Recent data from New Zealand’s Treasury has revealed that homes in high flood-risk areas are experiencing significant increases in insurance premiums, with some rising by hundreds or even thousands of dollars.
Insurance premiums across New Zealand have increased nearly 30% over the past 18 months, as insurers use more precise risk modelling to set their rates.
Actuarial consultancy Finity has been monitoring insurance premiums on behalf of the Treasury since late 2022, using a dataset designed to reflect New Zealand’s natural hazards profile. This dataset includes real addresses but anonymises other details like property age and construction materials to protect privacy.
Since October 2023, the monitoring has expanded to include 1,710 properties in flood-prone suburbs. The latest report, based on April 2024 data, indicates that insurance remains broadly accessible.
RNZ’s report has revealed that for properties in the seismic dataset, 93% were able to obtain online quotes from at least two of the four monitored underwriters:
However, in Canterbury, nearly half of the properties could not secure more than one quote.
For high flood-risk properties, 92% were also able to get quotes from at least two underwriters, but 25% faced additional flood premiums of at least $250. In some cases, these premiums were as high as $4,500, though most were under $1,000.
Despite general availability, some flood-affected suburbs faced challenges. In Christchurch’s Avondale and Woolston suburbs, high-risk properties could not obtain more than one online quote. Even low-risk properties in Woolston struggled, with only 10% able to secure a second quote, and no low-risk properties in Avondale managed to do so.
“We can see by the difference in availability between high/low risk properties and no risk properties that at least some insurers are likely using flood risk as a driver for underwriting criteria,” the report said, according to RNZ.
Nationally, the average cheapest online quote in April was $1,839, a 15% annual increase, and a 29% rise since monitoring started. Canterbury, Tasman, and the West Coast saw the largest annual increases.
Insurance Council New Zealand (ICNZ) chief executive Kris Faafoi explained that premiums tend to rise after significant natural events like last year’s Auckland Anniversary Weekend flooding and Cyclone Gabrielle.
“We are still seeing the effects of that reflected in Finity’s data. Some of those pressures are now easing with construction inflation and reinsurance rates stabilising which are flowing through into premium levels,” he said, as reported by RNZ.
The ICNZ has been calling for enhancements to the Fast-Track Approvals Bill, emphasising the urgent need for development projects to incorporate safeguards against natural hazard risks.
