About three years ago Justin Lim got married and purchased a home.
A bank worker for about seven years, Lim says he thought he had a pretty good handle on his finances.
But when it came to insurance, Lim says he was on less comfortable ground.
What insurance policies did he have? What was covered? What was not covered? And how much was he spending?
“I just thought it'd be really cool if I can create a portal that enabled me to get a view of my whole entire world of insurance in one place,” he says.
Lim founded insurance portal Quashed in 2019, and it launched in 2020.
Consumers can upload their insurance policy documents on Quashed’s browser platform and then get information about their plans, how much their insurance is costing them and when policies will renew, all on one page.
It also has a comparison feature called Market Scan. Market Scan uses machine learning and artificial intelligence to scan uploaded insurance policy documents and can compare them to others, and give Quashed users at least three potential policies to consider.
Quashed has some insurance companies providing policies directly to it, including Protecta, Pinnacle Life and Initio.
The rest of the data it gleans from policies uploaded by its users. Lim says Quashed is adding between about 200-300 new users on a good day on the insurance portal.
Up, up and away
Other than Consumer NZ’s insurance survey, comparing premiums for insurers is usually a matter of doing your own desk research and individually working out which insurer offers what, and for how much.
The most recent Consumer NZ survey published in December 2022 found that insurance premiums had risen for a standard house by 17% in Hamilton, 15% in Auckland and 14% in Dunedin compared with December 2021.
Quashed found for the year ended 2022, general insurance premiums for its customers rose on average by 17% for house insurance, 12% for contents insurance and 10% for car insurance.
Quashed analysed thousands of insurance policies uploaded to its site in January, February and March, and has now released a report detailing how much premiums for those policies have risen.
For house insurance, premiums for renewed policies had an average increase of 20.3% and an average premium increase of $327.
For contents policy premiums increased on average by 14.7%, while car insurance premiums rose on average by 10.05%.
Quashed found that the average New Zealand household could expect insurance premiums to cost $561.50 more when they go to renew their policies.
Lim says New Zealanders can save thousands of dollars on insurance by shopping around.
“Our insurance comparison tool, Market Scan, has found that the difference in premiums quoted across insurers increased compared to the prior quarter. This means consumers shopping for insurance would find a bigger difference in prices and potential savings.”
Quashed found that the average price difference between the most expensive house insurance policy and the cheapest on the site was $827.83.
He says there are plenty of insurance brands outside of the dominant two players who have good offerings in the market like Cove or Pinnacle Life or MAS, and he hopes Quashed helps New Zealanders to get the best bang for their buck.
Lim says it's important to note changes to the Toka Tū Ake EQC levy have had an impact on premiums. The EQC levy has risen to $552 including Goods and Services Tax (GST) in October 2022, up from $345 including GST.
Analysis commissioned by Treasury found the rising EQC levy was the largest single contributor to insurance premium price rises.
The Fire and Emergency New Zealand levy is also paid through house insurance policies, and is rising to cover a new employment deal for firefighters, which is capped for homeowners at close to $150, the Insurance Council of New Zealand says.
Lim says he’s working hard to get more insurance companies putting their policies straight onto the site, and expects Quashed will sign up one of the big two - IAG or Suncorp - by the end of this year.
It has also signed a partnership deal with Xero, and has been doing workshops to help its staff understand their insurance policies, whether they’re well covered, or could save money.
Quashed is focused on ensuring what it offers just isn’t a race to the bottom-priced insurance policies, Lim says, and its comparison includes analysis so that it is showing policies that are fit for purpose, not just cheaper.
For its business journey, Lim says he’s taking inspiration from share-buying platform Sharesies' incredible rise.
The firm raised $600,000 for its development in 2021.
Lim sees Quashed as filling a similar space to Sharesies.
Quashed can help to make insurance easier to understand, more accessible, more affordable and ultimately invigorate interest in our insurance lives, Lim says.
18 Comments
I created an account this morning & tried it out. Conceptually it's a nice idea, but in practice falls flat.
They don't have access to a significant part of the market, meaning that their comparisons only include a few select insurers. Given how dynamic the pricing environment is becoming across the various underwriters who operate in the New Zealand market, there's no guarantee that their best price represents the actual best price in the market.
Moreover, and more importantly, the idea that insurance is best purchased on a 'lowest possible price' model is a fallacy. If I were to take insurance out with Tower, then I might be in for a rude awakening if I were to have a fire in the boat-house which took out the ramp & jetty.
The assumption of homogeneity is key to price comparison. You want to look at apples & apples? Go ahead. What this outfit is doing is comparing apples to oranges, and failing to tell you about the grapes that are on special down the road. Sure, they'll retort with "but we show the differences in cover below the quote", but that makes the assumption that the relevant clauses in each policy are constructed identically & interact with the insuring clause in the same fashion, never mind any correlated exclusions that might affect the cover.
Go ahead and try it out for yourself if you like, caveat emptor.
Fair point. Yes the cost of construction has gone up over 20%, but is that the true cost or is that construction margins?
Remember, we had a rapid reduction in the cost of credit, something that is used when building houses. Put simply, would we have seen a 20% increase in the cost of construction if interest rates had stayed 8%+ over the last 15 years?
