Insurer Suncorp NZ says it wants checking natural hazard risk to be ‘as routine as researching the school zone’ for house buyers but cautions having good data won't automatically lead to better decision-making

Natural hazard information needs to be easier for people to use when making big life decisions like buying a house, the chief executive of the country’s second largest insurer, Suncorp New Zealand, says.

Recent research by Talbot Mills, commissioned by Suncorp NZ, showed that while a majority of homeowners felt confident assessing a property’s risks before buying - 57% of respondents actually considered natural hazard information when buying their most recent home.

The survey of 1029 homeowners also found that 49% of respondents often relied on “gut feeling and intuition” rather than professional data or reports when making major life decisions - like buying a home. 

The survey found 70% of respondents agreed that the way businesses and councils talked about natural hazard risk was confusing and hard to use in real life.

And while 59% of those surveyed turned to official council data for information on natural hazards, the next most common source of information was family, friends and local knowledge at 27%.

Asked what was stopping them from looking at natural hazard information, 28% of respondents said they didn’t know where to find the information while 20% didn’t know what information was available.

“New Zealand is building a comprehensive set of natural hazard data but our research illustrates that having good data won’t automatically lead to better decision-making unless people know where to find it or how to use it," Suncorp NZ chief executive Jimmy Higgins said.

"We want checking natural hazard risk to be as routine as researching the school zone, commute or building report," he said.

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, an average of around $4.2 billion a year.

'Insurance is often treated as a settlement requirement rather than an important indicator of risk'

In its latest policy paper Suncorp NZ, which operates Vero and has a majority stake in AA Insurance, said the issue was not a lack of information. 

Information was held by the likes of councils, the Natural Hazards Commission, Earth Sciences New Zealand, NZ SeaRise and the private sector.  

“Instead, the challenge is that natural hazard information is fragmented, inconsistent across regions, often difficult to interpret, and typically encountered too late in the property journey."

“A LIM (Land Information Memorandum) may never arrive after a buyer has become emotionally and financially invested in a property," the policy paper, called From Data to Decision-Making: Helping New Zealanders Make Better Decisions About Natural Hazard Risk, said.

“Insurance is often treated as a settlement requirement rather than an important indicator of risk.”

“While banks require proof of insurance, borrowers may have little understanding of how insurance availability, affordability and terms could change as climate-related risks increase," the policy paper said.

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.

'Climate change is an elephant in the room and we need to tackle it one bite at a time'

While the paper said flood modelling standards, spatial planning reforms, and the commitment to a National Flood Map “all represent meaningful progress”, better data did not automatically lead to better decisions.

The paper said "recent research ... makes clear that information must be accessible, understandable and actionable if it is to influence behaviour".

"This is the missing link in the resilience puzzle."

Some recommendations Suncorp NZ made in its policy paper are to:

• Expand the NZ Flood Map into a broader, all-hazards property risk platform that "serves as a central access point" for natural hazard information
• Establish a plain-English natural hazard risk communication standard so there’s a consistent approach to explaining hazard risk to households including common terms like “1-in-100-year flood”
• Apply this communication standard to things like LIMs, council hazard maps, real estate materials and insurer messages
• Develop and publish guidance for people who identify potential hazard risks including where to find more information, who to talk to and when people may need professional assessments
• Fund a public education campaign to help people understand and use natural hazard information
• Seek greater alignment between councils' risk methodologies and insurers’ assessment of natural hazard risk, when considering development in hazard-prone areas
• Have the Real Estate Authority, REINZ, the Law Society and the New Zealand Society of Conveyancers develop practical guidance and continuing professional development on natural hazard and insurance-risk conversations, including standard buyer checklists and signposting to authoritative information sources
• Have standard buyer guidance, and sale and purchase agreement templates that encourage purchasers to confirm insurance availability before making an offer, bidding at an auction or confirming finance
• Have lenders discuss insurance availability, affordability, excesses and exclusions with borrowers for higher-risk properties

"Building resilience starts with informed decisions. To grow resilience over time, New Zealanders need to know about, understand, trust, and act on natural hazard and insurance risk information," the paper said.

Higgins said it needs to be more achievable for people to make resilient choices as data alone couldn't do that.

“Kiwis need more help to cut through the technical jargon and use hazard information to make decisions.”

“Climate change is an elephant in the room and we need to tackle it one bite at a time. Our research and our policy proposals show that small changes to the system across government, councils and industry can make data accessible, transparent and actionable,” Higgins said.

“These changes will help build safer, more resilient communities for the future.”