Insurer on why flood risk must be factored into coastal home premiums

Insurer on why flood risk must be factored into coastal home premiums | Insurance Business

Insurer on why flood risk must be factored into coastal home premiums

As sea levels continue to rise due to climate change, the number of struggling homeowners in coastal areas also increases – prompting an insurer to stress why flood risk needs to be factored into premiums.

Sacha Cowlrick, executive manager for consumer insurance at Vero, explained that low-lying coastal areas are already dealing with property issues due to climate change – with houses and land being flooded by the sea, especially during storms.

“We have strict underwriting and price criteria in place to ensure that if we’re providing insurance to these properties, the premiums [price] reflects the increased risk,” Cowlrick told Newshub.

She added that insurers must continually assess the possible physical and financial impacts of climate change, with the option to decline cover if the risk is too great.

Read more: Climate change threatens coastal communities

According to the Insurance Council of New Zealand (ICNZ), wind and flooding in the West Coast in March cost the industry $4.09 million – including $398,776 paid for 67 house and contents insurance claims.

In the last two years, the largest cost was the severe weather and tornadoes in April 2018, which cost $74.3 million – including 12,503 house and contents insurance claims that amounted to $46.2 million.

Cowlrick advised buyers looking for coastal properties to talk to insurers and consider the risks before committing to paper.

“We encourage anyone [considering buying] in a coastal area to make sure that they understand the risk of flood or sea water damage, what work is being done by their council to mitigate it and to explore their insurance options before committing themselves to buying,” Cowlrick said.