New Zealand personal lines premiums gained 20% over the past year, fuelling calls from consumer advocates for more transparency on how prices are calculated, the NZ edition of Taylor Fry’s annual Radar report says.

“Home and contents policies have been hit hardest, with the overall percentage rise for personal lines in addition to earlier increases of 15% for home and 10% for contents in 2023,” director Ross Simmonds said.

Future premium moves could be complicated by insurers looking to bring in more risk-based pricing, which would have the greatest impact on people in high-risk areas.

“Potentially, if we had another year of profitability again, that would start putting some pressure, just competitively, on prices. But the flip side to that argument is that we don’t really have full risk rating, particularly around floods,” Mr Simmonds said.

He says the challenges highlight the need to improve adaptation to natural disaster risks, with the issue gaining attention in reports by the Climate Change Commission and New Zealand’s parliament.

The Radar report shows reinsurance costs are likely to curb premium relief for New Zealanders despite benign weather over the past year.

Mr Simmonds says reinsurers raised rates and the points at which cover begins after the previous year’s severe losses, while global factors such as US hurricanes are expected to continue influencing the market.

“For NZ policyholders, this suggests no substantial relief from insurance premiums due to international factors such as reinsurance costs, for the foreseeable future,” he said.

Reinsurers are looking to reduce their exposure to secondary perils, which in New Zealand are typically floods, Mr Simmonds told insuranceNEWS.com.au.

The report also includes a review of the New Zealand cyber market, where there remains a relatively low take-up of cover by businesses amid growing awareness.

About 8%-10% of businesses are estimated to hold cyber cover, compared with 20% in Australia and about 40% in the US.

Taylor Fry says reasons include cost, the level of penalties under privacy legislation relative to other jurisdictions and a lower perceived threat compared with Australia, where cyber incidents have dominated headlines over the past couple of years.

The report says there is a low level of cyber awareness and confidence among brokers to sell what is a reasonably new product, and some insureds have a “she’ll be right” attitude to cybersecurity.