AA Insurance has reached the maximum value of properties it can insure for seismic risk, meaning it cannot offer new home insurance to properties located in two postcodes – 7608 in Lincoln and 7615 in Rolleston.
AA head of underwriting Dee Naidu said it had put a cap on the amount of risk it could take on to ensure it can serve its existing customers.
“Limiting new policies in high-risk areas is never something we do lightly. It’s a necessary step to honour our commitments to existing customers and uphold our role as a responsible and trusted insurer,” Naidu said.
“The decision was driven by AA Insurance reaching its maximum exposure limit for homes in postcodes identified as having elevated seismic risk.
“This limit is informed by our own risk modelling and historical claims data.”
Several people on the Lincoln Community Facebook Page said they had tried to get insurance with AA.
They were told they could not be covered but were not given a specific reason why.
“There wasn’t any real explanation other than ‘the system says we can’t insure you’. So I just moved on to AMI,” one person said in a post.
Insurance companies cap the maximum amount they will pay for all covered claims during a policy period, known as an aggregate limit, to manage financial risk. This allows for stable pricing and financial planning.
Naidu would not say what AA’s limit was due to commercial sensitivity.
In Lincoln, it will not issue new home insurance in postcode 7608, which includes parts of Gerald, James, and Edward Sts.
In Rolleston, postcode 7615, which covers the eastern part of the township between Lowes and Selwyn Rds, will not be issued new home insurance.
The closest known fault line to Rolleston and Lincoln is the Greendale fault, which runs from Hororata to Rolleston’s Izone.
The fault was discovered after the magnitude 7.1 earthquake on September 4, 2010, when part of it was activated near Darfield.
“We regularly review areas where underwriting holds are in place and, if our exposure reduces, we intend to reopen to new customers,” Naidu said.
She said existing customers would not be affected by the change.
Anyone buying a home that was already insured with AA in those areas will be able to continue under the same policy as the previous owner.
“This means that if someone is purchasing a home we already insure in these areas, they will be able to obtain cover with us, ensuring continuity of protection, subject to our standard underwriting criteria,” Naidu said.
IAG, which owns AMI, State and NZI, had no restrictions on issuing new home insurance policies in Selwyn, a spokesperson confirmed.
