The Insurance Council of New Zealand | Te Kāhui Inihua o Aotearoa (ICNZ) has acknowledged the government’s decision to maintain the Natural Hazards Commission (NHC) levy at its current rate. The announcement comes as insurance affordability continues to be a key issue for both the industry and policyholders nationwide.
The NHC levy, collected by insurers and included in homeowners’ insurance premiums, is used to fund the Natural Hazard Fund. The fund pays claims related to natural disasters, purchases reinsurance, and supports the administrative functions of the NHC. The levy is currently set at 16 cents per $100 of insurance cover, providing up to $300,000 per event for residential property damage.
A recent ICNZ survey indicated that half of respondents were unwilling to pay an additional $200 per year to further fund the NHC. Thirty per cent (30%) said they would be willing to pay more, while 21% remained undecided. ICNZ chief executive Kris Faafoi said the decision to leave the levy at its current rate is positive for households managing persistent cost-of-living challenges. “We welcome the government’s decision and the importance of keeping insurance accessible. Taxes and levies already account for around 40% of a home premium,” Faafoi said.
Faafoi also noted the role of the NHC in disaster recovery. “New Zealand is one of the most natural hazard-prone countries in the world, and climate change is making these events more severe and intense. The NHC remains a critical component in our ability to recover,” he said.
The government’s decision followed a review led by the Treasury on behalf of Associate Minister for Finance David Seymour. The review, conducted under the Natural Hazards Insurance Act 2023, involved consultation with insurance industry representatives, subject matter experts, and community groups. Options considered included maintaining the current levy or increasing it to as much as 25 cents per $100 of cover, with 24 cents identified as the technical rate.
Finance Minister Nicola Willis addressed the affordability issue. “[Insurance is] a major cost-of-living pressure, and a proposal which sought to add potentially hundreds of dollars to New Zealanders’ insurance bill was one that I thought was appropriate [that] we scrutinise very, very carefully,” she said. She confirmed that the government would continue to review the proposal and present further recommendations to Cabinet.
Affordability challenges extend beyond the NHC levy. Consumer NZ has reported a rise in the number of households discontinuing insurance due to cost, with 7% dropping insurance in 2022 and 17% in 2025. Insurance now ranks among the top four financial pressures for New Zealanders, alongside housing, food, and household debt.
ICNZ has reiterated the need for proactive risk management to maintain long-term insurance accessibility. “ICNZ has continually emphasised that the best way to manage long-term accessibility is to reduce risk across communities before disaster strikes,” Faafoi said.
Faafoi pointed to the government’s National Adaptation Framework, which outlines collaboration among government, councils, the private sector, and communities to address climate-related risks. He added: “We need clear rules, funding arrangements, and responsibilities locked in quickly so that adaptation can move from paper to real projects on the ground. By reducing risk, we protect our communities and ensure insurance remains accessible.”
