Natural hazard risk in New Zealand will likely grow faster than our ability to manage it, the country's largest insurer IAG NZ says, as it calls for a clear, long-term government roadmap

"Natural hazard risk will likely grow faster than our ability to manage it," New Zealand's largest general insurer, IAG NZ, says.

That, IAG says, is because the country's current approach to natural hazard risk reduction is not yet fit for purpose.

“It has developed in an indirect, ad hoc and piecemeal way and, as a result, is complex, fragmented, and incomplete. This in turn limits the ability of councils, businesses, and households to reduce the risks they face."

IAG NZ trades under the AMI, State, NZI, Lumley and Lantern brands. It also provides general insurance products sold by ASB, BNZ and The Co-operative Bank.

Its chief executive, Phil Gibson, says: "This problem is solvable, but there are pieces of the puzzle that must be added to our current approach if we are to do a better job of reducing risk.”

That's why, in its latest report released on Wednesday, the insurer is calling on the Government to put forward a long-term road map on how to strengthen the country's ability to reduce natural hazard risk. It has proposed a possible 15-year roadmap option.

Sustained risk reduction

IAG NZ's report called A long-term approach to natural hazard risk reduction, looks into what's needed to make sure NZ's approach to natural hazard risk reduction can meet present and future demands.

The report says: “At its core, the challenge is systemic. It is not simply a matter of increasing risk, but of a growing mismatch between that risk and the sophistication and capacity of the system to manage it."

“New Zealand lacks the necessary commitment, direction and accountability for sustained risk reduction, and a coherent long-term plan to deliver it. Without these foundations, existing efforts are difficult to prioritise, align, and sustain over time and the effectiveness of otherwise well-intentioned policies and reforms will be undermined," the report says.

Since 2000, the price of house insurance has increased 916% - which consumer advocacy organisation Consumer NZ says is the biggest price rise for goods monitored by the Consumers Price Index (CPI) over the past 25 years. Alongside this, premiums have increased three times more than CPI inflation since 2011.

IAG NZ's report found 42 gaps and future needs that should be addressed. In a nutshell, these are:

• Where and what we build: The report says “the planning system lacks clear direction, thresholds, and adaptive mechanisms, while building and infrastructure frameworks insufficiently address future hazard risk, resilience across the lifecycle of assets and the need for large-scale adaptation, retrofitting or withdrawal from high-risk areas”.
• Knowledge: IAG NZ says there’s gaps in the availability, quality, accessibility and usability of hazard and risk information.
• Incentives: There’s insufficient incentives that prioritises risk reduction, and public expectations about risk and government support are “inconsistent” and “often misaligned with future realities”, the report says.
• Resources: There are constraints on funding, financing and capability.
• Governance: “Critically, New Zealand’s approach lacks clear system-wide accountability, coordination, and direction. There are no agreed national objectives, no comprehensive national plan, and no consistent mechanism to prioritise, monitor, and drive risk reduction across government,” the report says.

Aotearoa is viewed as the second riskiest country in the world when it comes to natural hazards and since 2010, $64 billion has been spent on natural disasters - this is an average of around $4.2 billion a year.

These hazards create “significant and lasting impacts on the economy”, the insurer says, as “they impose large direct costs, divert public and private investment, place pressure on our public finances, slow growth and reduce economic resilience".

IAG NZ says around 95% of that expenditure goes towards response and recovery, while only a small fraction is spent on reducing future risk.

“This pattern is unsustainable. As the climate changes and development continues in hazard-prone areas, the scale, frequency, and cost of these impacts will increase.

“Without a more effective approach to risk reduction, natural hazards will inevitably become a persistent constraint on our economic aspirations."

Roadmap

A long-term, coordinated and sustained programme of reform is needed, the report says.

“A central requirement is the development of a clear, enduring national plan for natural hazard risk reduction, supported by strong political leadership, clear national goals and priorities, and ongoing oversight and accountability. This effort will need to span multiple governments and operate over decades.”

IAG NZ has put forward a phased approach when it comes to a possible roadmap.

The present is called phase 0 and focuses on establishing the governance needed to develop and deliver a national plan for natural hazard risk reduction.

Phase 1, which goes over 4 years, is about laying the “foundations by strengthening planning frameworks, investing in risk-reducing infrastructure, improving knowledge, and clarifying cost-sharing and public expectations”.

The report says phase 2, which spans five to 10 years, will “extend and deepen the approach by aligning legislation, improving incentives, expanding the range of funding and financing solutions, lifting workforce capability, setting the basis for the improved resilience of buildings and infrastructure, and establishing the framework for retreat from high-risk locations”.

Phase 3, which is 10 years and over, would be about enabling large-scale adaptation by “establishing frameworks and solutions to support the upgrade, replacement or withdrawal in high-risk areas”.

Within this, the report says immediate priorities would be:

• Establishing senior political ownership of risk reduction across all natural hazards
• Establishing a strategy to reduce natural hazard risk, with specific objectives and independent oversight to keep things on track
• Refreshing the National Policy Statement - Natural Hazards
• Establishing an ongoing approach to Crown investment in, or co-financing of, risk reduction infrastructure
• Establishing the framework and mechanisms to capture the actual and expected costs of natural hazards to support informed policy development and investment

Making sure insurance remains available and affordable

Gibson says: “Our country needs councils, communities, businesses and homeowners to reduce the natural hazard risk they face. But New Zealand does not yet have a complete or coherent approach to enable this, and we want to help.”

He says if risk is well managed, the cost and harm it can create will be kept in check, with flow-on benefits for the cost and availability of insurance.

IAG NZ's full year 2025 financial results showed an annual "insurance profit" of A$606 million (about NZ$644 million). 

"We are determined to make sure insurance remains available and affordable for New Zealanders. That means being prepared to have hard conversations and pushing for stronger action to reduce risk at its source," Gibson says.

“New Zealand has choices in how we fill the gaps … But delay, half-measures and political caution will cost us in the long run.”