Almost everyone has noticed that insurance premiums are on the rise. It’s tempting to, one, blame industry greed and, two, consider doing away with your insurance when you see your bills going up and up.

Neither of these is the right approach.

Let’s look at the issues.

First, why the increasing premiums? Just look at the news headlines to see the pressures on the insurance industry. Cyclones, floods, inflation, labour shortages, the cost of building, and even the war in Ukraine. All of these factors, both locally and globally, impact the cost of insurance.

The frequency and severity of natural disasters means insurers are paying out on more claims than ever.

This problem is magnified by economic pressures. Repairing or replacing clients’ property and possessions simply costs insurers more in today’s environment. It also takes longer because of supply chain constraints, further adding financial burden.

As international reinsurers are increasing their rates to cover their losses, our NZ insurers are paying more for reinsurance to ensure that they have the ability to respond to claims now and in the future.

Furthermore, as the cost of replacing goods increases, you need to make sure that your coverage is fit for purpose. While insurers will automatically adjust your sum insured at policy renewal time, the responsibility falls on you to make sure your coverage is adequate in the event of a total loss. This is a lesson many in the North Island are painfully learning.

Cutting insurance altogether is not the sensible solution, however. We have all read the stories of the uninsured who are left with nothing after the ravages of Cyclone Hale. It is not worth the risk in the face of more frequent adverse weather events.

We urge you to keep your insurance on your most valuable assets. Insure what you can’t afford to lose.

If you find it hard to meet your new premium costs, consider ways to make savings.

Increasing your excess is one of the easiest ways to do this. Having a $2,500 excess instead of a $500 excess will bring down your premium. In the event of a total loss of your home and contents, the $2,500 less you receive will be insignificant compared to not being insured at all!

Some reductions can also be found by paying annually instead of monthly on many policies or bundling policies with one insurer. You can also explore your policies in depth to see if making minor adjustments to your situation (like garaging your car nightly, installing security lights, deadlocking windows etc.) might reduce your premiums.

For advice about how you can keep yourself insured, please contact us at C&R Insurance.