Risk-based pricing on house and landlord insurance
The chances of your home being damaged by various risks, like earthquake, flood, storms or other natural perils are different depending on where you live. What your house is made of or if your house has any special features are some things that we also take into consideration when we calculate your house insurance premium. We call this risk-based pricing.
If your property is more likely to be affected by natural perils, your insurance premium will likely be higher. On the flip side, if you’re less likely to be affected, you’ll not pay as much. For example, a house in Wellington, might be considered higher risk as it’s more likely to be affected by an earthquake, compared to a house in an area like Whangarei.
These risks change over time, so we keep an eye on the big picture and your premiums could go up or down based on new data that becomes available.
Why we use risk-based pricing
We introduced risk-based pricing as it’s the fairest way to price premiums. It means you only pay for the risk that may impact you and your property.
Recovery from flood, earthquakes and other natural perils can cost the insurance industry billions. So, if there’s a natural peril, we need to make sure we can do our part to pay out to the people who need it and still have money to pay for day-to-day claims.
Your risk profile is an estimate of the risk for flood and for earthquake. If you think the information is incorrect, please contact us.
What is a risk profile?
Flood risk profile
Flood risk profileFlooding is New Zealand's most common natural hazard. To help us set our premiums fairly, we use information from the RMS® New Zealand Inland Flood high-definition HD Model.
It is built with data from local organisations and institutions, including the National Institute of Water and Atmospheric Research (NIWA), Land Information New Zealand (LINZ), local and regional councils and the ICNZ. Find out more about RMS and its flood methodology here.
The Inland Flood model includes river-related flooding and storm-related flooding. It does not include coastal flooding or flooding as a result of rising sea levels.
Earthquake risk profile
Earthquake risk profileAs New Zealand is located on the boundary of two of the world's major tectonic plates, we are at greater risk of earthquakes and the damage they cause.
To help us set our premiums fairly, we use information from the RMS® New Zealand Earthquake high-definition (HD) Model. It is built with data from recent and historical earthquake events as well as information from local scientific experts and agencies.
Find more information about RMS and its earthquake methodology here.
Risk ratings explained
The flood and earthquake risk ratings below are unique to your house or landlord's house policy address. The risk is calculated for the property's main building, so may be different for outbuildings or garages depending on their location and construction. Regardless of your risk level, you'll be covered under the terms of your policy and your certificate of insurance. If something doesn't look right, or you've made alterations to your property to better prepare your house in the event of a flood or earthquake, you can email customers@tower.co.nz.
Modelling by RMS
Flood risk ratings
Risk data for this address not available
We don’t currently have risk data for this address. This may change as more data becomes available and that means it may affect your premium in the future.
Flood - very low risk
This address is unlikely to have any chance of river or rainfall related flooding. Flooding is likely only realistically possible in very extreme rainfall events.
Flood - low risk
This address is expected to have a low chance of river or rainfall related flooding or have little property damage if a flood were to happen. Although the risk of flooding is minimal for most common levels of rainfall, extreme or prolonged rainfall may still cause flooding to the property.
Flood - medium risk
This address is expected to have some chance of river or rainfall related flooding and/or if a flood were to happen, experience moderate levels of property damage. The extent of this is increased during extreme, or prolonged rainfall events.
Flood - high risk
This address is expected to have a high chance of river or rainfall related flooding and/or if a flood were to happen, experience high levels of property damage. Extreme or prolonged rainfall may cause extensive flood damage to the property, but even more common levels of rainfall could pose a risk to the property depending on other factors. For example, the groundwater level or river height at the time of the rainfall.
Flood - very high risk
This address is expected to have a very high chance of river or rainfall related flooding and/or if a flood were to happen, experience very high levels of property damage. Extreme or prolonged rainfall may cause extensive flood damage to the property, but even more common levels of rainfall could pose a flood risk to the property depending on other factors. For example, the groundwater level or river height at the time of the rainfall.
Earthquake risk ratings
Risk data for this address not available
We don’t currently have risk data for this address. This may change as more data becomes available and that means it may affect your premium in the future.
Earthquake - very low risk
This address is expected to have a very low chance of being affected by an earthquake and/or if an earthquake were to happen, experience little property damage.
Earthquake - low risk
This address is expected to have a low chance of being affected by an earthquake and/if an earthquake were to happen, experience little property damage.
Earthquake - medium risk
This address is in a location with some risk of being affected by an earthquake and/or if an earthquake were to happen, experience moderate levels of property damage.
