to the insurer.