New Zealand’s insurance brokers are raising concerns about property risks in some of the country’s most desirable residential areas, warning that natural hazards could impact insurance coverage.
The Insurance Brokers Association of New Zealand (IBANZ) has highlighted the potential risks in areas such as Papamoa, Southshore in Christchurch, and Morrinsville in Waikato – locations that recently ranked among Trade Me’s most sought-after suburbs.
IBANZ chief executive Mel Gorham said that while these suburbs are popular, some properties may be affected by environmental risks such as flooding, erosion, land subsidence, or slippage. These risks can lead to local authorities issuing Natural Hazard Section Notices, which are placed on property titles to notify buyers, lenders, and insurers of known risks.
Under New Zealand’s insurance framework, these notices can impact coverage. The Natural Hazards Commission Toka Tū Ake (NHC) has the discretion to decline some or all of its standard $300,000 insurance payout if the damage is caused by a hazard already listed on a property’s Section Notice.
Gorham also noted that some private insurers may not approve claims unless NHC has confirmed its portion of the payout, which could leave homeowners exposed.
“This could leave the property owner with no cover at all for what is likely to be the most significant natural hazard their property faces,” she said.
Natural Hazard Section Notices are issued under Section 72 of the Building Act, which allows councils to grant building consents for properties in high-risk areas if the construction does not increase the existing hazard. While these notices serve as a disclosure tool for stakeholders, IBANZ believes that their impact on insurance coverage is not well understood.
As concerns grow about natural hazard exposure, NHC’s latest report highlighted more than $10 million in funding for initiatives aimed at improving national resilience. The funding, detailed in the latest “Research and Resilience Highlights Report,” is being directed toward earthquake, flood, and environmental risk mitigation projects.
A key focus is the study of base isolation technology, a method used internationally to strengthen buildings against seismic activity. NHC is examining whether the long-term benefits of adopting this technology on a wider scale outweigh its upfront costs.
Other research initiatives include:
Alongside research efforts, NHC collaborates with industry organisations such as the New Zealand Planning Institute and Structural Engineering Society NZ to promote resilience in construction and urban planning.
