Understanding your premiums

You may have noticed some changes to your premiums over the last couple of years – and you may be wondering why they’ve come about.

Lumley a business division of IAG New Zealand Limited’s (IAG) strong underwriting and pricing disciplines mean customers pay a fair price for their insurance cover. Because IAG regularly reviews its pricing, customers’ premiums could change every year based on a number of reasons.

  • Paying claims;
  • Securing reinsurance;
  • Running the Lumley insurance business;
  • Collecting the required levies and taxes for the Government.


To work out the cost of your claims and cover, IAG combines 100 years of experience in insurance with the information you tell us about your home, contents and/or car. Your premiums are also affected by claims inflation (the number and severity of claims made over a year) and your own claim history. Excesses and discounts can also nudge your premium up or down, as do any large purchases you’ve added to your policy, changes in sum insured, or changes in circumstance.


Everyone needs insurance – even insurance companies. The Reserve Bank decides how much reinsurance IAG need to buy each year, and this is heavily influenced by the occurrence – and likelihood – of natural disasters. The number of natural disasters over the past few years has caused reinsurance costs to rise.

New Zealand can be a risky place to live, with its floods, storms and earthquakes. And some places are riskier than others. In the past, the risk difference between provinces hasn’t always been fully reflected in the price you pay for your insurance. But IAG have learned a lot about environmental risks in New Zealand over the past few years and how they’re growing. So if you live in an area at high risk of a natural disaster, you could pay more for your home and or contents insurance than a like-for-like home in a lower risk area.

Business costs

Inflation affects everything – including the running costs of The Lumley Insurance business and the capital IAG need, to provide you with comprehensive cover. For example, more people are carrying personal electronic devices every year, so contents claims for these items have increased significantly. More technologically advanced cars, needing more expensive parts, are another ever-rising cost.

Tax and levies

GST is charged at 15% of the total amount owing, so any increases to your insurance premium, including any levies charged, means you’ll also be paying more GST. Levies are charges that are applied to insurance premiums and paid to the Government. They help cover the cost of services that benefit everyone, such as the Earthquake Commission (EQC) and Fire and Emergency New Zealand (FENZ).

Earthquake Commission (EQC) Levy

The EQC is a New Zealand Crown entity that provides insurance for residential buildings and defined areas of residential land covering damage from natural disasters like earthquakes, volcanic eruptions, tsunami, natural landslips and hydrothermal activity. It also insures for fire resulting from any of these natural disasters, and land damage from storms or floods. Most people will automatically have EQCover if they have a current home insurance policy.

EQCover is funded through the EQC levy which is automatically included in the premium you pay for home insurance, and for some commercial property policies with residential components*. IAG collects the EQC levy on the government’s behalf and passes it on to the EQC.

From 1 October 2022, the maximum EQCover amount will increase from $150,000 (+GST) to $300,000 (+GST). The maximum EQC levy will increase from $300 (+GST) to $480 (+GST). 

This change will be applied at your annual policy renewal that comes into effect between 1 October 2022 and 30 September 2023 and will affect Home insurance* premiums from all New Zealand general insurers. This change does not affect the sum insured of your policy.

The maximum EQCover amount and levy applies per residential dwelling. For example, per apartment in an apartment building.

If you need to make a EQCover-related claim, your private home insurance policy will cover the costs over and above the EQCover amount, less any applicable excess, up to your sum insured and subject to the terms and conditions of your policy.

*This applies to multi-dwelling residential building policies, such as residential body corporates, and commercial property policies with a residential component, such as retirement villages.

Fire and Emergency (FENZ) Levy

Responding to rural and urban fires across New Zealand, Fire and Emergency New Zealand is mainly funded by levies on property insurance. IAG collect this levy as a part of your home and contents insurance premiums and pass this on to FENZ. The amount IAG collect is set by FENZ, so this may also vary depending on how much they tell IAG to collect.

We’re here to help

It’s important that you have the right level of cover to suit you, especially if you need to make a claim. Over time, the things you own and your circumstances can change, so it’s a good idea to review your cover from time to time.

To discuss your premiums further, please contact us, or reach out to your broker.

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