This report argues that New Zealand must make strategic decisions now about how it will respond to the impact of climate change on the insurance industry.

The report outlines the current and anticipated pressures on insurance premiums, highlighting the growing vulnerability of the country's properties to floods and coastal inundation. With climate-related risks increasing, the authors warn that leaving insurance decisions in the hands of the free market will lead to inequitable outcomes that further entrench inequality.

The report then explores the potential for government intervention in the insurance market, acknowledging the need for a balanced approach that considers both individual and collective interests, as well as promoting social equity. It considers various policy options, including subsidies, premium caps, and the creation of a public insurance scheme.

Findings

• Aotearoa New Zealand will face unprecedented climate-related risks in the coming decades and beyond. 
• The accessibility and affordability of residential insurance as climate change-related impacts increase is a key challenge that must be considered urgently. 
• Insurance enables families and communities to bounce back more quickly after a disaster, minimising financial hardship and protecting the most vulnerable in our society from falling into poverty in the aftermath of an event.
• Insurance also reduces fiscal risk to the government by lessening the need to provide financial assistance to those who suffer significant property losses after a natural-hazard event.

Recommendations

• Introduce targeted subsidisation for homeowners whose insurance premiums surpass pre-defined measures of affordability.
• Establish a public insurance scheme to make cover for flood hazards available and affordable for those who will not otherwise be able to access cover.
• Any public intervention into the private insurance market scheme must be situated within, and mutually reinforce, a clear and legally enforceable adaptation strategy.