Insurance Brokers Association of NZ wants the Government to create a register of properties with Section 72 hazard notices, saying the implications of the notice aren't widely understood

The Insurance Brokers Association of New Zealand (IBANZ), the industry's lobby group, is calling for a centralised register of properties impacted by a hazard warning called a Section 72 notice.

Councils can place a Section 72 notice on a property’s record of title when it allows building consent for a property that is known to have been affected by or is at risk of a natural hazard. 

These hazards include erosion such as coastal erosion, bank erosion and sheet erosion, falling debris such as soil, rock, snow and ice, subsidence, inundation including flooding, overland flow, storm surge, tidal effects and ponding, and slippage. 

On its website, the Natural Hazards Commission Toka Tū Ake (NHC) says the notice is to make sure anyone with an interest in the property like banks, insurers, lenders and potential buyers, are aware of the hazard and the risk. It also means the NHC can fully or partly decline claims.

Alongside this, according to the Building Act 2004, building consent authorities who place a Section 72 notice on property titles are not liable and no civil proceedings can be brought against them.

The Act says this is “on the grounds that the building consent authority issued a building consent for the building in the knowledge that the building for which the consent was issued, or the land on which the building was situated, was, or was likely to be, subject to damage arising, directly or indirectly, from a natural hazard.”

‘Increase transparency and improve access to information’

IBANZ chief executive Katherine Wilson says the implications of this notice are not widely understood.

She also raised how this meant the NHC could limit or decline claims for damage caused by that hazard. 

This meant there could also be a flow on impact for a homeowner's private insurance, Wilson said.

“As private insurers usually top up the cover above the NHC cap, many private insurance policies will only pay out once NHC accepts its portion of the claim, potentially leaving homeowners uninsured for the specified natural hazard risk.”

For each natural hazard event, the NHC currently pays $300,000 towards rebuilding or repairing a residential home. This is called a building cover cap and currently, the Natural Hazards Insurance Levy is 16 cents per $100 of the insurance cover amount.

As well as this, Wilson says it’s not unusual for a homeowner to only find out about a Section 72 notice on their property when they want to sell or make an insurance claim.

“IBANZ is advocating for government to create a centralised, freely available register of properties with Section 72 notice to increase transparency and improve access to information. 

“We also believe there is a need for a public education campaign to support awareness and understanding.”