The recent release of the report by the Expert Working Group on Managed Retreat is a most welcome contribution to the much wider work going on around how we can manage climate risks.
Its authors are well known in Government, academic and insurance circles and have been working on such issues for many years. The report is not a reaction to Aotearoa’s latest twin climate disasters but its adjacency to them does though mean more people should, and hopefully will, pay much more attention to it.
It clearly also comes at a time when central and local government, insurers and communities are grappling with the very real impacts and longer terms risk assessment and management work being done in response to those twin climate disasters.
More widely, it comes during the hardest reinsurance market we have seen for many years generally, and at a time when reinsurers are reassessing the overall climate risk for Aotearoa and pricing it accordingly.
The report is all the more welcome as it provides a framework to help central and local government and communities across the motu look much more closely at the hazards they face and the steps they can take to deal with them. This is not just about leaping to the last resort of retreating.
General insurers, as well as reinsurers, have a major role to play in helping communities weigh the risks and their options; not least because the terms and conditions under which insurance is available can have a major impact on communities. Indeed, this approach is captured under Step 2 of the report’s proposed approach (see E33) where input from experts with regard to financial risks is called for.
Of course, pressure on the terms and conditions under which insurance is offered always first occurs at the margins. The first test of this will be where councils in the wake of this year’s extreme weather events have identified areas where flood mitigation is required to protect residential properties. Once necessary mitigation measures, if any, have been identified and completed, there needs to be a high level of confidence that the risks have indeed been addressed and that a Cat 2 designation can be lifted with a reasonable expectation that it will be enduring.
What’s essential in this process, and this applies across the motu, is that insurers work with communities to understand the outlook for insurance as best as that can be provided. Of course, protection is not just about insurance, but avoiding harm to people, social distress and wider economic and environmental loss. Not unexpectedly, attention is focused now on those areas worst affected by this year’s twin climate disasters, but the issues apply across the motu to areas of elevated risk.
In an ever-warming world where extreme weather events continue to become both more frequent and severe, more and more communities will face intolerable risks to life and safety. We also know to expect more severe transport and economic disruption, and environmental and social losses. This is not just about insurance.
It’s also clear that recent years have seen a step change in annual climate-related losses around the world which has inevitably flowed through into capacity and pricing for insurers around the world. It has raised the bar here and elsewhere to ensure resilience is hard-wired into thinking about future consenting and current protection for communities. Insurers’ experience and expertise can help support the conversations that need to be had.