Earthquake - high risk
This address is in a location more likely to be affected by an earthquake and/or if an earthquake were to happen, experience high levels of property damage.
Earthquake - very high risk
This address is in a location most likely to be affected by an earthquake and/or if an earthquake were to happen, experience very high levels of property damage.
Risk rating FAQs
To understand more about what makes up your premium, visit our Understanding your house and landlords premium page.
An earthquake risk rating reflects the potential risk of an earthquake to your property, the size of the earthquake, and the cost to replace or repair your property if an earthquake occurs. The earthquake risk rating categorises your property as either very low, low, medium, high, or very high.
A flood risk rating reflects the likely frequency of your property being flooded, the size of those floods, and the cost to replace or repair your property in instances of flooding. The flood risk rating categorises your property as either very low, low, medium, high or very high.
No. This change impacts how we calculate the flood portion of all Tower customers' house and landlord insurance premiums. Most of our customers won't see any significant change in their premiums. Here's a quick snapshot:
- Nearly 90% of our customers will receive a reduction in the flood risk portion of their premium (on average., about $25 per year per customer).
- About 10% of our customers will see an increase in the flood risk portion of their premium (for the majority, this will be less than $50 a year).
- For the very small portion of our customers (less than 1%) who receive a high or very high flood risk rating, they will see an increase greater than $501 per year. If your property falls into this category, we will aim to proactively contact you prior to your policy renewing to discuss this increase and your options.
Log in to your My Tower account to see your premium breakdown. Four weeks before your policy renews, you will see a comparison of what you paid last year vs. your upcoming premium breakdown for different risks.
While we aim to show you as much information as we can, as risk-based pricing for floods is new, we won't be able to show you the flood premium breakdown from last year.
You will also find information on what you can do to help protect you and your property from flood-related events.
To help Tower understand the flood risk for your address, we've commissioned a company called Risk Management Solutions (RMS). The RMS flood models are built using the most advanced technologies, science, and data, including lessons from historical events, geologic data, ongoing global research, and damage statistics.
Tower combines the RMS model with our own claims' knowledge and data, as well as building construction type and elevation, to better understand the risk associated with each address.
The launch of the flood model is a first for New Zealand and is part of our commitment to giving our customers a better understanding of their risk profiles.
Learn more about the RMS approach to flood modelling and the New Zealand Inland Flood HD Model
Our data shows the likelihood of a flood happening in the future. Your property may still be at risk of a flood in the future, even if this hasn't affected your property before.
Our data is based on a combination of Tower and Risk Management Solutions (RMS) model data. The RMS model outlines the potential risk of flooding from rain or rivers occurring and is combined with Tower's estimated rebuild or replacement cost.
The RMS New Zealand Inland Flood HD Model is built with some of the latest and most sophisticated data available in New Zealand, including data from the National Institute of Water and Atmospheric Research (NIWA), Land Information New Zealand (LINZ), local and regional councils, and the ICNZ.
Our new way of pricing more accurately reflects the cost of providing natural disaster cover at each address. This means locations that have a higher chance of suffering damage from natural disasters will likely pay more than locations where the chance is lower.
We don't know what other providers are charging. Tower has made this change because we are committed to a sustainable future, and we believe it's important to be open and honest about insurance and the risks associated with climate change.
Helping our customers understand the breakdown of their insurance premium is important. We believe risk-based pricing is the fairest and most transparent way to distribute costs amongst our customers to make sure they don't pay for the risks they don't have.
Your new annual premium is calculated four weeks prior to your renewal date. It is made up of a number of factors, which you can learn more about on our Understanding your house and landlord premiums page.
We're unable to give you any indication of what your new premium will be before this timeframe. We send you your renewal documents one month before your renewal date, so you'll have time to review any changes.
Please note that if your risk rating is high or very high, we will aim to proactively contact you before your policy renews. If your rating is very low, low, or medium, then the flood portion of your premium is less likely to significantly increase.
A flood risk profile is very specific to the location of each individual address and the type of property at each address. Because of this, two neighbouring properties could have very different loss profiles.
As we use address-based risk pricing, the price of insurance for every property could be different, even if they are next door to each other.
Our modelling considers factors like the elevation, slope, and material of the land, as well as how close your address is to streams, rivers, and other waterways. We combine this with information about the building, the number of stories, how it is constructed, and the building materials.
Assessing properties with this level of detail means flood damage risk and the price of insurance will vary from one address to another, even for units in the same block.
