Only 59% of Kiwis aged 18-34 have car insurance, possibly because the cost for under-25s is so high, says the Commission for Financial Capability (CFFC), a government funded entity which builds financial capability to equip retirees.
Noting that in Britain, devices placed in cars to assess safe driving have reduced many young people’s insurance premiums by up to 40%, the CFFC is challenging New Zealand insurance companies to consider a similar initiative to make it more affordable for young Kiwis to have insurance when they’re on the road, and to drive more safely.
The Commission says that its research shows that New Zealand ranks low for insurance cover among OECD countries. The country ranks 35th out of 45 countries on insurance spend at 2.5% of GDP, compared to the OECD average of 8.4%. New Zealand sits well below the US in 6th spot at 11.2%, the UK in 9th at 9.2%, and Australia in 21st at 4.9%.
The CFFC’s Financial Capability Barometer quarterly survey of 2,000 New Zealanders finds that only half of those surveyed could count on insurance to cover property loss due to theft, serious damage to their home through disaster or weather, or car crash or major breakdown.
Income protection was one of the least favoured forms of insurance, with only 15% of Kiwis taking it out, despite 42% saying their income varied ‘a bit’ or ‘a lot’.
New Zealanders also tend to under-insure their homes. A 2016 Treasury report estimated 85% of houses were under-insured by an average of 28%, where the insurance policy would not pay out enough to rebuild a home fully.