A Masterton District Council [MDC] committee has been told that the council is facing insurance cost headwinds as prices rise sharply.
A report tabled at Wednesday’s MDC audit and risk committee said MDC’s main insurance premiums have increased by more than 30 per cent on last year as risks to the market as a whole increase. All MDC’s insurance cover had been renewed this year from 1 July.
The report, written by MDC finance manager David Paris, said the majority of the insurance programme was bought by a Wairarapa councils group, which spread risk and increased the portfolio of insurance cover to attract better pricing.
Across three main policies, premiums have increased almost 32 per cent for the 2023/24 financial year over the previous year.
The reasons for the increases include higher premiums from insurers as they price in greater risk from the higher number of events and claims they are seeing [locally and globally], and increasing asset values.
“Liability claims against councils are increasing and insurers are increasing premiums as a result,” the report said.
Across three policies illustrated by a graph in the report, premiums are stated to have increased from $1,034,044 to $1,363,912, which is $329, 868 or almost 32 per cent up on last year.
“Increases total close to $80,000 more than the value allowed for when preparing the 2023/24 Annual Plan. These increases have been one of the factors in the need to increase rates for the 2023/24 financial year and will make it more difficult to manage the council’s finances within the budget envelope this year,” the report said.
“One other factor of note is the Professional Indemnity excess for Masterton District Council has increased from $10,000 per claim to $50,000 per claim. This is a direct result of the claims history of the Masterton District Council and linked to the earthquake and structural engineering challenges that the council has been drawn into over the last five years.”
Market commentary from MDC insurance broker Marsh has noted a number of relevant factors impacting the market. These include: the impact of January and February 2023 storms is still to be determined and could exceed $5 billion in claims; global insurance markets are setting double-digit premium increases as they price in higher risks, particularly in high-risk natural catastrophe zones; the 2022 year had been one of the costliest on record for insured natural disasters; inflation is driving up the replacement value of property insured; sourcing new capacity for property cover in the Wellington region has been challenging; and professional Indemnity insurance was challenging to secure for professional organisations such as engineers – with higher premiums and reduced cover.
– NZLDR
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There’s always something district councils with there management people got wrong 🙄. District councils must stop spending rate payers money on unnecessary projects just to appease some minority groups and get back to basics. Government and district councils are out of control the cost of living in New Zealand is getting to high? No wonder everyone is leaving 😕 😪.