40K flood-prone NZ homes to lose insurance in next 20-30 years

Government report revealed $100 billion worth of homes at risk of flooding

40K flood-prone NZ homes to lose insurance in next 20-30 years

Catastrophe & Flood

By Kenneth Araullo

Around 40,000 NZ flood-prone homes around the country could lose insurance in the next 20 to 30 years, according to Climate Sigma managing director Belinda Storey.

The startling figure comes alongside a government report that found $100 billion worth of homes that are at risk of flooding. This equals to 675,000 people, or 1 in 7 Kiwis. A managed retreat that is being considered by the government in conjunction with flood mapping and research from the IAG is looking to cost a hefty $3.75 billion every year.

“The hardest market in a decade”

In the same panel interview in which Storey gave her warning, ICNZ chief Tim Grafton highlighted the adverse effects of the recent Cyclone Gabrielle as well as the Auckland floods in January. Grafton said that if the risk isn’t reduced and vulnerable communities aren’t relocated then insurance will inevitably do its job.

"[It] signals through price, then increasingly it becomes less affordable to insure your property," Grafton said. “This is why something needs to be done about it. Really pleased to see things brought forward with the Roche task force with the mandate to look at how and where the potential relocation may occur."

Even before the two extreme weather events, New Zealand homeowners were already seeing a “steep rise in premiums.” Tower boss Blair Turnbull recently expressed a similar sentiment, noting that the recent natural catastrophes have cut into the profits of the insurer.

"That was on the back of high inflation, high building costs and the insurance that the insurers buy offshore to diversify their risk. We've got the hardest market in a decade,” he said.

Alo participating in the panel was senior civil and environmental engineer Aidan Cooper, who said that while there’s a large number of homes at risk, the exact amount is unknown. This makes it a great opportunity, he said, to start identifying and start adapting.

Storey’s figure of 40,000 of homes at risk of losing insurance is not an exact estimate, with the director stating that she can’t be confident in it given that the “adequate mapping of that risk” isn’t available. While Auckland has accurate flood models, many other regions across the country don’t, Storey said.

Storey called for an investment for flood risk assessment on a national scale. She said that it’s necessary "so you don't have a situation where Auckland has got excellent information and other regions don't." She mentioned Lidar, a technology that has been around for decades, and its usefulness because flood mapping can’t be done without it.

"We have a better understanding in the topography of the moon than we do of Hawke's Bay, so we need to be making major investments in our risk on a national scale," she said.

A recent model from the country’s largest insurer, IAG, found that there are 20,000 homes at risk of flooding, necessitating a managed retreat should another extreme weather event hits Aotearoa.

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