Insurance premium hikes hitting businesses hard
The Wellington Chamber of Commerce showed the impact that rapidly rising insurance premiums are having on businesses and commercial property owners in Wellington during today’s Mayoral Forum on insurance issues.
"Today’s well-attended event heard the deep level of concern in Wellington about the ongoing viability of insurance for people and businesses who need it, because they have been either refused policies or nearly priced out of the market," says Chief Executive John Milford.
The Mayoral Forum on Insurance was called by Wellington City Mayor Justin Lester and attended this morning by over 100 decision-makers including Finance Minister Grant Robertson, Earthquake Commission Minister Dr Megan Woods and Commerce Minister Kris Faafoi.
"We welcome the Government’s commitment today to lead a broad taskforce investigating the city’s economic and infrastructure resilience. The Chamber looks forward to contributing and championing the views of our members.
"The Mayoral Forum was a great opportunity for the Chamber to illustrate how insurance premiums are increasing commercial rents and putting the squeeze on businesses’ fixed costs," says Mr Milford.
"Insurance premiums in Wellington rose after the Canterbury earthquakes, rose again after the Kaikoura earthquake, and are now rising yet again due to insurers adopting ‘risk-based’ pricing.
"There appears to be no end to rising premiums.
"One example is a typical commercial office block in Wellington that has seen its insurance premiums rise 220 per cent in just four years, from $99,000 in 2016 to almost $320,000 this year.
"For commercial property owners these cost increases are staggering and are directly leading to rising rents for businesses in Wellington city.
"For business tenants, rising insurance premiums and rents are just one of the many factors driving up their costs.
"Insurance comes on top of recent Fire Service Levy rises of 40 per cent, as well as forecast rates increases by both the Wellington City Council of 3.9 per cent and Greater Wellington Regional Council of 8.9 per cent for next year alone.
"The driver of rising council rates is the decision by both councils to increase the multipliers they apply to businesses.
"Already Wellington City businesses pay the highest proportion of rates of any town, city, or region in New Zealand - nearly 50 per cent higher than in Auckland and nearly 100 per cent more than in Hamilton.
"Wellington City is going from a 2.8 multiplier to 3.25, and Greater Wellington is going from 1.0 to 1.7 - businesses already pay a 7.0 multiplier to the regional council for public transport services.
"Wellington’s thriving central city relies on the liveliness that businesses bring. Ever-escalating costs puts these businesses at risk."