LGNZ and ICNZ on the threat to coastal properties

LGNZ and ICNZ on the threat to coastal properties | Insurance Business

LGNZ and ICNZ on the threat to coastal properties
Kiwis could find their dream of owning a seaside property dashed as councils across the country consider property restrictions to combat sea level rises, with the insurance industry also warning that if this issue is not addressed “properties currently lying in the risk path” may become uninsurable. 
 
Lawrence Yule, Local Government New Zealand (LGNZ) president and Mayor of Hastings, said it was tough but relevant to tackle the issue, telling Fairfax Media: “We need to make some pretty brave and long-term decisions about that stuff.
 
“It won’t bite us, it will bite someone in 30, 50, or 100 years’ time, and they won’t thank anyone today who hasn’t been brave enough to look at these things and make the right call.”
 
Yule also warned that there might be a need to relocate entire coastal communities and to assess infrastructure placement, such as roads, airports, and sewage treatment. His statements come as LGNZ’s national council prepares a position paper on climate change to submit to the government, the report said.
 
In Wellington, these projected changes could threaten an estimated 2,000 houses, 20 businesses, and 21 kilometres of road, according to a 2015 Parliamentary Commissioner for the Environment report.
 
Across NZ’s largest coastal cities, the figures suggest more than 11,000 homes could be at risk - and that is assuming greater rises do not occur.

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Tim Grafton, Insurance Council CEO, urged people to start considering sea levels when looking at property, especially with houses built to last 100 years and ownership typically lasting 20 years or more, the report said.
 
“The industry is well aware that, if nothing is done to the properties currently lying in the risk path, there will be a problem later down the track where insurance either may not be available or accessible,” he explained.
 
He cited Christchurch’s Flockton Basin as a sneak peek of the problem NZ’s coastal communities are facing. The area sank by a metre after the Canterbury earthquakes, simulating 50 years of sea-level rises in one day.
 
In response to the ensuing flood problems, insurers increased excesses by up to $10,000, making insurance less accessible for many residents, the ICNZ boss told Fairfax.
 
If insurers refuse to cover a property, this might cause banks to refuse mortgages.
 
“That would reduce the number of potential buyers ... there would be a downward spiral of price because of the supply-demand situation,” Grafton told Fairfax.
“I would do due diligence for any property at the seaside.”
 

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