A simple guide to premiums, levies and the value of advice

Insurance costs can feel complex and it’s not always clear what you’re paying for, who sets each component, or what can and can’t be changed. This guide explains the main parts of your insurance cost and how they fit together.

What makes up your insurance cost?

When you receive an insurance quote or renewal, the total cost usually includes three distinct components.

1. Insurance premiums

The insurance premium is the cost charged by the insurers to provide cover for your risks.
Premiums are shaped by a range of factors, including:

  • The type and level of cover your choose.
  • Your claims history.
  • The nature of your business, assets or activities.
  • Reinsurance costs (what insurers pay to insure themselves).
  • Wider market conditions, including natural disasters and global risk trends.

What Abbott helps with:

  • Advises on appropriate cover.
  • Helps structure your insurance to suit your needs.
  • Works with insurers to obtain suitable terms.

Talk to your broker about structuring the right cover.

2. Government levies

Government levies are mandatory charges collected through insurance policies to fund public services, such as Fire and Emergency New Zealand and the Natural Hazards Commission.

The Natural Hazards Insurance (NHI) levy and the Fire and Emergency levy (FEL) are set by the Government and apply consistently across the insurance market.

Important to know:

  • Levies are not set by insurers or brokers.
  • They are non-negotiable.
  • Insurers collect them on behalf of the Government.
  • Brokers do not retain any portion of these levies.

While levies form part of the total insurance costs, they are separate from the premium charges for insurance cover.

3. Broker fees

Some insurance policies include a broker documentation fee or service charge, which reflects the professional advice and services provided.

What this may cover:

  • Risk assessment and advice.
  • Policy placement and negotiation.
  • Ongoing policy management.
  • Claims advocacy and support.
  • Renewal reviews and adjustments.

What Abbott does:

  • Is transparent about any documentation fees charged.
  • Explains what services are included.
  • Ensures clients understand the value of advice, not just the cost.

What can and can’t be changed

Can be changed:

  • The type and level of cover you choose.
  • Excess levels.
  • Risk management improvements.
  • Policy structure and insurer selection.

Cannot be changed:

  • Government levies.
  • Statutory changes.
  • Market-wide regulatory requirements.

Your broker can help you understand where flexibility exists and where it doesn’t.

GST and your insurance

Insurance premiums in New Zealand are subject to Goods and Services Tax (GST).

GST is collected on behalf of Inland Revenue and is not retained by your insurer or broker.

While GST isn’t an insurance charge, it does affect the total amount you pay. Any increases in premiums, levies, or fees also increases the GST applied.

For GST-registered businesses, GST may be claimable as an input tax. Your accountant or tax adviser can advise how this applies to your circumstances.

Why insurance costs change from year to year

Even if your circumstances haven’t changed, insurance costs can move due to:

  • Global reinsurance pricing.
  • Increased frequency and severity of claims events.
  • Regulatory or levy changes.
  • Shifts in insurer appetite for certain risks.

These changes are not always visible, but they influence the cost of cover across the market.

Abbott’s role as insurance brokers

Our role is more than simply placing insurance on your behalf, we:

  • Explain costs clearly and honestly.
  • Help you understand what you’re paying for.
  • Ensure levies and premiums are applied correctly.
  • Support informed decisions about protection and risk.

Because if something changes, we believe you should understand what has changed, why and what it means for you.

Any questions?

Understanding your insurance should never feel like guesswork. If you’d like to talk through your insurance costs, we’re here to help.

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