Natural Hazards Commission looking into 'smarter and more cost-effective ways' for the Crown to insure infrastructure risks given agencies manage insurance separately across more than 100 contracts

The Government wants to understand how exposed the country’s public infrastructure is to natural hazards by investigating “smarter and more cost-effective ways” for the Crown to insure infrastructure risks. 

Finance Minister Nicola Willis told interest.co.nz in a statement that Government agencies currently manage insurance separately across more than 100 contracts.

“That makes it difficult to understand the Crown’s overall exposure, take advantage of its scale, or make the best long-term decisions about protecting critical public assets like roads, schools and hospitals,” Willis said.

The Government directed the Natural Hazards Commission Toka Tū Ake (NHC) to develop a detailed business case for a Crown public infrastructure risk management scheme, giving $2 million in funding as part of Budget 2026.

In Budget 2026, under a section titled Public Infrastructure Risk Management Scheme Development, the Government said: “The risk management scheme is intended to help the Crown understand its exposure to potential losses so it can choose the most cost-effective mix of insurance, self-insurance, and investment in resilient assets, enabling more efficient preparedness for and responses to shocks.”

Willis said New Zealand faces significant natural hazard risks, and when major infrastructure is damaged, taxpayers ultimately carry the cost.

“We want to make sure the Government has the best possible understanding of those risks and is managing them as effectively as possible.”

She said the detailed business case would be looking at “whether there are smarter ways” for the Crown to understand and finance those risks.

In her letter of expectations to the NHC, released publicly in July, Willis wrote: “The Government continues to develop its approach to risk financing for public assets. Cabinet has approved an indicative business case and preferred way forward for NHC to be given a mandate to implement a public risk financing scheme.”

Cabinet approved the indicative business case in September 2025, which led to the funding for the detailed business case.

Treasury had also been involved and Willis expected close collaboration to continue between NHC and Treasury, the letter said.

“If the new function is progressed, it should be managed and governed appropriately with the Treasury. I also expect NHC to maintain governance and performance of the Natural Hazards Insurance Scheme, and ensure any potential issues relating to the performance and delivery of either function are raised with the Treasury and my office as appropriate," Willis wrote.

Willis told interest.co.nz the work was still in its early stages and no decisions had been made about creating a public asset risk financing scheme, expanding the NHC’s role, or what any future model might look like.

“The business case will assess the practical options, costs and benefits before any decisions are made. A progress report is due at the end of September, and the business case is expected to be finalised in early 2027.”