New Zealand's biggest insurer is urging the incoming government to push on with natural hazard risk reduction, climate change adaptation and managed retreat work to help keep insurance available and affordable in the face of stark impacts, and rising costs, from extreme weather and natural hazards.
IAG, which operates the AMI, State, NZI, NAC, Lumley and Lantern brands, and provides general insurance offered through ASB, BNZ, Westpac and The Co-operative Bank, says it has been clear for more than a decade that NZ needs to take urgent action to keep people safe from natural hazard and climate change impacts.
IAG says it has now paid out more than $1 billion worth of insurance payouts for the January North Island floods and Cyclone Gabrielle, second only to payouts made for the Christchurch earthquakes.
"We believe that the best way to keep insurance available and affordable is by reducing natural hazard risk through good planning decisions, investment in protection and resilience measures, and where necessary, through relocating people away from at-risk properties," IAG CEO Amanda Whiting says.
"My message to our new government would be to prioritise this important work."
Whiting says IAG received 51,000 insurance claims for the North Island floods and Cyclone Gabrielle, with 99% of motor vehicle, 97% of contents, and 93% of home claims having now been settled. Average claim costs are rising, she says, noting average weather-related claim costs were $35,000 in Hawke’s Bay, $30,000 on the West Coast, and $21,000 in Gisborne Tairāwhiti.
By international standards, NZ has high levels of private insurance. Whiting says the best way to keep insurance available and affordable is by reducing natural hazard risk through good planning decisions, investment in protection and resilience measures, and where necessary, moving people away from at-risk properties.
“For over a decade, we have been clear that New Zealand needs to take urgent action to keep people safe from the impacts of natural hazards and climate change. If we continue along this path, and do not act with urgency, New Zealanders will continue to be exposed to harm," says Whiting.
"It is also becoming evident to government and communities that a failure to reduce these risks may impact the long-term availability and affordability of insurance in some communities."
The previous government last year released NZ's first national adaptation plan, which set out that the Ministry for the Environment and Treasury would lead a programme of work on how NZ meets the costs of climate change and invests in resilience. Banks have told a subsequent parliamentary inquiry into climate adaptation that insurance withdrawal would leave them with stark options.
IAG says it insures $940 billion of commercial and domestic assets in NZ.