Tower has made the decision to take a different approach to flood and earthquake risk pricing because we believe it's the fairest way to distribute claim costs. Instead of averaging the total risk of flooding and earthquakes amongst all our customers across New Zealand, we now have the data to understand the risk of rainfall and river-related flooding, and earthquakes for each individual address.
In fact, we've been calculating earthquake-related risk this way since 2018. This change means that the insurance premiums our customers pay more accurately reflect the cost of providing cover for individual properties.
We think it's important to educate our customers, communities, and other stakeholders about the risk of river and rainfall-related flooding in New Zealand. We hope it will encourage people to take action to mitigate and reduce the impacts of weather events like floods and storms.
We want to give Kiwis all the facts we have about their homes so they can make informed decisions. Disclosing the flood risk of individual properties provides customers with the information they need to make informed decisions about the houses they buy and where they invest. We also hope it will help our customers understand their insurance needs and the breakdown of their insurance premium.
Tower looks at our own data, including claim information, construction type, and elevation. We combine our data with a flood model developed by Risk Management Solutions (RMS). This RMS model incorporates the most up-to-date flood data to work out the chance of something happening to your address.
Learn more about RMS and their approach to flood modelling
The chance of a flood or earthquake event happening varies from house to house. The data that we use to understand this risk is very comprehensive, and we now understand these differences in greater detail. This includes factors like the elevation, slope, and material of the land, as well as how close your address is to rivers and other waterways.
We combine this with information about your house and other factors specific to you, like your claim's history, and your age. These factors can be highly variable, even for houses on the same street. Therefore, one neighbour's insurance might be cheaper, while another neighbour's might be more expensive.
If you think that Tower has an incorrect rating for your property, please email customers@tower.co.nz.
The type of information that we will need to review includes evidence of any measures you have undertaken to protect your property from flooding, including raising the elevation of your home and/or other forms of flood protection.
Tower's flood risk rating may be different than what your council LIM or property file shows. Tower's model takes into consideration a number of factors, including building construction type and the number of stories. This data is combined with the Risk Management Solutions (RMS) flood model.
The RMS models are built using the most advanced technologies, science, and data, including lessons from historical events, geologic data, ongoing global research, and damage statistics.
If you have made changes to your property to mitigate the impact of floods, such as raising the elevation of your home or other forms of flood protection like installing flood walls, please email us at customers@tower.co.nz. We will review the information you provide to make sure we accurately understand the risks facing your property.
We're sorry to hear you're unhappy and we want to hear from you. Please call us on 0800 379 372 so we can talk through your flood risk rating and try to answer any questions you have.
If you're not satisfied with the outcome, you can complete our online complaints form or email complaints@tower.co.nz so our Customer Care Manager can review your complaint.
Properties across New Zealand may have an elevated level of flood risk if they are located in low-lying areas or by rivers or streams. Many property owners will already be aware that they live in a flood-prone area if their property is located by a creek or river, for example, or they know aspects of their property flood after high rainfall.
Some of these people will have already put measures in place to protect their property against flooding, and if that's the case, we can look to reduce their flood risk premium. Heavy rainfall events, or flash floods, can occur nearly everywhere and result in flooding even in more elevated regions.
No. The data we use doesn't currently include coastal flooding. In the future, Tower will look into models that accurately understand the impact of coastal flooding.
Anyone can check their property's flood risk rating by starting a house quote or landlord quote on our website. If you're an existing Tower house policy or landlord policy customer, you can log in to My Tower and check your property's flood risk rating and premium breakdown.
If you have any questions about the flood risk rating for your property, you can call us on 0800 379 372 or email customers@tower.co.nz.
Tower commissioned Risk Management Solutions (RMS) to support our risk rating approach. RMS has been building risk catastrophe models for over 30 years and now builds and maintains over 300 global models that help understand what can happen in New Zealand.
Both RMS and Tower have similar aims: to help New Zealanders better understand the risks associated with their properties.
Your premium consists of several components for the different types of risk covered under your house policy, including flood, earthquake, fore, accidental damage, and burglary, as well as government levies and taxes.
As part of the new flood address-based pricing, for customers in lower flood-risk areas, the flood component of the premium will go down. However, the overall house premium itself may not reduce due to factors that influence the other premium components. For example, the house sum insured amount may have increased, or there could have been changes to taxes and levies.
Our aim is to cover and protect as many New Zealand addresses as possible by fairly allocating the appropriate premium amount for the risks associated with that property. If you are unsure whether Tower will cover your property, start a house policy quote to check your address.