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

Insurance costs can seem confusing as the total amount you’ll pay is made up of several components.

This guide explains the main parts of your overall 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 four main components.

1. Insurance premiums

The insurance premium is the dollar amount charged by insurers each year for an insurance policy.
Premiums are influenced 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 inflation, claims costs, supply chain costs, 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.

2. Government levies

Government levies are mandatory charges collected through some 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 may form part of your total insurance costs, they are separate from the insurer’s premium charges for your 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.

4. GST

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 as any increase 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 if this applies to your situation.

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.

Why insurance costs change from year to year

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

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

These changes are not always visible, but they influence the cost of insurance 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 transparently.
  • Help you understand what you’re paying for and why.
  • Ensure levies and premiums are applied correctly.
  • Support informed decisions about protection and risk.

You can read more about the role of an insurance broker and the value of advice here.

Ask us

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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