Earthquake Commission (EQC) levies will triple from next year as the Commission seeks to rebuild its Natural Disaster Fund (NDF).
Insured homeowners currently pay 5c per $100 of insurance cover and from February 1 next year that figure will rise to 15c per $100 of insurance cover, with an annual cap of $207 (including GST).
The proposals were announced by Finance Minister Bill English, who said the increased funding would also more realistically reflect the EQC's operating costs.
"The levy increase is a responsible step to ensure EQC can meet its long term costs and continue to provide disaster cover around the rest of New Zealand in a sustainable way.
"Strengthening EQC's finances will provide additional confidence to homeowners throughout the country that EQC has the capacity to meet its obligations now and in the future," English said.
The increase will provide revenue to meet EQC's operating costs, which for many years have been subsidised by NDF investment income, enable EQC to rebuild to its pre-earthquake level of $6 billion in around 30 years and reduce its estimated $1.2 billion cash shortfall to $490 million.
The levy rise will increase annual revenue from about $86 million to around $260 million with the increase adding around $2.65 a week for most homeowners insurance premiums.
"Raising levies for those who benefit from earthquake insurance cover is the fairest way to ensure EQC can meet its long term costs," English said.
"The increase is not based on a full actuarial forecast of future liabilities, which will be calculated as part of a review of EQC in the future."
English said he would take the terms of reference for a review to Cabinet in the coming months.
"However it is clear the current levy is too low and needs to increase now to pay for EQC's operating costs and to begin rebuilding the NDF."