Something to revisit if the residential construction sector collapses.
Fair point. Yes the cost of construction has gone up over 20%, but is that the true cost or is that construction margins?
It's the cost, because labours more expensive and everything takes longer to get done post covid.
Construction companies have been falling over across both sides of the Tasman because margins have gone out the window.
Margins in one stage of the process. Construction companies are being squeezed due to interest rates more than doubling in a short space of time, yet elements such as land prices and construction materials have not yet reacted to this change in borrowing power.
Or are you trying to say that land, construction materials etc would have increased to where they are today regardless of the increased borrowing power?
Margins at every stage. Producing stuff takes longer post covid, because you only need one component missing and you're stuffed. The longer something takes to make, the longer it'll take you to get paid for it, and it costs money for stuff to sit around idle.
Also, as a rule of thumb most businesses' now have 25% higher labour costs, because that's about the absenteeism rate.
This is just a much more expensive environment to do business in. Will it reverse? Maybe, but probably not anytime soon.
I'll take your word for it. I can't speak for all businesses, but I work as an Estimator for a manufacturer using raw materials imported in USD. A large player in civil infrastructure. The market sets the price, our prices don't go up because we had idle extruders last month or 3 people off sick.
While I agree missing components = delays = $$. What missing components are we talking about? GIB?
Maybe if we didn't have much competition in our sector, we'd be in a position to price gouge.
For a house insurance policy what counts is the sum assured which is directly related to construction costs. If you use the insurance companies Kordell calculator I believe you'll be overinsured by about 15-20%. I keep a close watch on construction costs in New Plymouth they are around $3000/m2 for std build on a flat section, no fancy earthworks or HD piling required. I add on 15% for disaster premium and am happy with my sum assured.
That's the house only, no other bits like driveways, patios, decks, sheds, car ports, demolition which are extra. Leave them out and you are underinsured.
A recent request for an estimate to my insurance company and believe the other insurance companies will be the same, for an estimate on a section without a house and for which I'd already partially designed a house so I know the house area, wall and roof types met with can't give you an estimate. When the house is erected , CCC issued we'll give you a quote. This section is subject to ponding according to NIWA, upon which the Council rely, and between the years 2081 and 2100 a 1:100 year event will flood the section to a level such that the floor must be above natural ground level of the section by about 700mm. Not too onerous. This means the road side walk would be inundated to around 100mm or greater for the section to start being inundated. The floor level height requirement is a council covenant.
There is no stream or river or nearby low lying area, other than the section itself.
The design rainfall used to create the flood extent maps is a 1% AEP 60 minutes storm generated from the HIRDSV4 database, provided by NIWA. Rainfall intensities are adjusted for the RCP 6.0 (2081 – 2100) climate change scenario. Ridiculous.
Unfortunately you can't take out house insurance and exclude flooding.
And I imagine when you go to build on the section, the council will want you to accept a section 73 (of the Building Act) notation on the title before issuing the building consent;
https://www.legislation.govt.nz/act/public/2004/0072/latest/DLM306820.html
From an anecdotal perspective, it seems the use of these title notations is increasing dramatically as more an more councils accept what in many cases are exaggerated/unlikely/over-egged projections of flood hazards.
And yes, insurance costs more - and I even wonder whether in future we might see insurers excluding coverage for those hazards mentioned on the s73 title notation.
I do wonder what conveyancing lawyers who do the title search on a property advise their clients about these title notations. It might pay to speak with yours before accepting such a notation and commencing construction (as resale could become difficult in future).
That's interesting, This is the heading on the Council "Covenant". "CONSENT NOTICE PURSUANT TO SECTION 221 OF THE RESOURCE MANAGEMENT ACT 1991" with all the building conditions and its on the title. No mention of a section 73. I don't know whether they can then spring that on you before issuing a CCC if you have complied with the above.
Was the section created through a recent subdivision? That will be the RMA s221 title covenant.
Building Act s73 notification are different and issued on issuance of a building consent. If you already have a PIM signed off and building consent for the dwelling - and no s73 notification - all good. If you have not yet gone through that process, you might want to enquire with the council's building consents department before submitting a PIM and making application for a building consent.
I had a client who went through all that design expense, only to be told on uplift of his building consent that a title notification (his was a coastal hazard) would need to be agreed. He decided not to build and simply sold the section with its existing dwelling (which had no hazard notification on the title).
"Was the section created through a recent subdivision? " yes a single section subdivided into two.
Thanks for the other info. It does seem to me its either the law or Councils interpretation of the law that they can't inform one early in the process. I don't know if the Council will advise at the PIM stage without you having to ask and be a walking encyclopedia on certain sections of the RMA.
My intention was to do a PIM first but for daylight recession and potential boundary issues first and unaware of the S73 sprung on at a later stage. Through a PIM first hoped to catch the "nasties" at that stage. All very tricky.
I do all my own research and only recourse to a lawyer if I have difficulty in understanding what's going on. On this section I had a condition obtaining insurance must be to my satisfaction. I had the lawyer phrase that after indicating what I wanted. I was unsuccessful in my offer for other reasons but probably would have invoked that condition to opt out.
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