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Prang it! But the cost of cover is rising
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Motor insurance appears to have become better value, but house insurance has become worse.
Insurance Council figures just released for the year to September 2014 show the trend in the "loss ratio" of the different insurance types which householders are exposed to.
Loss ratios show the proportion of premiums paid by policyholders that the insurers end up paying out in claims.
The lower they are, the more profitable a line of business is for insurers, says Tim Grafton, chief executive of the Insurance Council.
Judged that way house and contents insurance excluding earthquake cover, which is quoted separately, has become worse value.
Insurers paid out $52.15 for every $100 collected in gross house and contents premiums.
That compared to $58.11 the previous year, $59.33 the year before that, and $62.30 the year before that.
There's a lot of money at stake.
In 2014, a combined $1.48 billion was spent on house and contents insurance (minus the earthquake component) up from just over $1b in 2011.
And the claims paid were $609.6 million, compared to $512.2m in 2011.
By contrast, the loss ratio for car insurance has risen.
In 2014, it was $65.99 for every $100 in premiums, up from $64.88 the year before, and $63.52 the year before that.
This is a figure that includes commercial vehicles, though the bulk of policies are on private motor vehicles.
The loss ratios provide a snapshot of improving or worsening value in different insurance lines and Grafton said that competition was one of the factors that would influence their rises and their falls.
New Zealand has one of the most concentrated insurance markets in the developed world with Suncorp (which owns Vero and the majority of AA Insurance) and IAG (which owns AMI, State, Lumley and NZI) having the lion's share, though South African insurer Youi entered the market last year determined to win market share.
It's up to consumers to ensure competition is strong by shopping around, but many of us aren't playing our part.
Each year brings an opportunity to shop around again because general insurance policies are renewable each year, meaning they come to an end and a new policy is created.
But when IAG took over Lumley last year, Suncorp protested saying most people just weren't shifting insurer at renewal time.
It said 80-90 per cent of people simply let their insurance roll over, also protesting that IAG companies would have 60 per cent market share in the house, contents and domestic motor vehicle insurance market.
Shopping around isn't as easy in New Zealand as overseas.
In countries like Britain there are well-developed general insurance comparison websites.
Insurers don't like them because they say such sites turn shopping around into a case of price comparison rather than people weighing up the cover they would get for the price they are paying, and the strength and competence of insurers.
IAG and Suncorp do not provide their pricing to price comparison sites, so the car or home owner has to shop around by going from insurer to insurer looking for the best deal.
It is time-consuming and to do it well, people need to make comparisons of the policy wordings of the different insurers, but for the most part it can now be done without having to make phone calls.
These days most policies can be found online, but specialist insurance brokers are also an option, especially for those who seek insurance advice for covering something like a business.
It can be worth the trouble as monthly premiums can be different.
In a recent price survey Consumer found just over a $36 difference in prices quoted by insurers for a 45-year-old Auckland-based man to insure a 2009 Honda Civic S worth $18,500.
There are also ways of cutting premiums by trimming cover.
Products ratings agency Canstar says those with "comprehensive" policies can choose to trade down to a third party policy.
If you run an older car you can afford to replace, it's worth considering, and though it is legal to drive uninsured, it isn't a good idea. It is important to insure against the risk of running into an expensive car whose insurer decides to sue you to cover the costs of repairing it.
When it comes to car insurance, Canstar encourages car-owners to consider increasing their voluntary excess, and seeing what it does to the premiums they would pay, though warns that policyholders who do this need to ensure that the have the money on hand should disaster strike.
This is something homeowners can consider too, and see how much they can save on premiums to decide whether it is worth it.
Canstar says doing without "extras" like roadside breakdown assistance, a free hire car while your vehicle is being repaired, excess-free windscreen repairs, and guaranteed no-claims bonuses all keep premiums down.
With car insurance having risen in price, it is also worth thinking about insurance when considering what car to buy, or whether to modify it thereby making it more tempting to thieves and hence more costly to insure.
In 2014 we paid a collective $1.5b for motor insurance (including commercial vehicles) up from $1.34b in 2011.
It also recommends looking at getting all your insurance from one place, as this brings multi-policy discounts, but insurers love these, as the more policies you have with them, the more work it is to shift to another insurer.
- Stuff
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