Private insurers have absorbed $31 billion of the more than $64 billion in total natural hazard costs New Zealand has incurred since 2010, while government spending on reducing that risk before disasters strike has remained at just 3%, according to a Sapere Research report commissioned by IAG. That imbalance sits behind the repair bill now facing Environment Canterbury (ECan) in Kaikōura, where an estimated 450mm of rain over July 7 and 8 caused flooding, stopbank breaches, erosion and heavy movement of gravel and sediment.
ECan chairperson Dr Deon Swiggs said the event points to a wider case for investment in climate change adaptation.
"Every dollar we spend now has a saving of $7-$9 in recovery costs and this is where insurance is going, because if you don't do this work you may not get insurance," he said.
That framing lines up with where policy currently stands. As reported in coverage of the government's new climate adaptation bill, climate change minister Simon Watts introduced legislation on July 15, 2026, that would, for the first time, place a legal obligation on councils to plan how high-risk communities will adapt to climate change over a minimum 30-year horizon.
Watts confirmed the funding split remains unresolved, telling media that cost-sharing decisions would be left to the next term of government, while finance minister Nicola Willis has rejected calls for a dedicated resilience levy, arguing it is unnecessary "if you have prudent government investing in infrastructure."
The gap between resilience spend and disaster response is visible in how insurers price flood exposure today. The Reserve Bank's May 2024 Financial Stability Report found that around 6% of properties, roughly 120,000 nationwide, are assessed at high flood risk, with an average of 20% of insurers' quotes on those properties carrying an additional flood premium of $250 or more a year.
In Treasury data reported separately, that additional premium reached as high as $4,500 on some properties, with some Christchurch suburbs unable to secure more than one online quote at all. Kaikōura, where flood protection along the Kowhai River held but the riverbed has risen five to seven metres in places, is a candidate for the same kind of repricing once insurers assess the aftermath.
Council flood protection recovery manager Shaun McCracken said repairing ECan's infrastructure, including flood protection assets, would run to tens of millions of dollars based on current estimates.
Swiggs said public safety is the immediate focus while staff work through the damage.
"Our first priority is to make it safe, plugging in holes and critical weaknesses, repairing the breaches and working where there is erosion," he said.
ICNZ has pointed to specific examples of what earlier resilience spending has returned. As set out in its proposal for a Community Protection Levy, the $15 million Awanui Flood Protection Scheme in Kaitaia is estimated by the council to have already avoided around $50 million in damage, and a $4 million stopbank upgrade in Taradale helped protect around 10,000 properties during Cyclone Gabrielle.
Those figures sit behind ICNZ's push to replace the Fire and Emergency New Zealand levy with the new levy, which would redirect an estimated $600 million to $700 million a year into resilience projects rather than post-event recovery.
ECan's own resilience work in Kaikōura is funded through the Regional Infrastructure Fund, under an arrangement in which government contributes 60% of costs.
That programme, including river protection, vegetation clearance, berm work and measures on the Kowhai River to lower future flood risk, had only just started when the flood struck.
"The funding has been really helpful as we were already bringing in large rocks into the area to prepare for a rainy day," McCracken said, adding that a dozen work sites are now under way to deliver immediate resilience measures, though the Kowhai River flood defences remain vulnerable.
Kaikōura has around 3,000 ratepayers, but Swiggs said the district's exposure carries implications for the national economy given its position on the South Island transport network.
"Kaikōura is an example of where it could go terribly wrong if you don't think about how you fund resilience," he said. "It is a small community which is vulnerable to climatic events and they can't fund it by themselves."
Insured losses from the Kaikōura event itself are not yet available, though the damage profile, spanning road closures, flooded buildings, inundated vehicles and commercial disruption, is consistent with the multi-line exposure seen across a costly run of South Island weather events over the past year.
According to the ICNZ Cost of Natural Disasters database, that run includes $158.9 million from the October 2025 event, $37.4 million from a June 2025 storm, and $75.9 million and $83.9 million from January and February 2026 events respectively.
Te Uru Kahika, the body representing regional and unitary councils that Swiggs chairs, has lobbied government for several years for co-funding toward flood resilience, and Swiggs said a larger region provides the capacity and staffing needed to respond to events of this kind.
