Dunedin city councillor David Benson-Pope is calling for government intervention in the insurance industry to tackle "market failure" he says is a threat to heritage buildings across the country.
Cr Benson-Pope raised the issue at a Dunedin City Council committee meeting last week, after being forced to sell his Wellington apartment when insurance premiums skyrocketed.
The 1903 apartment, one of 10 in a category 1-listed heritage building, was not deemed earthquake-prone.
Cr Benson-Pope later told the Otago Daily Times the building's body corporate had been quoted $20,455 for full cover in 2016, shared between the building's apartment owners.
The following year, the premiums jumped to $88,932, and this year they rose again, to $141,566, he said.
The dramatic increases, driven by earthquake-cover premiums, triggered an "uprising" by apartment owners and forced the body corporate to accept lesser cover, excluding earthquakes, he said.
Cr Benson-Pope said NZI provided about 70% of the cover, but the hikes were linked to heightened "perceived risk" and higher premiums demanded by reinsurers following the Kaikoura earthquake in 2016.
His "frustration" was compounded by the refusal of any other insurance company to offer cover, and a focus on building construction dates that ignored strengthening work.
"What's happening is just a rort," he said.
He feared more owners would be unable to afford full cover or to maintain their properties, putting heritage buildings at risk.
While problems were worse in Wellington, given its heightened seismic risk, the issue had implications for other centres, including Dunedin, he warned.
"What the insurance industry does in various places, flows on to everywhere.
"For towns that have a high stock of important heritage buildings, this has got some really serious implications unless it's addressed.
"If the same sort of increases, or even lesser ones, were to start happening here [Dunedin], then it puts even more buildings at risk."
Insurance Council of New Zealand chief executive Tim Grafton said the Canterbury and Kaikoura earthquakes had led to "increasing awareness" of the risks to buildings, and Wellington was "known to be at significant risk".
However, just because a building was not earthquake-prone did not mean it was not at risk of structural damage, which insurers took into account, he said.
"Insurance has long used pricing to signal risk levels. Far from market failure, what we're seeing is a logical and inevitable response to increasing risk levels and a sign of the urgency with which we need to address these risks by putting adaptation and mitigation measures in place."
The Ministry of Culture and Heritage was already surveying stakeholders on ways to strengthen the protection of heritage buildings.
At Cr Benson-Pope's behest, a DCC submission on the survey was changed to include his call to investigate "market failure" within the insurance industry relating to heritage buildings.
New ways to ensure affordable cover for heritage buildings was available was also needed, he said.
The DCC also suggested improving the legal tools available to require owners to maintain their properties, among other changes.
A treasury spokeswoman said lifting the cap on Earthquake Commission (EQC) building cover, from $100,000 to $150,000 from next year, as part of an EQC Amendment Bill now before a select committee, was also progressing.
That "would be expected to reduce price pressures on private insurer premiums".
