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Thursday, June 23, 2011

AMI clients face hefty premium rises after quake

AMI clients face hefty premium rises after quake

5:30 AM Thursday Jun 9, 2011

AMI Insurance, which has faced a crisis after Christchurch's February earthquake, has confirmed that its customers are facing big rises to their premiums.

John Balmforth, AMI's chief executive, said policy holders would face average price increases of up to 20 per cent for dwellings, 15 per cent for contents and 4 to 5 per cent for vehicles.

The increases would be larger for South Island customers than for those in other parts of New Zealand, he said, as policy holders from that part of the country had previously paid lower premiums. 'It's a catch-up situation."

He said there would be an obvious financial impact on customers, but some of AMI's competitors were making even larger increases.

Interest.co.nz has reported that AA Insurance is increasing its home premiums by an average of 50 per cent.
Mr Balmforth said AMI was still tallying the cost of this year's Christchurch earthquake.

It was the city's biggest single insurer.

In April, the Government made available a $500 million support package to the company, to be used in the worst-case scenario of it not being able to cover its own costs.

Insurance Council chief executive Chris Ryan said AMI's premium increases were unsurprising, considering the challenges facing the company in Christchurch and increased rates from international reinsurance providers - the organisations that provide financial backup to insurers.

Similar price increases could be on the way from other firms.

"Every statement you get from one company can be seen as an opportunity for another," Mr Ryan said.

"I wouldn't say that there would be across-the-board movement. I think each company will be making its own decisions."

Mr Balmforth said uncertainty remained over whether AMI would have to draw on the rescue package, which if called upon would result in the state taking an ownership stake in the insurer.

The company would not have a clear idea of the cost of the Christchurch quake at least until August.

ALL RISE
20% rises for home insurance
15% rises for contents insurance
5% rises for vehicle insurance

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