Insurance premiums have rocketed up in Wellington on the back of risk-based pricing (Radio NZ)

The Bulletin: True cost of insurance comes into focus

Good morning, and welcome to The Bulletin. In today’s edition: Forum puts insurance costs into focus, two new polls show opinion turning against cannabis legalisation, and Makhlouf saga likely to be aired in parliament today.

A major forum in Wellington has highlighted problems faced by the insurance industry and those wanting to buy their services. It’s a highly relevant time for these discussions to be taking place, both for the city itself, and for the rest of the country, as rising costs and a move to new pricing models leave some saying the market is effectively broken.

The key discussion of the forum is covered well in this story by the NZ Herald’s Tamsyn Parker. A rapid increase in premiums for inner city Wellington has left some businesses shaken – in one example a commercial building saw premiums rise by 220% in the space of just four years. The Insurance Council say there’s still plenty of choice, but as was reported in March by Radio NZ, IAG for one isn’t taking on any new property insurance business in Wellington at the moment – that report was later disputed but it struck a chord with many Wellingtonians who had felt getting cover was impossible.

Basically, with a move to more risk-based pricing, Wellington is a relatively special case in all of these discussions. The risk of a major earthquake has always been there, but since the shake in 2016 there has been a much greater awareness of just how dangerous that could be. Major public buildings, like the city library and the Town Hall, have been closed indefinitely because of the danger. For buildings that have stayed open, the Insurance Council says it is just now that the pricing is much more reflective of that actual risk. A taskforce is being set up in Wellington, but as Morning Report reported this morning, it is because cities have basically been built in the wrong places.

Earthquakes are one thing – they could come at any time and be unexpectedly extremely destructive, as was the case in Christchurch. But with the risks associated with climate change, the long term consequences are much more predictable. This feature from Stuff last year highlighted that around the country, and over the course of decades, tens of thousands of coastal properties will be lost to rising seas and more destructive storm surges. Increasing costs for insurance will be one of the signals of that, likely followed by those properties becoming uninsurable.

And what then? Will the government be forced to step in? Quite possibly, said climate change minister James Shaw back in April. “Shaw indicated that central government may bear some of the inevitable cost of landowners suffering total losses caused by climate change impacts,” reported the NZ Herald. In the short to medium term, the question for everyone is increasingly going to be what they’re willing to pay for insurance. But in the long term, the answer for many will be that it simply isn’t possible.


Following on from yesterday’s two polls, they also looked at legalisation of cannabis. And for advocates of legalisation, neither is good news. Both One News and Newshub surveys found narrow margins against legalisation, which will be put to a referendum alongside the 2020 election. That’s in contrast to previous survey which found the opposite, suggesting public opinion has swung to some degree. Speaking of those polls by the way, Colmar Brunton’s Jason Shoebridge spoke to The Spinoff about what happened there, and why they might have come out so differently for the party vote.


The NZ Herald have had strong ongoing coverage of the Gabriel Makhlouf Treasury saga, and this (paywalled) comment piece from political editor Audrey Young wraps up recent developments really usefully. She has turned the focus directly on the ministers responsible for the various departments involved – finance minister Grant Robertson, GCSB minister Andrew Little, and above them PM Jacinda Ardern. They were all involved in meetings regarding the material being released on the day it happened, and knowing who exactly knew what and when will determine whether any or all of them misled the public. Expect a fair bit of Question Time today to be devoted to the matter.


New Zealand’s soldiers will leave Iraq by the middle of next year, the PM has announced. The deployment is currently on a ninth rotation. It’s part of a mission that has consistently been billed as training Iraqi forces, which is clearly a large aspect of what NZDF personnel are doing. But as Harmeet Singh Sooden wrote on The Spinoff recently, that’s not entirely believable as the only purpose of the mission, given soldiers have also been involved in more operational situations which haven’t been widely publicised.


Unionised workers at Kmart will get bumped up to a living wage, reports Stuff. It will kick in for workers who have been with the company for a year, who will move to $20.55 an hour, with a further increase next year. It’s not the only interesting development in the agreement, which also includes a provision to convert labour hire workers to permanent employees once they’ve been there six months.


I missed this one late last week, but Queenstown’s referendum on a visitor levy has been approved by voters, reports Crux. In fact it was approved by a very wide margin, with 81% in favour among a turnout of 41%. That will now signal to the government that they can proceed with introducing legislation. Mayor Jim Boult has also suggested that some form of sweetener in the form of a commercial rates rebate could be offered to hotels that have to collect it – details are in the article.


Finally, I’m hoping a reader will be able to enlighten me on a detail in this Business Desk story. It’s about submissions to the Environmental Protection Agency on OMV’s plans to drill for oil in the Great South Basin. Here’s the line that I’m confused about: “Most oppose the application citing concern about climate change – a ground the decision-making committee is specifically barred from considering.” Like I say, hopefully someone will be able to clear up why an organisation called the Environmental Protection Agency can’t take submissions on the greatest environmental challenge of our lifetimes into account.


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Right now on The Spinoff: Josie Adams writes about a plan for New Plymouth to become a sister city of Austin, Texas. Amanda Thompson writes a love letter to her crockpot, with a lentil recipe which looks delicious. Alex Casey sighs wistfully and waxes lyrically about the joy-bringing qualities of Manu Vatuvei’s laugh. And author Steff Green writes about the booming prospects in self-publishing for those willing to learn what works.


I’ve always wondered just how much of an impact the red and white MAGA cap had on the 2016 US election. You know the one, that Donald Trump wore constantly in spite of (or perhaps because of) it being heavily mocked, and which has subsequently become a symbol of a whole worldview. Well, Current Affairs has explored the upcoming US election along similar lines, taking the view that Trump won in part because he had more iconic merchandise. Here’s an excerpt about the upcoming Democratic Primary, focused on the fading campaign of Beto O’Rourke.

Beto’s still got one trick up his sleeve: He’s punk rock. Beto was in a punk band when he was younger, and he talks about it, like, a lot. He even claims he’s running a punk campaign. The original punks wanted to break down the separation between performance and audience, smashing barriers to participation by valuing rawness and honesty over technical skill. But Beto means, uh, meeting people in small venues?

Regardless, Beto’s punk pretensions have trickled into his online store, which largely embraces a minimalist black-and-white aesthetic. Most importantly, he’s selling an iron-on patch! It looks like the logo for 1990s WCW wrestling stable New World Order, which is definitely either punk rock or a coded shout-out to the Illuminati.

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The NBA finals series could come to an end today, with the Warriors at risk of losing their crown to the Raptors. This piece from The Ringer is a really good examination of how it has all gone so wrong from a team that looked like it was going to become one of sport’s great dynasties. Of course, you shouldn’t count them out just yet, but odds are the NBA trophy is about to head to Canada for the first time in the competition’s history.


From our partners: A two-tier system of energy use is developing, with those on high incomes much more able to reduce their bills than households on lower incomes. Vector’s Chief Risk and Sustainability Officer Kate Beddoe outlines what the company plans to do about that.


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