Finance minister Nicola Willis has pushed back against an Insurance Council of New Zealand (ICNZ) proposal to replace the Fire and Emergency New Zealand (FENZ) levy with a new natural hazard resilience fund, saying a dedicated levy is unnecessary if the Government is investing prudently in infrastructure.
Willis made the remarks Thursday at the ICNZ annual conference in Auckland, where she acknowledged the proposal warranted discussion but stopped short of backing it.
“I recognise there are differing views about how resilience and emergency response systems should be funded,” she said. “That is absolutely a legitimate debate.”
ICNZ has called for the FENZ levy – which currently raises around $800m annually – to be replaced by a Community Protection Levy focused on natural hazard risk reduction, with FENZ’s funding moving from insurance-linked levies to Crown appropriations. According to the lobby group, the proposed levy would allow between $600m and $700m a year to be redirected into resilience work such as flood protection, coastal protection, managed retreat, and landslip and storm risk mitigation.
ICNZ chief executive Kris Faafoi said the Crown should take direct responsibility for funding FENZ, and that countries with comparable economies and risk profiles – including Australia and Singapore – fund their fire services through central government appropriations rather than through a charge on insurance contracts.
Willis pointed to Budget 2026’s infrastructure investment as evidence the Government was already addressing resilience without requiring a separate levy mechanism. She cited weather-affected roads as an example, saying it was “fiscally stupid” to simply rebuild them after every event, interest.co.nz reported.
“But having a specific levy to achieve that, I don’t think is necessary if you have prudent Government investing in infrastructure,” she said. “Our view is that New Zealanders, who all pay tax, should expect their government, when it’s making infrastructure investment decisions, to be prioritising resilience.”
Asked directly whether she would support the proposal, Willis replied: “show me the money. To answer the question, we are already as government, stepping up investment and resilience.”
ICNZ’s 2025–26 policy agenda continues to stress urgency around climate adaptation, risk reduction, and infrastructure resilience, including engagement with the National Adaptation Framework and resource management reform processes.
The ICNZ push comes against a backdrop of mounting concern about insurance costs. The Reserve Bank of New Zealand (RBNZ) said in its May 2026 Financial Stability Report that rising rebuild costs, climate change, and improved modelling of seismic hazards were leading to higher premiums and increasingly impacting insurance affordability and availability.
The RBNZ estimated the total sum insured of New Zealand residential dwellings in 2024/25 was around $1.5 trillion, with the national average annual premium for domestic buildings cover sitting at about $2,900.
Willis acknowledged that premiums had risen faster than general inflation and that New Zealanders in earthquake- and flood-prone areas had faced particularly sharp increases. She said the Government had directed the Council of Financial Regulators to conduct a six-month review of residential insurance affordability, with officials due to report back later in June.
“While insurance uptake does remain relatively high, we need a better understanding of whether rising premiums will affect under insurance over time,” she said.
