A peer-reviewed simulation of a 7.5 magnitude Wellington earthquake has found that nearly half of all road trips out of the capital could still be infeasible three months after the event. For brokers placing commercial cover in Wellington, the finding raises a question that standard policy design is not built to answer: if a client’s premises are undamaged but inaccessible for months, does their business interruption cover respond?
The simulation, published in the International Journal of Disaster Risk Reduction and reported by RNZ on August 9, 2026, modelled traffic disruption following a major rupture on the Wellington Fault. Researchers referenced a 2011 estimate placing the probability of such an event at 10% within the next 100 years. Using parameters including driver reaction time and jam density, and drawing on prior infrastructure damage assessments, the researchers modelled the closure of multiple key routes – including stretches of State Highway 1, Hutt Road, Grant Road, Curtis Street, and Chaytor Street.
In the three days immediately following the simulated event, 68% of inbound trips to the Wellington region and 82% of outbound trips would be infeasible. Three months later, those figures remained at 25% and 49%, respectively. Lower Hutt was identified as the most affected area, followed by Wellington City. The researchers acknowledged that the model assumed constant travel demand, noting the simulation “may overestimate congestion and trip cancellations by not accounting for behavioural adaptation during recovery.”
The three-month access finding is where the insurance exposure becomes concrete. Most commercial BI policies in New Zealand require physical property damage as the precondition for a claim. A Wellington business whose building is intact but whose staff cannot reach it, whose suppliers cannot deliver to it, and whose customers cannot access it due to network-wide road closures is facing losses that fall outside that trigger entirely.
New Zealand prevention-of-access and contingent BI extensions are generally triggered by insured physical damage near the premises, not by loss of access alone. Tower’s current business interruption wording, for example, provides prevention-of-access cover where insured damage within a one-kilometre radius hinders or prevents access to the premises. Policy wordings and geographic triggers can differ between insurers. Where road closures stem from infrastructure damage distributed across the network – rather than a discrete insured event in close proximity to the client’s site – those thresholds may not be met, even where extensions exist on the policy schedule.
Contingent BI cover protects policyholders if their suppliers or customers are affected by an event, even if the insured’s own premises are not. Denial of access and civil authority extensions respond when a business cannot access its premises due to a nearby event or government order. These are not standard inclusions in most SME policies, however, and require deliberate arrangement. Brokers should not assume an extension is active simply because it appears in a product guide – scheduling requirements, geographic triggers, and deferment periods all determine whether a claim would be payable.
No public data exists on what proportion of Wellington commercial SME policies currently carry active denial-of-access or contingent BI extensions. The Insurance Council of New Zealand (ICNZ) tracks gross written premium by class – commercial material damage and business interruption GWP across all New Zealand fell from $1.597 billion in 2024 to $1.427 billion in 2025, while earthquake-specific GWP (domestic, commercial material damage, business interruption, and marine cargo combined) fell from $1.220 billion to $1.126 billion over the same period – but does not publish data at extension level. The absence of that figure is itself a signal: extension adequacy is a client-by-client question, not a market average.
Indemnity period selection is the second area of exposure. Wellington earthquake repairs can take three to five or more years, and recommended BI indemnity periods for Wellington properties are a minimum of 24 months, and preferably 36 months. A standard 12-month indemnity period would expire well before the study’s three-month road disruption scenario has fully resolved – and that is only the access constraint, not the repair timeline.
The concern is compounded by current market conditions. Gallagher Insurance New Zealand’s March 2026 Market Update warned of a possible profitability tipping point within six months, noting that both IAG and Suncorp reported declines in New Zealand gross written premium – IAG’s intermediated business falling 10.4% and Suncorp declining 5.6%. In a soft market, clients under cost pressure may shorten indemnity periods or drop extensions at renewal. Gallagher Insurance New Zealand chief broking officer Mark Jones put the stakes clearly in March 2026, stating that underinsurance is “not just a claims problem anymore – it’s a financing and governance problem,” with banks and investors now “asking sharper questions about insurance to value, business interruption modelling, and location exposures.”
Vero’s annual SME Insurance Index, published in March 2026, found that more than one in five (21%) New Zealand businesses were not confident in their own business prospects, with nearly two-thirds having experienced a drop in revenue over the past year. Vero executive general manager Sacha Cowlrick warned against cutting cover under that pressure, stating: “Having adequate cover could be the difference between folding under pressure and finding a way through.”
The study’s authors stated: “Overall, the findings highlight that proactive planning, demand management, and targeted investment in critical corridors are essential to maintain network functionality and enhance resilience under extreme but plausible post-disaster scenarios.” That framing applies directly to insurance programme design, not only to infrastructure policy. The Reserve Bank of New Zealand (RBNZ) has noted that risk-based pricing for seismic risk has been most prominent in Wellington, and that rising premiums may lead customers to underinsure – taking higher excesses and lower sums insured – leaving owners of high-risk properties vulnerable in a total loss event. For brokers, the study provides quantified, peer-reviewed evidence that the risk extends well beyond the insured premises: road disruption alone, in the absence of any building damage, can render a business non-operational for months.
Three questions are worth raising at every Wellington commercial renewal: whether the client’s BI wording contains an active, correctly scoped denial-of-access or contingent BI extension; whether the geographic and damage triggers in that extension would respond to network-level road disruption rather than only proximate property damage; and whether the indemnity period is calibrated to a multi-month recovery scenario rather than a standard annual term.
The National Emergency Management Agency (NEMA) reiterated standard public guidance following the study’s publication, advising that households prepare emergency plans and that “in the event of an earthquake, remember to drop, cover, and hold.”
