Tower insurance customers with high risk earthquake-prone homes will soon have to start paying hundreds of dollars more in premiums.
The company has announced that thousands of its customers started paying hundreds of dollars more from 1 April for home insurance as it switched to risk-based pricing.
Its chief executive Richard Harding said those living in Wellington, Napier and Gisborne would face the worst of the increases.
"Five hundred odd will get significant increases over $2000 and the rest [1.5 percent] will get increases over $250," he said.
Mr Harding said the move to risk-based pricing was a fairer, more equitable way to operate.
He said regions at greater risk had already been paying more for house insurance, but this doesn't cover the full cost.
Mr Harding said other customers are paying too much.
"It takes about six Auckland households to subsidise each Wellington household in terms of insurance."
"The benefit of [the move] will flow to those people in Auckland who have lower risk properties and elsewhere in the countryside."
Mr Harding expects Tower would lose some customers but he expects other insurance companies would also follow suit.
Insurance giant IAG - which manages State, AMI and New Zealand Insurance and underwrites for Westpac - said there had been no decision to make the same move but it continued to review its business and position.
But Mel Bourke from the claimant advocacy group EQC Fix said if that became a trend, she was worried residents living in quake prone locations would simply forgo insurance altogether.
"What we might see is more people uninsured - that would be concerning," she said.
"If we're now looking at Wellington or Christchurch as high earthquake prone and people literally cannot afford insurance, that is a downside."
Ms Bourke said there should be more protections in place from the government for those people.
"If we have a large-scale disaster and percentages of uninsured homes has increased, then we've got incredibly vulnerable people who will need support," she said.
"We can sit here and be brutal and say, 'they didn't have insurance so too bad', but the humanitarian aspect in that still needs to be addressed."
Insurance Council chief executive Tim Grafton said there needed to be a combined response from central and local government as well as insurers to deal with areas prone to natural disasters.
"The sit-on-your-hands and do nothing option is not the way forward," he said.
"[We need to] sit down and think what are the adaptive pathways forward where we can look to make short to medium term measures to protect property."
Last month, the government announced moves to increase the maximum payout and the length of time to make a claim.
The legislation, expected to come in to effect on 1 July 2019, lifts the maximum payout from $100,000 to $150,000.
It will also change the time within which a claim must be lodged from three months to two years, and removes contents cover.
At the time, EQC Minister Megan Woods said she wouldn't be surprised if further changes were made.