4 Nov 2013

State-owned insurance firm 'would diversify market'

2:33 pm on 4 November 2013

A Labour Party proposal for a state-owned insurance company is being backed by an independent actuary.

Johnathan Eriksen says the idea proposed by Labour at the weekend, and New Zealand first earlier, has merit.

Labour Party leader David Cunliffe announced on Saturday the party's plan to plan to establish KiwiAssure if elected to government next year.

The company would be part of New Zealand Post and offer home, contents and vehicle insurance, along with cover for small business plant and equipment.

The Insurance Council says New Zealand already has a responsive and responsible private insurance industry and state ownership could send negative signals to investors.

But Mr Eriksen believes there is room for a state-owned insurance company to give some diversification in a market heavily dominated by Australian owned companies.

He says insurance premiums have risen an average of at least 30% nationally in recent times, due to the Canterbury earthquakes and a tougher building code making new homes more expensive.

Lawyer Andrew Hooker specialises in insurance issues and says people's experience with state-run insurance entities like EQC has not been great. He doubts there would be any improvement with a state-owned insurance firm - other than the profits going to the Government.

Mr Hooker says he would prefer to see tighter regulation of insurance companies.