IAG New Zealand, the country's biggest general insurer, is calling for a three step plan to combat flood risk, including halting building in flood prone areas.
The steps IAG wants to see include;
♦ A joint government and private sector project to build a common understanding of priority flood-prone communities;
♦ Implement a National Policy Statement to cease development in flood-prone locations. And;
♦ Establish a national programme of investment in flood protection.
IAG NZ CEO Amanda Whiting says IAG wants to avoid a scenario where the homes and businesses most exposed to flooding will find it difficult to obtain or afford insurance.
Whiting says while the government's recently released National Adaptation Plan is a great start in the response to the impacts of climate change, "we need to be much more specific, targeted and urgent about the steps we will take to reduce the risk of flooding."
“To keep people safe, we need to think smarter. We need greater investment in infrastructure and other solutions that either protect people or move them out of harm’s way,” says Whiting.
IAG trades through the AMI, State, NZI, NAC, Lumley and Lantern brands, and provides general insurance products sold by ASB, BNZ, Westpac and The Co-operative Bank. It insures some $715 billion of commercial and domestic assets.(You can see more on the National Adaptation Plan here and here).
“Development and investment decisions are leading to more people living in flood prone locations, where they face growing risks due to the impacts of our changing climate on rainfall and sea level. The last two years alone have seen 10 major floods with insured losses of around $400 million, plus wider economic and social costs that extend into the billions," Whiting says.
“Tragically, weather events in New Zealand have also resulted in serious injury and loss of life. Reducing the impacts of flooding is a large and complex challenge, but not an impossible one. There are practical, concrete actions we can take to increase our resilience."
“The most sensible course of action is to stop making this problem worse and better protect the 1% of New Zealand homes that are most exposed to flooding. New Zealand’s traditional focus on response and recovery must expand to place much more emphasis on prevention and risk reduction," says Whiting.
Details on IAG's three steps are below.
1. A joint government and private sector project to build a common understanding of priority flood-prone communities
First, we need to create a common understanding of which flood prone locations are most in need of support to reduce the risk they face.
This can be done through a formal project between central and local government, and other stakeholders to identify and prioritise flood prone locations. This project needs to take into account current exposure, quality of current flood protections, the financial position of councils, the deprivation and resilience of communities, the availability and affordability of insurance and lending, as well as current flood protection investment plans and projects.
2. Implement a National Policy Statement to cease development in flood-prone locations
Second, we need to stop building in flood prone locations, so the problem doesn’t get worse.
This would best be achieved through a National Policy Statement developed by the Ministry for the Environment/Manatū Mō Te Taiao working alongside local government and other stakeholders to develop a statement that requires councils to avoid new development, or intensification of existing development, within locations that are exposed to flooding that may occur more frequently than one in 50-years.
3. Establish a national programme of investment in flood protection
We need to develop and carry out a programme to improve flood defences in our most at-risk communities.
This would involve the New Zealand Infrastructure Commission | Te Waihanga working with Treasury/Te Tai Ōhanga, local government and other stakeholders to develop a business case and a programme of work for investment in flood protection infrastructure for priority flood-prone locations.
Whiting describes the three steps as practical, saying they would lead to a sensible and targeted reduction of flood risk for the communities that most need it.
"IAG is prepared to play its part in each of these steps," she says.
“Reducing the impact of flooding through better planning and infrastructure investment will help us to avoid a situation in the future where low-lying communities are more frequently disrupted by floods. If this continues, those homes and businesses that are the most exposed to flooding will find it difficult to obtain or afford insurance."
“For all New Zealanders, this is a future case scenario we resolutely want to avoid. Failure to properly plan and invest will not only make insurance harder to get and more expensive over time, but also cause wider and more devastating impacts on the physical and financial wellbeing of our most flood-prone communities," says Whiting.
*In an episode of our Of Interest podcast last month, Tower CEO Blair Turnbull spoke in detail about climate change and insurance.
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