The Insurance Council of New Zealand (ICNZ) has put the question of who pays for climate adaptation in front of the next government. It's a decision the current government has said it will leave to the new term.
In a statement on Wednesday, ICNZ called on whichever government is formed after the November 7 election to prioritise climate adaptation, resilience and long-term funding. ICNZ chief executive Kris Faafoi welcomed the recognition of climate-related risks during Tuesday night's Stuff leaders' debate between National's Christopher Luxon and Labour's Chris Hipkins.
"New Zealand has spent a lot of time talking about the problem. The next Government must pivot to action to reduce risk for New Zealand's communities that are the most vulnerable to natural hazard risk," Faafoi said.
He said that meant investing in flood protection and other resilience infrastructure, making better planning decisions, and avoiding further development in high-risk areas. "Long-term funding is critical. Communities and councils need certainty to plan and invest in resilience and adaptation measures that reduce risk," he said.
According to Faafoi, both leaders agreed that New Zealand cannot keep rebuilding after every disaster. He also cited the figure, raised during the debate, of 219,000 homes valued at $180 billion at risk from coastal or inland flooding.
ICNZ-commissioned research found seven in 10 New Zealanders expect flood, landslide and coastal inundation risks to be a significant challenge for future governments. Fewer than half (48%) believe politicians are taking the risks posed by extreme weather seriously, and nine in 10 want political parties to work together on solutions. Two-thirds (67%) believe natural hazard risks affect property insurance premiums.
The policy gap is specific. Climate Change Minister Simon Watts introduced legislation on July 15 that would, for the first time, legally require councils to plan how high-risk communities will adapt over a minimum 30-year horizon. Watts has said cost-sharing decisions will be made in the next term of government. Finance Minister Nicola Willis has rejected calls for a dedicated resilience levy. ICNZ has proposed replacing the Fire and Emergency levy with a Community Protection Levy, which it estimates would direct $600 million to $700 million a year into resilience projects.
Insurers are not waiting for the funding to be settled. In January, AA Insurance halted new home, business and landlord policies in Westport, IB NZ has reported.
"The best way to support the long-term accessibility and affordability of insurance is to reduce the risks facing homes, businesses and communities," Faafoi said.
For brokers with clients in flood-exposed areas, the cost-sharing decision now rests with whichever government forms after November 7. Until it is made, renewals in those areas will be priced and accepted on current hazard data rather than on adaptation plans that have not yet been funded.
