What was in the budget that affects your insurance costs?

Is there anything more tense than a budget lock-in? Hours spent waiting for reports to come flowing out of the locked budget room, information that will shape the way every man, woman and business will function in the next 12 months - and beyond.

It's especially tense in an election year, when we find out if promises were kept, or if we've been given short shift. So what did the 2017 New Zealand budget have for the insurance industry and our clients?

 

Premiums on the rise

The big announcement impacting the insurance industry in New Zealand was an increase to premiums. In the Budget 2017 announcement, Finance Minister Steven Joyce said that the increases would hit the Earthquake Commission (EQC), in order to build up a hard-hit Natural Disasters Fund (NDF) in the wake of Christchurch and Kaikoura's events.

"We need to start the process of replenishing the fund so it is available to contribute to future natural disasters," Joyce stated.

  • Premiums for home and contents will rise from 15c per $100 of cover to 20c per $100
  • Maximum annual payment of $276

As Joyce points out, this is a hike of as much as $69 per annum for personal or home insurance premiums. Quakes minister Gerry Brownlee believes that with this increase to the levy, the NDF can be refilled within 10 years instead of the expected 30-plus years. 

Coupled with the almost 40% increase to the Fire Service Levy which we have written about previously, the hike will be noticeable when you come to review your insurances.

 

No relief for New Zealand businesses

Across the globe, governments have been slashing corporate taxes in a bid to boost business growth. Even our neighbours in Australia have done this in recent years, with small business tax dropping significantly last year. 

There was no such change for New Zealand business in the 2017 budget. Corporate tax remains the same - something Deloitte CEO Thomas Pippos thinks won't last. 

"There is no doubt however, that with the passage of time and assuming we don't face future shocks, that all tax rates will be heading down under the current Government," he noted.

"It's just maths."

For now though, Kiwi businesses will continue as usual - as will the insurance broker industry. There was little in the budget for businesses and their insurance really with a much stronger focus on tourism, roads, rail and families - even housing didn't get a defining measure in the announcements. 

 

If you have any questions about whether your personal or business insurance needs will change because of the budget, talk to the team at Rothbury


Allan Henderson

About the Author

Name: Allan Henderson        

I’m the Leader - Business Development & Sales for Rothbury’s Wellington branch. I have over 20 years experience in the insurance industry and get a kick out of finding insurance solutions for my clients.

I enjoy leading and…
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I’m the Leader - Business Development & Sales for Rothbury’s Wellington branch. I have over 20 years experience in the insurance industry and get a kick out of finding insurance solutions for my clients.

I enjoy leading and developing people (including my 3 children although they may not appreciate my leadership skills at times – or ever for that matter) and am part of a really experienced team who have a lot of fun here in Wellington.

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Disclaimer: The articles published on this blog are designed to provide general information and do not take into account any individual’s particular circumstances. We recommend that you obtain professional advice on your requirements before making any decision about a financial product.
 


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