Insurance industry leaders in New Zealand are raising concerns that as insurers shift toward property-specific risk pricing, more homeowners may find it difficult to obtain coverage.
If a significant number of homes become uninsurable, property values could decline, potentially affecting the broader economy, the industry leaders said.
Speaking at the Insurance Council of New Zealand (ICNZ) conference, ANZ chief risk officer Ben Kelleher noted that while property values tend to drop in flood-affected areas immediately after an event, they generally recover within two years. However, he highlighted a lack of publicly accessible risk information, which complicates decision-making for buyers and sellers.
“What we lack is transparency of information, so any party going into a transaction would ideally have the same base level of information. If I’m going to buy a house in this location, what are its natural hazard risks,” he said, as reported by RNZ.
As climate change intensifies, insurers are factoring greater environmental risks into pricing models. This has led to rising premiums in high-risk areas and, in some cases, restricted coverage options.
IAG chief executive Amanda Whiting said insurers are increasingly using detailed risk assessments for individual properties, rather than relying solely on regional data.
“It is actually having a rating, a risk factor if you like, on every property in New Zealand so we can actually start to work through, how do we know where the high risk-rated properties are and what are we doing about those,” she said.
She added that insurance providers should clearly communicate when a proposed development is unlikely to be insurable, which could prevent homes from being built in unsuitable locations.
Tower Insurance chair Michael Stiassny called for stronger government oversight to ensure new developments are not placed in areas highly vulnerable to climate-related damage.
He cautioned that lower-income homeowners could be disproportionately affected if their properties lose insurance eligibility.
“The lower end of the market unfortunately is going to be taken to the cleaners by the developer already with the council in tow,” Stiassny said.
The discussion also touched on the complexities of managing existing homes in high-risk areas. Some councils have attempted to place risk warnings on property records, but legal challenges from homeowners concerned about declining values have hindered those efforts.
Successive governments have explored measures such as restricting development in flood-prone areas, enhancing risk data accessibility, and establishing guidelines for handling properties that become uninhabitable due to climate impacts. However, no significant legislative changes have been enacted.
A recent survey commissioned by ICNZ found that 49% of New Zealanders believe the government should increase investment in protecting homes and communities from extreme weather events. While this is slightly lower than the 53% recorded in 2023, it remains significantly higher than the 39% reported in 2002. About 29% of respondents were uncertain.
Survey data also showed strong public backing for stricter building regulations, with 83% of respondents agreeing that development should be restricted in flood-prone areas.
ICNZ chief executive Kris Faafoi said the findings demonstrate that many New Zealanders expect more proactive risk management strategies.
“It’s clear Kiwis want to see more investment in resilience measures and action to avoid building in dumb places,” he said. “The government is taking steps in the right direction, but New Zealand needs to remain focused on finding solutions to reduce risk and keep communities safe as we face the prospect of more extreme weather.”
Former Climate Change Minister James Shaw told the ICNZ conference that progress has been slow despite years of discussion.
“The agencies responsible for developing this framework have been going around in circles for years and years and years,” he said.
Current Climate Change Minister Simon Watts said a climate adaptation bill is expected to be introduced later this year, although it may not fully address all concerns raised by industry leaders.
