Auckland Mayor Wayne Brown says underestimated disaster recovery costs are partly responsible for this year’s nearly 8% average rate increase, and he is calling for central government and the insurance sector to take on a larger share of the cost of severe weather events, according to RNZ. His comments come as two separate national funding mechanisms – the levy that funds Fire and Emergency New Zealand (FENZ) and the levy that funds the Natural Hazards Commission Toka Tū Ake (NHC) – are both under review, with neither expected to be resolved before this year’s election.
A joint council and central government scheme to buy out homes damaged in the 2023 severe weather events wrapped up this week at a cost of $2 billion. It was budgeted for around 700 properties; roughly 1,200 went through the process. Brown said the mismatch between forecast and outcome shaped decisions that ratepayers are now covering. “The early estimates set the foundation for key funding decisions. Good decision-making relies on reliable information, and in situations like this, I would’ve preferred if they’d said, ‘we don’t know’ how many properties might be affected,” Brown said, as reported by RNZ. Auckland Council has also set a target of cutting $106 million from its operating budget in the next financial year, with the City Rail Link build and its ongoing running costs among the items straining the budget.
Brown’s central argument is that Auckland’s experience reflects a nationwide funding gap that local rates cannot close. “Ratepayers are not insurers and shouldn't bear the burden of the cost of major weather events. With ongoing budget pressures and the possibility of rates caps, councils simply do not have the financial capacity to absorb events of this scale. This is not unique to Auckland. We need a sustainable national approach in place before the next major disaster strikes. This is a nationwide issue that requires a coordinated government and insurance industry response,” he said.
Brown’s call for a national approach is not happening in isolation. FENZ collected close to $800 million in the 2024-25 financial year, with about 95% of that revenue drawn from a levy on property and motor insurance premiums, even though only 59% of its recorded call-outs between July 2025 and March 2026 were fire-related. Minister of Internal Affairs Brooke van Velden announced on June 17 that the Department of Internal Affairs would assess whether the levy remains appropriate, weighing direct Crown funding against a rates-based collection model. “Given the significance of the levy, it is timely to consider whether its design and operation remain appropriate, or whether improvements are possible,” van Velden said. The Insurance Council of New Zealand | Te Kāhui Inihua o Aotearoa (ICNZ) has proposed going further, replacing the FENZ levy with a Community Protection Levy that would redirect an estimated $600 million to $700 million a year into resilience work. ICNZ chief executive Kris Faafoi said the current levy is “too complex, too uneven, and no longer well suited to the risks New Zealand faces today.”
The NHC’s Natural Hazards Insurance levy faces a comparable gap between its funding and its obligations. The levy sits at 16 cents per $100 of building cover; Treasury’s Cabinet paper on insurance affordability, published in February 2026, puts the technical rate needed for long-term sustainability at 24 cents. At the current rate, Treasury’s own modelling gives the scheme a 34% to 38% probability of falling short of its costs over a five-year period. The government has deferred any increase, citing cost-of-living pressure, with a decision unlikely before mid-2027. The NHC’s reinsurance tower attaches at $2.2 billion; the Natural Hazard Fund itself holds approximately $800 million, meaning a loss event between those two figures would need to be met by the Crown.
Brown’s argument that costs are landing in the wrong place has a parallel in the Reserve Bank of New Zealand’s own assessment. Its May 2026 Financial Stability Report states that “emerging pressures from insurance affordability, underinsurance, and insurance retreat from areas exposed to elevated flooding risk indicate financial stability risks may increase.” AA Insurance has already placed underwriting holds on new home, business, and landlord policies in Westport and several Canterbury towns, citing flood and seismic exposure, while continuing to renew existing cover. “This decision reflects the elevated natural hazard risk of flooding in the area, and that our exposure has reached a level where a pause on new policies is the most responsible step to ensure we can be there for our existing customers when they need us most,” AA Insurance head of underwriting Dee Naidu said. ICNZ has characterised the holds as an isolated business decision rather than a sector-wide retreat, with chief executive Kris Faafoi saying other insurers had continued accepting new business in the affected postcodes.
Research commissioned by ICNZ found 87% of respondents support acting early to protect communities from natural disasters, and 61% believe government should lead that response. A separate climate poll from AMI, State, and NZI – now in its ninth year – found 92% of New Zealanders expect more frequent and extreme floods, and just 27% are confident the country can manage climate risk, against 42% who are not, marking the fifth consecutive year that pessimism has outweighed confidence. “It is clear we cannot continue as we are. New Zealand must take stronger action to reduce the impacts of climate hazards,” AMI, State, and NZI chief executive Phil Gibson said. Brown’s comments frame Auckland’s rate rise as a symptom of a broader, unresolved question about who pays for the country's growing exposure to severe weather. With the FENZ and NHC levy reviews both unresolved and insurers already repricing risk ahead of any decision, that question is likely to remain open well into the election period.
