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Understanding how premiums are calculated

Our general insurance policies are underwritten by IAG New Zealand Limited (IAG). To ensure customers pay a fair price for insurance cover, IAG regularly reviews its pricing. This means your insurance premium (the amount you pay for your policy), can change from time to time. 

Premiums for home and contents insurance are made up of different elements, and only part of your premium goes toward the insurer. Your premium also includes costs like government taxes, levies, and reinsurance. 

Base premium

The cost of your cover and claims are based on the information you tell us about your home, contents, and/or car. 

Premiums are affected by your choice of excess, any large or valuable purchases you add to your policy, changes in sum insured, or changes in circumstance.

Your premiums are also affected by your claims history and claims inflation (the number and severity of claims made over a year).

Business costs

Inflation affects everything, including insurance premiums. For example, more people are carrying personal electronic devices every year, so contents claims for these items have increased significantly. More technologically advanced cars, needing more expensive parts, are another ever-rising cost.


Everyone needs insurance – even insurance companies. The Reserve Bank decides how much reinsurance IAG needs to buy each year, and this is heavily influenced by the occurrence – and likelihood – of natural disasters. The number of natural disasters in New Zealand over the past few years has caused reinsurance costs to rise.

New Zealand can be a risky place to live, with its floods, storms and earthquakes. And the risk of such events is higher in some places than others. So if you live in an area at high risk of a natural disaster, you could pay more for your home and/or contents insurance than a like-for-like home in a lower risk area.


Goods and services tax (GST)

GST is charged at 15% of the total amount owing so any increases to your insurance premium, including any levies charged, means you’ll also be paying more GST.


Levies are charges that are applied to insurance premiums and paid to the Government. They help cover the cost of services that benefit everyone, such as the Earthquake Commission (EQC) and Fire and Emergency New Zealand (FENZ).

Earthquake Commission (EQC) levy

EQC is a New Zealand Government department that provides natural disaster insurance for residential homes and land if you have a current private insurance policy. Insurance companies like IAG collect this levy as part of your premiums on behalf of the EQC, who set the amount that is collected.

Fire and Emergency (FENZ) levy

FENZ is an integrated fire and emergency service organisation under which urban and rural fire services are combined. It is mainly funded by levies collected on property insurance. Insurance companies like IAG collect these levies as part of your premiums on behalf of FENZ, who set the amount that is collected.

If you need help, call 0800 808 618.