Taxi drivers are warning that they may have to pass on higher insurance and registration costs to passengers.
State Insurance is lifting vehicle premiums by up to 30%. The average customer faces a premium rise of between 10% and 15% but some bills will jump by twice that much as State moves to more individually tailored risk assessments.
The company attributes the rise to the economic recession, changes to the way it assesses risk and the cost of Japanese repair parts.
Last month, the Government announced that the ACC car registration levy would cost another $32 from July.
The executive director of the Taxi Federation, Tim Reddish, says there's already anecdotal evidence of a 20-to-30% drop-off in drivers' incomes because of the recession and a reduction in business travel, so taxi companies are likely to adjust their fares to compensate.
Consumer advocate can't understand it ...
Consumer New Zealand says it does not understand the reasons behind State's decision.
Spokesperson Hamish Wilson says that the introduction of more personalised assessments in itself would not lift the average premium.
With such a system, Mr Wilson says, customers who have driven around for 20 years without putting a scratch on their car should actually pay less.
He says it's just normal insurance business practice to make the most risky customers pay higher premiums.
... but the Insurance Council can
Insurance Council chief executive Chris Ryan says, however, that State probably has good reasons for lifting its premiums.
"There are increased costs coming through into the industry, particularly in the cost of repairs for increasingly complicated motor vehicles," Mr Ryan says.
"And also insurers themselves are finding times are pretty tough in their investment portfolios as a result of the economic issues."
Explaining the new method of risk assessment, State spokesperson Mike Tully says the company is making greater use of factors such as age, gender and driving experience.
Some individual premiums will go up more than others because each customer's risk will be calculated more accurately.
Mr Tully says State will also lift premiums on house and contents cover at some point.
State is the first insurer to raise its prices but expects others to do the same.
