Homeowners will be paying much higher premiums in the next couple of years, as payouts rise and costs increase, the Insurance Council says.
Insurance companies paid more than $566 million in domestic building and contents insurance claims in the year ending September 2008, compared to just over $535 million the year before, and about $477 million in 2006.
Insurance Council chief executive Chris Ryan says insurers finally have to bite the bullet and raise premiums in order to sustain profitability.
There have been rises in claims due to climate change, he says, costs related to regulation have risen and shortages of labour, tradespeople and materials have pushed up costs.
Mr Ryan says until now the competitive nature of New Zealand's insurance industry has shielded home owners from any significant increase, but that is no longer sustainable.
