Dunedin residents are facing insurance premium hikes of nearly 20% despite national averages showing a moderation in prices. The Insurance Council reports that premiums nationwide are running below inflation, but this national trend masks significant local variations. For business owners and property investors, relying on national averages for budgeting is increasingly unreliable.
The national moderation in premiums is real, with the average cheapest home premium falling from $1,999 to $1,886 in the year to October 2025. However, this moderation comes after a period of steep increases, with insurance prices still 28.8% higher than three years earlier. Kris Faafoi, the Insurance Council’s former chief executive, noted that while the steep hikes appear to be over, New Zealanders are still paying far more for insurance than they were three years ago.
Dunedin’s higher premiums are due to structural factors, particularly risk-based pricing. Insurers are now tailoring premiums to specific property hazards, moving away from a single national risk pool. In Dunedin, half of all buildings in Dunedin South are at risk of rainfall flooding, a figure projected to rise to 70% by the end of the century. High flood-risk properties are seeing extra premiums averaging over $1,000 a year, with some facing surcharges as high as $9,250.
The city was warned about these risks eight years ago when AMI and State increased premiums for higher-risk Dunedin customers. Then-mayor Dave Cull described the rises as “perfectly predictable” and warned that insurers could eventually withdraw from high-risk areas altogether. Similar patterns have been observed in other regions, with Gisborne’s cheapest premiums jumping 42.1% and Wellington Central and the Hutt Valley up 32.5% in the year to October 2024.
On top of risk pricing, there is a flat cost that all policyholders must bear: the Natural Hazards Commission levy. This levy is set to increase from 16 to 24 cents per $100 of cover, raising the maximum annual levy from $554 to $828 per dwelling. This flat cost is stacked on top of location-specific premiums, adding to the financial burden.
Households are already responding to these costs, with 17% of policyholders dropping house insurance on cost grounds, up from 7% in 2022. For commercial landlords and owner-operators, going uninsured is not an option. Experts advise finding out a property’s actual flood and seismic rating, getting quotes from multiple insurers annually, and factoring insurance risk into lease, purchase, and site decisions.