The Natural Hazards Commission (NHC) has highlighted New Zealand’s expertise in natural disaster risk pooling, drawing international attention.
As the world’s first country to implement such a scheme in 1945, New Zealand has become a key adviser to nations looking to mitigate the financial impact of climate-driven natural hazards.
The NHC noted that global institutions – including the World Bank, the Asian Development Bank, and Lloyd’s of London – regularly consult New Zealand on designing and operating risk pool systems. These schemes aim to provide a base layer of insurance coverage for major disasters, enabling greater affordability and availability of broader insurance products.
NHC chief executive Tina Mitchell noted that climate change is accelerating the frequency and severity of natural hazards worldwide. As a result, governments are increasingly exploring risk pools to protect their populations.
“The World Bank has been active in advising governments with financial exposure to natural hazards on the merits of pool schemes and points to us as one that’s been around for nearly 80 years,” she said.
The effectiveness of New Zealand’s risk pool system was put to the test during the Canterbury earthquakes.
While all claims were eventually paid, the process revealed inefficiencies in handling claims on such a large scale. These issues prompted the commission to create a more streamlined and collaborative framework to improve outcomes for policyholders.
“Although the financial support was there, we know that many Canterbury homeowners did not have an optimum claims experience. We learnt from that and formed a private-public partnership with insurers,” Mitchell said.
New Zealand also shares insights through its membership in the World Forum of Catastrophe Programmes, an international network of approximately 20 risk pool operators.
The group meets annually to exchange ideas on claims management, emerging risks, and leveraging technological advancements to enhance disaster response.
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An emerging topic of interest is the balance between providing risk protection and encouraging long-term adaptation.
“Risk pool schemes provide protection but also run the risk of blunting the signals that might otherwise prompt societal change and adaptation. Some countries are increasingly interested in our legislative mandate to reduce risk and turn the dial for society on preparedness,” Mitchell said.
